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Liz Truss, who will succeed Boris Johnson as UK prime minister, is being greeted with an economy headed for a potentially prolonged recession and a surging cost of living that is already over 10% year-on-year for the first time in four decades. The economic challenges for the new premier are of the first order.
The British economy today looks like a scene straight out of the 1980s and not the 21st century: a looming recession, industrial worker discontent and declining household finances.
That is why there are those who compare the economy that Liz Truss receives with the one that Margaret Thatcher inherited in 1979, before bringing to the United Kingdom the free market policies that defined her legacy and that endure today.
And it is that both Truss, and his former rival, Rishi Sunak, have declared their admiration for “the iron lady”, who led the country between 1979 and 1990 with a right-wing and austere economy.
Boris Johnson’s successor has beaten the former finance minister in a tight race within the ruling Conservative Party, vowing to press ahead with tax cuts and stronger action to tackle the energy crisis and rising cost of living.
“I will introduce a bold plan to cut taxes and grow our economy. I will take care of the energy crisis, of the energy bills of the citizens. But also about the long-term problems we have with the energy supply”, promised Truss once the result that gave him victory was announced.
The highest inflation in four decades, the immediate challenge
Thanks in large part to global gas price volatility triggered by the Russian invasion of Ukraine, the average UK household energy bill could reach more than £3,500 a year, almost triple the level of a year ago. year.
A high energy price has pushed inflation above 10% year-on-year, the likes of which has not been seen since the 1980s, with the government facing increasingly urgent calls to take action ahead of winter.
Liz Truss will also have to deal with the aftermath of a summer of unrest in which tens of thousands of rail, port and postal workers, lawyers and garbage collectors have gone on strike demanding higher wages to keep up with skyrocketing wages. the prices of the family basket.
The situation is such that the National Institute of Economic and Social Research think tank estimates that one in five British households will have no savings by 2024, while the current finance minister warned that people earning £45,000 (about $52,000 ) a year, well above the £31,000 average, they could soon find it difficult to pay their bills.
With Reuters and AP
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