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David Cameron, Theresa May, and Boris Johnson – all three were forced to resign prematurely. In the first case, the reason was the vote for the country’s exit from the EU, in the second – the inability to convince the British parliament to accept the terms of Brexit, and in the third – a series of internal scandals.
The recently elected Liz Truss could repeat their fate. According to some reports, a member of the British parliament suggested writing a letter to the chairman of the Conservative Party steering committee, Graham Brady, asking for a vote of no confidence in the party leader.
According to an Opinium poll, 75% of Britons believe that the ruling Conservative Party has lost control of the economic situation in the country. Among those who voted Tory in 2019, 71% hold the same opinion. The abandonment of the Liz Truss government’s plans to reduce the maximum rate of income tax from 45% to 40% for those whose annual earnings exceed £150,000 will only make things worse.
Against this background, Analysts at S&P Global Ratings have worsened their outlook on the budget deficit, and the level of public debt, according to the release, will rise over the next two to three years. Inflation is expected to be 9.5% this year, then slow to 5.8% in 2023, and will be below 2% in 2024-2025 at 1.6% and 1.7%, respectively.
The agency also predicts the country will be in a technical recession in the coming quarters, with S&P expecting a 0.5% decline in overall GDP in 2023 after growing 3.3% this year. Between 2024 and 2025, UK GDP will shift to growth – of 1.4% and 1.6%, respectively. In April, the agency projected the economy to grow 2.3% in 2023 and 2.2% in 2024.
In theory, the U.K. long-term government bond purchases announced last week should end on October 14. Thus, the Liz Truss government has less than two weeks to reassure investors. If it fails, Moody’s and S&P Global could downgrade the country’s credit rating as early as October 21.
