Why was Truss' tenure so short – and now what?

British Prime Minister Liz Truss took office last month with hopes and promises of reinvigorating the British economy and putting it on the path to long-term success.

It didn't go to plan.

Instead, Truss' tenure was scarred by turmoil as her economic policies threatened the country's financial stability, driving the pound to record lows, sparking chaos on bond markets and increasing mortgage costs for millions of people.

Though Truss took office amid a cost-of-living crisis, the war in Ukraine and the lingering effects of the Covid-19 pandemic, her decision to announce 105 billion pounds (USD 116 billion) of tax cuts and spending increases without providing details on how she would pay for it unnerved investors, who warned of soaring public debt.

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That undermined confidence in the government's ability to pay its bills and raised questions about the economic credentials of a new prime minister who took office after a deeply divisive contest for leadership of the governing Conservative Party.

The disarray surrounding the economic plan weakened Truss's authority as prime minister, and ultimately led to her decision to resign on Thursday.

What happens now?

The party says it will select a new leader and prime minister by October 28. Truss will remain prime minister until then.

To avoid the need for a lengthy election campaign that could have left the country without an effective government for weeks, party leaders decided that lawmakers would have greater say in the choice and without weeks of hustings around the country.

Under the expedited process, challengers for the leadership must garner the support of 100 other Conservative lawmakers — out of a total 357 — by Monday afternoon. That means a maximum field of three for lawmakers to vote on. The last-placed candidate would then be eliminated and the top two candidates will face an online vote of the party membership.

Conservative leaders are hoping that this lightning contest will produce a consensus candidate who can unite the party behind the tax and spending priorities Treasury chief Jeremy Hunt has already outlined.

What are the big hurdles?

The first challenge will come just days after the new prime minister takes office, when Hunt delivers his fiscal plan to the House of Commons on Oct 31.

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Truss triggered the crisis that led to her downfall when she and Hunt's predecessor unveiled plans for sweeping tax cuts without saying how they would pay for them and without providing independent analysis of their impact on government finances.

Since taking office last week, Hunt has reversed most of those cuts and promised to cut government debt as a percentage of economic output in the coming years. He has also warned that painful spending cuts will be needed during what's likely to be a “difficult” winter.

Opposition parties and some Conservative lawmakers are already pushing for increased spending in areas such as healthcare, welfare benefits, state pensions and free school lunches to shield the poorest in society from spiraling prices.

Why doesn't the UK have a general election?

Legally, the government isn't required to call an election until December 2024, five years after the Conservatives won a landslide victory under the then Prime Minister Boris Johnson.

But opposition parties and some members of the public are demanding an immediate election after the uproar of recent months. Truss was forced out of office after less than two months on the job and she followed Johnson, who resigned after his authority was undermined by a series of scandals.

The damage done by Truss and Johnson has cratered support for the Conservatives, with some analysts suggesting they would lose many seats if an election were held today. Because of this, the new prime minister is expected to resist calls for an early election, and instead try to use the next two years to rebuild confidence before going to voters.

David Lawrence, a research fellow at the Chatham House think tank in London, said people are likely to be focused on the cost-of-living crisis and soaring energy bills this winter, and that gives the Conservatives time to try to change the narrative.

“I think what will matter most in the next election is how the prime minister, the government has dealt with those challenges,” he said. “So if the new Conservative leader believes that they can take control of the energy crisis … and that the cost-of-living crisis is dealt with, that people feel they have more money in their pockets by the time of the next election, I think that's the best they can hope for.”

But the pressure for an election may be difficult to resist.

“At the end of the day, the constitution doesn't require it, but … I agree with the principle that we should test the new prime minister in reasonably short order, rather than wait until potentially January 2025,” Conservative lawmaker Mark Garnier told the BBC on Thursday. “I think people would be furious, rightly furious” if we didn't hold an election.