Truss is gone. Who will lead the UK?

This is an audio transcript of the FT News Briefing podcast episode: ‘Truss is gone. Who will lead the UK?’

Marc Filippino
Good morning for the Financial Times. Today is Friday, October 21st. And this is your FT News Briefing.

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Liz Truss resigned as the UK’s prime minister yesterday after weeks of turmoil. There is a lot riding on the next government.

Chris Giles
There’s no magic solution. I think that’s what we’ve found.

Marc Filippino
And as the politicians hash it out, British people are struggling.

Unidentified man 1
We just realised that we can’t continue to afford to pay the mortgage and the heating bills, the gas bills . . . 

Marc Filippino
I am Marc Filippino, and here’s the news you need to start your day.

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She spent just 44 days in office. Liz Truss will go down in history as the country’s shortest-serving prime minister. She’ll stay on until a new leader is chosen, and the UK’s ruling Conservative party is scrambling to do that in the next week. Here’s the FT’s chief political correspondent Jim Pickard with some of the contenders.

Jim Pickard
One of them is Rishi Sunak, who is the former chancellor, and also Penny Mordaunt, who is currently in the cabinet. And then the surprise candidate, possible candidate is Boris Johnson, who is on holiday at the moment in the Dominican Republic in the Caribbean. So the problem you’ve got is that there are still a lot of MPs who supported Boris Johnson who are still angry that he was forced out of power. You’ve got quite a few supporters of Rishi Sunak, the former chancellor. You’ve got a lot of rightwing Eurosceptics who aren’t fans of Sunak. There are a lot of cliques forming. There’s a lot of bad blood. I think, I think the Tory party is having a bit of a crisis, and it’s not quite clear how rapidly they can pull out of this nosedive.

Marc Filippino
As a longtime political correspondent, this isn’t Jim’s first time covering a messy downfall.

Jim Pickard
But there’s something about Truss’s resignation, which is particularly acute, which is that she does have a majority of 80, unlike Theresa May who only have a (inaudible) and support in House of Commons. Liz Truss inherits the huge majority from Boris Johnson and basically squandered that with several self-inflicted mistakes.

Marc Filippino
In her resignation speech yesterday, Truss described coming into office at a time of great economic and international instability. She said her country had been held back for too long by low economic growth.

Liz Truss
And we set out a vision for a low-tax, high-growth economy that would take advantage of the freedoms of Brexit. I recognise that given this situation, I cannot deliver the mandate on which I was elected by the Conservative party.

Marc Filippino
For an economic perspective on this, I’m joined now by the FT’s economics editor Chris Giles. Hi, Chris.

Chris Giles
Hi, Marc.

Marc Filippino
So, Chris, what do you make of Truss’s speech?

Chris Giles
Well, my reaction to the outgoing prime minister implying that it was all the fault of international markets and it’s very difficult to be the prime minister of any country at the moment really doesn’t remotely get to the heart of the matter. The loss of confidence in the UK, and the UK alone among European countries, all of which face the same economic difficulties, some of them more so than the UK, came because she had a view of economic strategy that frankly wasn’t credible. Very quickly the markets didn’t buy it, and all of the problems since then have been driven by a lack of confidence in her own economic strategy, admittedly at a time of difficult economic conditions across the whole of Europe, no doubt about that. But it was her own strategy and her own decisions that clearly were the catalyst to her own downfall.

Marc Filippino
So what does the government or I guess, you know, right now just chancellor Jeremy Hunt need to do to rebuild the confidence in the UK economy?

Chris Giles
So what Jeremy Hunt needs to be able to do, and he knows this fully well and he’s made this point himself, he needs to be able to demonstrate to financial markets that the UK public finances are both sustainable, but not only on paper, but they can get through Parliament so that the financial markets can trust that the UK government is not going to try and play fast and loose with the public finances or with inflation. And that also will mean, therefore, that the Bank of England does not have to raise interest rates quite as far as markets were fearing that they would have to raise interest rates and that people outside the UK, the UK borrows money internationally, has a large current account deficit, can have some faith that the government, whoever leads it, is going to ensure that they will get their money back when they want to get their money back, and that the UK will not be a basket case economy.

Marc Filippino
And aside from building international confidence, what can the government do to address the economic problems at home?

Chris Giles
There’s no magic solution, I think that’s what we’ve found. But of course within that government has the power to be able to minimise losses, particularly for the most vulnerable people, and share them out as equitably as possible. And I’m not saying what that means, but whatever is acceptable to society and also be very straight with the country, that that is what it is doing so that everyone can understand that that’s the plan.

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Marc Filippino
Chris Giles is the FT’s economics editor. Thanks, Chris.

Chris Giles
It’s a pleasure, Marc.

Marc Filippino
And British people have been struggling with living costs. Food is becoming more and more expensive. So is energy. And mortgages have risen because of the financial fallout from the Truss administration’s economic plan. Here’s what some News Briefing listeners told us about how the cost of living crisis is affecting them.

Unidentified man 1
My partner and I live in a small, two-bedroom apartment. We just realised that we can’t continue to afford to pay the mortgage and the heating bills, the gas bills . . . And so our own way of coping with the cost of living crisis is, is to basically just put the other bedroom on Airbnb.

Unidentified university student
As a university student having this cost of living crisis is just another thing to add on top of the previous years of, you know, lockdown. And so it just makes enjoying university life even harder. It just means that you can’t go out as much.

Unidentified man 2
September, starts September, when I suddenly realised I wasn’t able to save as much and had to cut back on the things that I’d like to do, like going out to restaurants and playing golf. And so I had to go back on those things to make the savings I want to make in order to do the things I want to do long-term.

Marc Filippino
The FT’s Sarah O’Connor has been reporting on the cost of living crisis and what it means for ordinary people. She joins me now. Hi, Sarah.

Sarah O’Connor
Hello.

Marc Filippino
When you hear these people that reached out to us and told us their stories, you know, what’s your reaction?

Sarah O’Connor
Well, I thought you had a really good range of voices there from, you know, people like students who were maybe not able to, to party as much to people in a lot more economic distress, having to rent out their rooms, spare room on Airbnb and that sort of thing. And I think that really speaks to what’s happening here in the UK right now, which is that this cost of living crisis is very broad-based. You know, it’s really affecting everyone from the bottom of the income distribution to the top. If you look at what’s happening to people who didn’t really have high incomes to begin with, inflation falls more heavily on them. I mean, the inflation rate, if you’re a poor person, it actually is, is just higher because of the kinds of goods that you buy, and they just don’t have savings to cut.

Marc Filippino
Yeah, it’s actually related to that. You visited a food bank recently. What did you see there? How bad is the cost of living crisis for people like the ones you’re describing?

Sarah O’Connor
Yeah, it was really, really sobering. The feedback that I went to in South London, there were huge queues of people. They’d set up is at a church. They’d set up a kind of a white tent where they were handing out the bags of food, and there was a queue right the way through the car park. They also do hot meals there, and they told me that that month they’d given out a thousand hot meals. And the same month a year ago, it was 500. So you’re really seeing a huge explosion in demand for food. And not only that, but the people who work there were telling me that increasingly people are saying, please, can I have the kind of food that doesn’t have to go in the fridge because I’ve turned my fridge off to save electricity. So yeah, quite, quite sobering to hear that when we live in ostensibly one of the richest countries in the world.

Marc Filippino
What is the political turmoil that we’ve seen with, first, Liz Truss’s “mini” Budget and now with the uncertainty of the next prime minister, what does it mean for their lives?

Sarah O’Connor
Yeah, so, you know, even before the “mini” Budget and the turmoil that that kicked off, we knew that we were heading into a really difficult period, right? And this is something that is happening in lots of countries because of the war in Ukraine and energy bills are much more expensive. Inflation is high. Our labour force is kind of shrinking in a way that actually is a bit unusual compared to some other countries so we have some extra challenges. The thing that kind of has been layered on top of that is that our mortgage payments are now set to go up an awful lot. And so that’s painful for everyone who has a mortgage, which is a decent proportion of the people in this country. But it will be particularly difficult for sort of slightly younger people who have only managed to get on to the housing market in the last few years because house prices have been very high. People have actually been borrowing large sums of money, which has been possible because interest rates are so low. So as we move out of this low interest rate environment and quite a sort of abrupt manner, it’s just as a big shock to people’s living standards.

Marc Filippino
Sarah O’Connor is the FT’s employment columnist. Thank you so much for your time, Sarah.

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Sarah O’Connor
Thanks for having me.

Marc Filippino
Before we go, a reminder that our friends at the FT Weekend podcast are leaving our feed. Soon, FT Weekend will exclusively be on their own feed. We’ll still carry them for a few more weeks until listeners make the leap. And then we’re going to stop hosting them here. So please make sure you subscribe to FT Weekend’s feed. It’s on Apple, Spotify or wherever you get your podcasts. We’ve also put a link in the show notes to make it nice and easy for you.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back next week for the latest business news. The FT News Briefing is produced by Sonja Hutson, Fiona Symon and me, Marc Filippino. Our editor is Jess Smith. We’d help this week from David da Silva, Michael Lello, Gavin Kallmann and Sam Giovinco. Special thanks to Lauren Fedor for her reporting on our midterm series. Our executive producer is Topher Forhecz. Cheryl Brumley is the FT’s global head of audio, and our theme song is by Metaphor Music.

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