UK Prime Minister resigns over country’s miserable economic situation

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UK Prime Minister, Liz Truss, has become the shortest serving PM in history (served 6 weeks), after having resigned on Thursday facing backlash for her economic policies.

She said that she would remain as the prime minister until a successor is chosen. Her tenure though short was a volatile one as it saw her libertarian economic policies result in a market meltdown, an emergency central bank intervention, multiple U-turns, and the firing of her closest political ally and Treasury chief Kwasi Kwarteng.

A country under whose reign “sun never used to set” is in a mortifying economic condition these days and a lot needs to be factored in for this recent collapse. It all started with Brexit when multinational companies transferred over $1Trillion out of British banks and further transferred nearly $150Bn of their assets out of the country causing serious liquidity crunch before the financial institutions who were already facing crisis due to change of currency. Foreign direct investment reduced drastically and British Property Market which used to be the most lucrative in the entire Europe recorded massive negative growth. All this led to the current stage where the country’s economic damage seems irreversible.

The COVID 19 pandemic and the Russia-Ukraine war also had their effects but more recently the government’s policies didn’t help the situation either. One of the examples is the Mini Budget of the past month where the Finance Minister Kwasi Kwarteng announced freezing of energy bills and pledged 45 Billion pounds of tax cuts which were practically not possible.

The ruling conservative party is going to again elect its new leader on 28th October. The road ahead for the new PM isn’t going to be easier when the country’s fiscal reputation has hit a rock bottom with the economy heading into recession and inflation at a 40-year high.

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