As Liz Truss stepped down from a turbulent and record-short stay as U.K. Prime Minister on Thursday, the question is what’s next from the country whose politics have taken investors on a roller-coaster ride over the last several weeks.
Truss has said she would exit the top job as soon as the Conservative party holds a contest to replace her, in an election likely by next week.
The rules governing that contest have yet to be announced, but key lawmaker Graham Brady said a new prime minister will be in place ahead of the fiscal statement due on Oct. 31.
The Conservative party is already facing general election calls by opposition Labour leader Keir Starmer, as well as Ian Blackford, the Westminster leader of the Scottish National party. While King Charles III is technically able to dissolve Parliament at the request of a new prime minister who can then call a general election, that’s unlikely.
The last U.K. general election was in December 2019 and the maximum term of five years for a U.K. parliament means the official dissolution will happen in December 2024. The Conservative party is unlikely to risk such an election before that time.
A recent poll by the Electoral Calculus found that Conservatives would not even make it as an opposition party should an election be held now, with a prediction they’d win just 24.1% of seats. That’s largely due to the historic unpopularity of outgoing Truss — the lowest ever for any U.K. political leader.
According to bookmaker Betfair, former Chancellor of Exchequer Rishi Sunak is the clear favorite to become the next Conservative Party leader, and thus the new prime minister, though some have actually called for the return of former prime minister Boris Johnson, who the London Times, citing sources, said has expressed interest.
Likely staying put will be new finance minister Jeremy Hunt, whose swift axing of tax-cut proposals that rattled financial markets weeks ago has appeared to return some calm to U.K. financial markets.
Truss became prime minister in early September following the resignation of Johnson. Her mini-budget under former Chancellor Kwasi Kwarteng, who was fired several days ago, was widely panned and blamed for upending the U.K. bond market and routing sterling.