New UK pm Truss faces daunting challenge

Liz Truss took over as Britain's prime minister on Tuesday, facing one of the most daunting challenges for an incoming leader in post-war history, led by soaring energy bills, a looming recession and industrial strife.

Truss, the fourth Conservative prime minister in six years, flew to the royal family's Scottish home to be asked by Queen Elizabeth to form a government. She replaces Boris Johnson who was forced out after three tumultuous years in power.

Ms Truss accepted Her Majesty's offer and kissed hands upon her appointment as Prime Minister and First Lord of the Treasury, Buckingham Palace said.

The 47-year-old former foreign secretary will address the country from Downing Street before appointing her government. Johnson urged the country and his warring party to unite behind the new leader.

The Bank of England warned of a long recession by the end of the year as Truss inherits an economy in crisis, with inflation in double digits, the cost of energy in double digits and the cost of energy in double digits. Workers in the economy have gone on strike already.

The plan to revive growth through tax cuts and potentially provide around 100 billion pounds $116 billion for energy has rattled financial markets, prompting investors to dump the pound and government bonds in recent weeks.

She enters the latest crisis in Britain with a weaker political hand than many of her predecessors.

After holding a place in the Cabinet of Ministers for eight years, she defeated rival Rishi Sunak in a tighter margin than expected, and more of the party's lawmakers initially backed her rival.

Johnson, who tried to cling onto power in July despite ministers resigning over a series of scandals, told reporters and politicians in Downing Street that the country must unite.

This is it folks, he said in his farewell speech. It's time for politics to be over, my fellow Conservatives. It's time for us all to get behind Liz Truss and her team. After speaking outside the famous black door, he left London to travel to northeast Scotland and give his resignation to the 96-year-old queen before Truss followed him into Balmoral Castle.

Johnson used his departure speech to boast of his successes, including an early vaccine programme during Covid 19 and his staunch support for Ukraine in its battle against Russia.

He also listed delivering the EU's main achievements as one of his main achievements, although polls show that a majority of people think leaving the EU is a mistake.

Britain has fallen from crisis to crisis in recent years and there is now the possibility of a long energy emergency that could drain the savings of households and threaten the futures of businesses that are still weighed down by Covid-era loans.

Household energy bills are due to jump by 80 percent in October, but a source familiar with the situation told Reuters that Truss may freeze bills in a plan that could cost up to 100 billion pounds $115.33 billion, surpassing the Covid 19 furlough scheme.

It is not clear how Britain will pay for the support, but it is likely that it will increase government borrowing.

The energy crisis could run for a couple of years, and the scale of the package has spooked investors.

The pound has fared worse against the US dollar than most other major currencies recently.

In August alone, sterling was down four percent against the dollar, and it was the worst month for 20 year British government bonds since 1978, according to records from Refinitiv and the Bank of England.

The government's spending spree in coronaviruses has weighed down Britain's public finances. The public debt, as a share of economic output, is not far off 100 percent, up from about 80 percent before the epidemic.