Liz Truss, the fourth Conservative prime minister in six years may have taken over the reigns of power from Boris Johnson, who was forced out after three tumultuous years in power.
But Truss may have inherited other challenges on ground such as soaring energy bills, inflation, among others to contend with.
But more worrisome is the warning from the highest bank in the land, Bank of England (BoE) of imminent recession and the historic pound fall against the dollar, the lowest since 1985.
Analysts say, it will take some ‘miracles’ for the new prime Minister to survive the likely social unrest arising from reduction in the social and economic conditions of the already overburdened citizens.
The currency fell to $1.1407 on Wednesday afternoon — a level not seen since the premiership of Margaret Thatcher.
Truss had raked in 81,326 votes to beat Rishi Sunak who polled 60,399 votes to become the leader of the ruling Conservative Party.In fact, the analysts believe that concerns about the economic posture of Truss may have also compounded pressures on the pound, according to The Cable online platform.
Andrew Bailey, governor of the Bank of England, highlighted the strength of the US currency during a treasury select committee meeting earlier on Wednesday, as he explained to members of parliament (MPs) the recent weakness in the pound.
He also said that a recession remained the most likely outcome in the UK.
When asked by MPs if there was much that the central bank could do to stop it, he said: “Insofar as the war (Russian-Ukraine war) is having this huge effect, the answer to that would be no.”
Valentin Marinov, head of G-10 currency research at Credit Agricole in London, told Bloomberg that “the markets are seemingly relishing the opportunity to bash the British pound.”
Also speaking on the country’s current economic situation, Roberto Cobo Garcia, head of G-10 currency strategy at BBVA in Madrid, expressed concerns on whether the fiscal policy of the new prime minister would help the currency.
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“Truss’s fiscal plans may help households but probably not the pound and the talk about the Bank of England doesn’t help,” he told the news agency.
“Global risk appetite may need to improve somehow to stop the pound carnage, “ he added.
