After only 45 days in office, British Prime Minister Liz Truss resigned her position on Thursday, bringing even more chaos to the ongoing political crisis facing the UK.
Her tenure was marked by political and economic turmoil as most of her propositions —encapsulated in a mini-budget marked by tax cuts— failed dramatically, taking the country into a domestic financial crisis.
“It is clear that parts of our mini-budget went further and faster than markets were expecting,” Truss had said last week, as talks of her demission were already in place.
Now, with her stepping-down made official, the Conservative Party has committed to finding her replacement in just one week.
How (And When) Will The Conservative Party Pick A New Leader?
Graham Brady, chair of the Conservative Private Members' Committee (also known as the 1922 Committee) said the party is expecting a new leader to be in place by Oct. 28.
Under normal circumstances, the selection process would involve Conservative lawmakers using secret ballots to select two top candidates that would then be voted upon by party members, which amount to about 150,000 British residents.
But now, with the British citizenry demanding quick action, Brady has said the party will need to set a very high threshold for the number of nominations from Conservative lawmakers that candidates will need to get in order to qualify, reported The Guardian.
Given that the party has 357 members of parliament, there can only be three nominees. But the case could be that only one gets to over 100 votes, which would immediately make that person prime minister. If there are two or more who reach this position, party members will be summoned to make the final call.
Who’s In Line To Succeed Truss As Prime Minister?
While opposition leader Keir Starmer has called for an immediate general election after Truss’ resignation, the Conservative Party’s agenda is set on finding a new leader for its remaining time in office.
Jeremy Hunt, the new finance minister has ruled himself out from the role, as well as influential Tory veteran Michael Gove.
Though nominations have not been made official yet, possible contenders include former Chancellor Rishi Sunak and former Prime Minister Boris Johnson.
Penny Mordaunt, leader of the House of Commons and Defense Secretary Ben Wallace are also gaining popularity as unlikely underdogs.
Sunak is expected to run again, as he came in second in the leadership contest that followed Johnson’s resignation and led to Truss’ term last summer.
Penny Mordaunt was an unlikely candidate that quickly rose to prominence in the summer contest, becoming the oddsmakers’ favorite. Her most powerful claim is a vivacious lack of association with Johnson and his cabinet that presents her as a “fresh start” to the party’s stagnated leadership.
Boris Johnson himself could be a runner-up to take his old job back. The former PM left in scandal after more than 50 ministers and aides, including Sunak, resigned after a series of moral accusations on a key ally of Johnson, as well as other scandals including an alleged mishandling of the COVID-19 pandemic and breaking his own lockdown rules.
Johnson still enjoys support amongst Conservative Party members. A quick poll conducted on Thursday on 530 party members puts him as the top favorite candidate with 32% of votes, followed by Sunak with 23%.
Next off, with 10% of votes, comes Wallace, the current defense secretary. He is a former soldier who opposed Brexit and could also bring a much-needed air of freshness to the struggling Tory leadership.
Nominations will close at 2 pm (local time) on Monday.
Market Reaction
ETFs built around the British economy reacted favorably to Truss’ resignation. Her leadership proved to be a big failure to the country’s economy, taking a toll on the British pound and the population’s purchasing power.
iShares MSCI United Kingdom ETF (NYSE:EWU), which follows the broader UK equity market, experienced a modest rally after the news was announced, but leveled down to close only 2 cents lower at $26.78 on Thursday. The smaller Franklin FTSE United Kingdom ETF (NYSE:FLGB) had a similar performance, losing only 0.1% to end at $19.97.
iShares MSCI United Kingdom Small-Cap ETF (BATS:EWUS), providing exposure to 270 small-cap British companies was up 0.5%, closing Thursday’s trading session at $26.41.
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