New UK Prime Minister Inherits Worsening Crisis, Skyrocketing Energy Bills

For believers in pathetic fallacy, the thunderclouds hanging over London today are an ominous sign for Liz Truss, who has officially been handed the reins of government by the outgoing Prime Minister Boris Johnson.

In his final speech outside 10 Downing Street on Tuesday (Sept. 6), continuing what has been a common theme of late, Johnson joined the ranks of European leaders blaming the Kremlin for the continent’s soaring energy bills.

In a comment that ramps up the pressure for Truss to act on the U.K.’s record energy prices, he added: “We have and will continue to have the economic strength to get people through this energy crisis that has been caused by Putin and his vicious war […]. I know that Liz Truss and this compassionate Conservative government will do everything they can to get people through this crisis.”

Throughout the final weeks of the Tory leadership campaign, the issue of whether the new prime minister would commit to government spending to ease the burden of high energy prices became a key battleground for Truss and her rival Rishi Sunak.

Related: Crypto Champion Sunak Faces Digital Internationalist Truss in UK Leadership Race

For most of the summer, Truss’ position was that she would tackle the crisis by cutting taxes, although she stopped short of promising direct payments or price caps. As she told the Financial Times in August, “The way I would do things is in a Conservative way of lowering the tax burden, not giving out handouts.”

Sunak, on the other hand, supported a $43.6 billion government scheme to ease the cost of living for U.K. households and had pledged a further £10 billion to counter the energy crisis during his leadership campaign.

Read more: UK Government to Pay Out $43.6B to Support Households

Last month, a spokesperson for Sunak said Truss was “divorced from reality” on the issue, adding that “Liz’s plan will not touch the sides for the majority of British families this winter and pensioners will get no help whatsoever.”

Action Expected Imminently

In recent days, however, Truss’ stance appears to have softened. When asked in Manchester last week whether she would rule out any form of grant to help with energy bills, Truss replied, “That’s not what I said,” adding, “I can assure people I will do all I can to make sure that energy is affordable and that we get through this winter.”

Whatever path she takes, an announcement on Truss’ energy strategy is expected to come by the end of the week. As the Guardian reported Tuesday, allies of the new prime minister are understood to be discussing a £100 billion ($116 billion) package that could include freezing energy bills.

According to the newspaper, treasury sources said that under the proposal, funds could be provided by commercial banks and backed by government guarantees.

Besides tackling the current energy crisis, several policy issues relating to the financial services and technology sectors are also likely to be high up on Truss’ agenda. The Financial Services and Markets Bill, as well as the much-anticipated second Economic Crime Bill, will need to be passed through parliament in the coming months, with Truss now in a strong position to shape their ultimate form.

See also: What the UK’s Economic Crime Bills Mean for Anti-Money Laundering Fight

Truss is also expected to review the role of the country’s financial regulators and is said to be considering plans to merge the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA) and Payments Systems Regulator into a single regulatory body, the Financial Times reported in August.

If carried out, the merger would represent the biggest shake up of the U.K.’s regulatory regime since the FCA and the PRA were created in 2013, following the perceived failures of their predecessor, the Financial Services Authority, in the wake of the 2008 banking crisis.

At the time, Sunak’s campaign criticized the proposals as “ignoring the lessons of the financial crisis.”

In his final public comments as prime minister, Johnson called for union within the Conservative party and an end to the factionalism that has characterized the last two months, saying, “It’s time for us all to get behind Liz Truss and her team and deliver for the people of this country.”

As a new leader takes up the gauntlet, the British people will be closely watching how Truss handles the current energy crisis. While she may have won the support of the Tory party, she must now prove herself to the public at large if she wants to survive the next general election.

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