[News Figures] Truss, Who Claimed to Be the 'Second Thatcher'... Why Did She Resign After 44 Days?

Attempted Economic Growth Through Large-Scale Tax Cuts Backfires
Financial Market Turmoil Leads to UK's Shortest-Serving Prime Minister in History

Prime Minister Liz Truss of the United Kingdom. [Image source=Yonhap News]

[Asia Economy Reporter Kang Juhee] UK Prime Minister Liz Truss announced her resignation just 44 days after taking office, earning the dubious distinction of being the shortest-serving prime minister in British history. As the UK's first female prime minister in her 40s, she dreamed of becoming the 'second Margaret Thatcher,' but lost public trust due to financial market turmoil caused by large-scale tax cut policies.

On the 20th (local time), Prime Minister Truss held a press conference in front of the UK Prime Minister's Office in London, stating, "Given the current situation, I acknowledge that I cannot fulfill my duties as the prime minister elected by the Conservative Party," and added, "I have informed King Charles III of my intention to resign. I will remain in office until a successor is chosen."

With Truss's resignation, the UK Conservative Party is set to elect a new party leader next week. In the UK's parliamentary system, the leader of the majority party automatically succeeds to the prime ministership. Before Truss, the shortest-serving prime minister was George Canning in the early 19th century, who served 119 days before dying of illness.

When Truss took office on September 6 last month, there were expectations that she would be a savior to revive the UK, which was suffering from soaring inflation and economic recession. Truss held key positions in the governments led by David Cameron, Theresa May, and Boris Johnson. At 39, she served as Environment Secretary in 2014, and subsequently held major cabinet posts including Secretary of State for Justice, Chief Secretary to the Treasury, Secretary of State for International Trade, and Foreign Secretary, earning recognition for her political skills.

From the start of the leadership race, Truss cited former Prime Minister Thatcher as her role model and pledged large-scale tax cuts, including the abolition of proposed corporate tax increases. The aim was to stimulate the economy through increased consumption and investment via tax cuts. She also gained support from conservatives by taking a tough stance against Russia, which instigated the war in Ukraine, and by actively advocating for Brexit (the UK's withdrawal from the European Union). Ultimately, Truss won 57.4% of the vote in the Conservative Party leadership election, defeating her rival, former Chancellor Rishi Sunak, who received 46.2%, becoming the UK's third female prime minister in history.

Crucially, Truss's tax cut policies triggered a backlash against her leadership. Just two weeks after taking office, on September 23, she abruptly announced a tax cut package worth approximately ?45 billion (about 73 trillion won). However, the UK government's tax cuts and policies such as energy subsidies for households and businesses raised concerns about fiscal deterioration. As a result, the pound sterling's exchange rate plunged to a historic low of $1.03 last month, and UK government bond prices collapsed (bond yields surged), causing turmoil in financial markets.

In response, Truss withdrew most of the tax cuts and took steps to manage the situation, including dismissing Chancellor Kwasi Kwarteng, but it was insufficient to restore lost trust. After Truss announced her resignation, foreign media satirized her brief tenure as "shorter than the shelf life of a lettuce."