By Scott Wright
BUSINESS groups have appealed for stability after the UK was thrown into fresh political turmoil following the abrupt resignation of Liz Truss as Prime Minister today.
The FTSE 100 closed the session marginally higher this evening, and sterling made modest gains on the US dollar as markets reacted to Ms Truss quitting after just 44 days in power, following another chaotic 24 hours in Westminster.
But business groups were left frustrated over the prospect of further political instability amid an ongoing cost-of-living crisis that has left the UK on the brink of recession.
Shevaun Haviland, director general of British Chamber of Commerce, said: “Following weeks of chaos and uncertainty, the Prime Minister has resigned. Her resignation means the UK now faces even greater uncertainty, just as it stands on the cusp of a recession.
“It is now vital the Conservative Party speedily comes to a decision on a new leader who can return both political and economic stability. The new administration must immediately set out how they plan to deal with soaring energy bills, labour shortages, spiralling inflation and interest rates.”
Martin McTague, national chair of the Federation of Small Businesses, said: “It is incumbent upon the next Conservative Party leader to show they can provide stability and take the necessary steps to secure economic growth in the face of significant recessionary pressures.
“Businesses are crying out for an end to the political turmoil and a focus on remedying the economy, supporting small firms through the hard winter ahead.”
Ms Truss paid the price for an ill-judged growth plan concocted with former Chancellor of the Exchequer Kwasi Kwarteng announced a month ago, with its package of unfunded tax cuts unleashing chaos on the financial markets.
Mr Kwarteng was sacked by Ms Truss a week ago and his successor, Jeremy Hunt, has since unwound virtually every proposal contained in the mini-Budget. But UK households have been left facing the prospect of interest rates climbing higher than previously forecast, while the cost of financing Government debt has soared as bond yields surged. The base rate is currently 2.25 per cent.
Danni Hewson, financial analyst at stockbroker AJ Bell, said the resignation of another Prime Minister had led to “minute by minute fluctuations” on the markets.
Ms Hewson said: “There are big questions to be answered and they need to be answered quickly. The Conservative party is promising a quick appointment within days, crucially ahead of the fiscal event scheduled for Halloween. And for markets that’s really the key issue – that independent economic health check needs to be published and policy needs to stand. There can be no more vacillating, dithering or U-turns."
She added: “Volatility which has been a hallmark of global markets this year is most definitely here to stay in UK markets, at least for now. Time is short and credibility is on the line, but it is ordinary people’s finances that should be the priority.”
BCC said “flip-flopping” on policies has also undermined consumer and business confidence. Four in 10 firms expect profits to fall and two-thirds plan to raise prices, with inflation their top concern.
Ms Truss said the Tories would elect a new leader who would in turn become Prime Minister within the next seven days.
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