Nobody, not even among the supporters of Liz Truss, has any illusions about the mandate that awaits the future Prime Minister of the United Kingdom: it will be very complicated. At the head of a conservative party worn out by twelve years in power and by the scandals of the Johnson era, the ex-minister of foreign affairs, a convinced liberal multiplying the references to Margaret Thatcher, will face an unprecedented social, economic and political situation.
In October, the annual energy bills of the British will jump by 80% (to more than 3,500 pounds sterling, or 4,000 euros) and could reach the maddening sum of 6,000 pounds sterling, at the beginning of 2023. With inflation at 10 .1% over one year in July, which is likely to climb to 22% in a few months (according to the bank Goldman Sachs), the purchasing power of the British will fall in historic proportions: according to the think tank Resolution Foundation, household disposable income could decline by 10% by the end of 2023, and the number of people living in extreme poverty, unable to meet their basic needs, could reach 3 million.
change of foot
Strikes followed one another all summer long: among railway workers, postal workers, lawyers, dockers… The unions warned that they would intensify if Liz Truss did not take immediate measures to help the most fragile households. to overcome the winter. Labor and the Liberal Democrats advocate a freeze on energy bills. Armed with her ultra-liberal software, persistent in her promises of all-out tax cuts, Liz Truss resisted all summer, rejecting the principle of direct aid to households.
But, since the end of August, pressed including by her own camp, she has started a change of foot, announcing a rescue plan, the details of which should be known in the coming days. According to the British media, the leader is considering a freeze on the rise in energy prices for individuals, as part of this plan, the amount of which could reach several tens of billions of pounds sterling, on a scale similar to that decided to save jobs during the pandemic.
Where will Liz Truss find the money to finance this plan, if she does not give up on her promise of massive tax cuts – which would represent an estimated loss of revenue for the State of 30 billion pounds sterling British? By increasing public debt, most likely. How will the markets react, while the cost of debt continues to rise with the general rise in rates? Rishi Sunak, his unfortunate competitor to replace Mr. Johnson, warned of the inflationary danger linked to this fiscal policy.
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