Has your head stopped spinning yet?
Get set for a weekend of wrangling as Tory hopefuls try to secure the backing of 100 MPs to have a shot at being the UK’s third prime minister in four months. It could be over as soon as Monday or Tuesday. Rishi Sunak (remember him?) has an early lead, Penny Mordaunt publicly declared her candidacy as a “fresh start” and Boris Johnson is running the numbers to see if it’s worth trying for an unlikely return — rather like his hero Winston Churchill.
For some, Mordaunt could be the Goldilocks solution for Conservatives who fear the runaway train of a Johnson government but don’t want to sanction a Sunak leadership. But her unity pitch may only get her so far. Alex Morales and Kitty Donaldson explain how Tories who’ve worked with Truss and Mordaunt say that of the two, Mordaunt is actually less competent.
It’s worth remembering that whoever wins, the fun and games won’t go away. As Alex Wickham and Emily Ashton report, the Tories are riven with infighting as never before. You can blame Brexit for much of that, but you could also point to how — after more than 12 years in power — lots of them simply hate each other.
Losing a prime minister, chancellor of the exchequer and home secretary within days may be the best thing this government has done for the markets so far. The pound briefly cheered up a bit and gilts calmed down. “Markets are calling the shots right now,” Bank of New York Mellon strategist Geoffrey Yu says. And they still have some dire warnings for sterling.
Jeremy Hunt, the government’s old hand with almost a week under his belt, is expected to stay. But his Oct. 31 budget plan is looking shaky. JPMorgan CEO Jamie Dimon thinks Hunt will be around long enough for a call to discuss bank taxes and efforts to boost the finance sector’s competitiveness next week. But some supporters fear plans to reform the City of London will be sidelined by the upheaval in the Conservative Party.
No matter who replaces Liz Truss, the next PM will inherit an economy damned for the immediate future by rising borrowing costs, crippling energy bills, high taxes and no strategy about how to revive growth. UK inflation surpassed 10% amid warnings it could soar to 15% or more next year. Still, that’s dwarfed by the 25% in the Baltic region, where Estonia leapfrogged Spain to become the most expensive part of Europe.
The UK is changing governments almost as quickly as Italy, where Giorgia Meloni finally clinched a mandate from her coalition on the path to becoming Italy’s first female premier, after weeks of political stasis following her right-wing alliance’s election win.
Finally, a lettuce may have outlasted Truss (and created a small industry of memes and puns in the process), but the country’s pension crisis isn’t going away, Richard Portes of the London Business School tells The Tape podcast.
Enjoy the rest of your Saturday, and we’ll be back tomorrow with a look-ahead to the madness of the coming week.