Liz Truss wins race to be Britain's new leader

The incoming UK prime minister has promised a “bold plan” to cut taxes and said she will address spiralling energy prices that are driving a cost-of-living crisis in the country.

But Liz Truss offered no details of what either plan will involve; throughout her campaign, her critics, including opponent Rishi Sunak, have pushed her to detail her next steps, with households facing another spike in costs next month.

“I will deliver a bold plan to cut taxes and grow our economy,” Truss said. “I will deliver on the energy crisis, dealing with people’s energy bills.”

Liz Truss began her victory speech by congratulating her opponent, Rishi Sunak, who pushed her closer than many expected in the final ballot.

She then gave a hearty tribute to Boris Johnson, who she will replace as prime minister on Tuesday after months of scandals forced him to resign.

“Boris: you got Brexit done, you crushed Jeremy Corbyn, you rolled out the vaccine, and you stood up to Vladimir Putin,” Truss said. “You are admired from Kyiv to Carlisle.”

"I know that our beliefs resonate with the British people," she told the crowd of Conservative members. "I campaigned as a Conservative and I will govern as a Conservative."

Liz Truss, who has served as Boris Johnson’s foreign secretary for the past year, won 57% of the votes of Conservative Party members to become its leader. Rishi Sunak took 43%.

It was a closer than anticipated victory for the longtime favorite, who was popular among party members but won the support of less than a third of her MPs earlier in the leadership contest.

Truss is giving a speech to the Conservative Party conference now; she becomes the party’s leader immediately, and will officially take over as prime minister on Tuesday after meeting Queen Elizabeth II.

WATCH: Liz Truss gives victory speech after winning Conservative Party leadership election

Liz Truss — a tax-cutting crusader who has modeled herself on Margaret Thatcher and endeared herself to the Conservative Party’s pro-Brexit right wing — has won its leadership election and will take over from Boris Johnson tomorrow as the UK’s new leader.

WATCH: See the moment Liz Truss is announced new British prime minister

The British pound dropped to its lowest level against the US dollar since 1985 on Monday, signaling further woes for the UK economy.

Early Monday morning the pound dropped 0.3% to $1.1443 according to MarketWatch. It follows similar falls for the euro as the continent faces a deepening energy crisis.

This signals one of the many challenges that Boris Johnson's successor — the new UK prime minister — will face.

The next prime minister's celebrations are likely to be brief.

That's because the biggest issue in Britain today isn't the identity of the PM, but a spiralling cost-of-living crisis.

Average annual energy bills alone are set to rise 80% to £3,549 (approximately $4,180) from October – threatening to overwhelm much of the country. Inflation rose above 10% in July for the first time in 40 years, driven largely by the soaring cost of energy, food and fuel amid Russia’s invasion of Ukraine.

According to the Bank of England, inflation will soar to 13% by the end of the year. The central bank also predicted that the UK will enter recession before the end of the year.

As far as this affects the Conservative Party leadership contest, analysts are skeptical that either candidate’s policies will help. The Institute for Fiscal studies, an independent research group, last month said the leadership contestants, who both promise tax cuts and smaller government spending, “need to recognise this even greater-than-usual uncertainty in the public finances.”

On Sunday, speaking on a BBC political show, the contest's clear frontrunner Truss refused to discuss her plans to tackle rising bills, but added, “what I want to reassure people is, I will act if elected as prime minister within one week.”

Rishi Sunak has consistently attacked Truss's economic agenda, saying that her proposed tax cuts would push inflation even higher. And if Truss wins today, she'll immediately face pressure to match the opposition Labour Party's plan to freeze energy bills before a planned price hike in October.

That’s the question that Westminster is desperate to learn the answer to. Immediately, Boris Johnson will go from being prime minister to an ordinary Conservative MP. It is most unlikely he will serve in either Sunak or Truss’s cabinet, given his unpopularity. 

He will probably return to his media career as a columnist, author and broadcaster in some way or another. He was a columnist at the Daily Telegraph for many years, both while serving as an elected politician and as a private citizen. His salary for that column was greater than his salary for serving as prime minister. 

It is unknown whether or not Johnson wants to return to frontline politics or if he now wants to retreat, possibly even resigning as an MP, and live a quieter life. While that would be understandable, allies of Johnson believe that he is dissatisfied with how his time in power came to an end and feels that he has unfinished business. 

There may be hurdles to overcome if he wants to remain a force in British politics, though. If an ongoing parliamentary inquiry finds later this year that he deliberately misled parliament over Partygate, Johnson could face a recall election and lose his seat.

But looming over Truss or Sunak is the uncomfortable truth that the public hasn’t had any say yet in Johnson’s removal or the appointment of his successor. If things start going badly for the next prime minister, it would be theoretically possible for the Conservative Party to remove them and restore Johnson as its leader.

Lots of not very fun things. The most pressing issue is the cost-of-living crisis. Energy prices have soared by thousands of pounds, food costs are spiraling and real-term wages are falling. Small businesses that were saved by the government in the pandemic, especially in the hospitality industry, now face closure due to the escalation in prices.

Neither candidate has adequately answered how they intend to address these problems and the public are increasingly furious about it.  

On top of this economic crisis, there are also a bunch of problems that can loosely be described as Boris Johnson legacy issues. 

Johnson has been one of the most vocal and reliable allies to Ukraine since the Russian invasion in February.

The new leader will have to decide whether or not they will follow Johnson’s all-in approach as the rest of the West works out how to face the next stage of the war, with the risk of attracting unfavorable comparisons with Johnson should they deviate from his resolute position. 

Then there’s Brexit, which, contrary to popular belief, is certainly not done. The situation in Northern Ireland remains unstable and British relations with their European Union counterparts are extremely poor.

The new PM will have to decide whether they intend to remain hardline on all matters Brexit and risk the consequences, or take a softer line, angering the Brexiteer base and, well, risk the consequences. 

Read more here: Boris Johnson is handing his successor an economic ‘catastrophe’

In the United Kingdom, prime ministers are not directly elected; rather, parties are elected at general elections via a parliamentary system where local constituencies elect a Member of Parliament. 

The leader of the party with the most MPs -- and ideally an outright majority in the 650-seat Parliament -- will conventionally be asked to form a government by the Queen. 

If a sitting prime minister resigns, there is no need for another general election, so the governing party is able to simply elect a new leader. 

In the case of the Conservative Party, the new leader is elected by its roughly 160,000 members. This electorate is generally speaking older, whiter and more financially comfortable than the rest of the country. They are typically in favor of low tax, small government spending and socially Conservative policies. 

This could be why the campaigns to replace Johnson have not fully addressed the cost-of-living crisis looming over most people in the UK, focusing on lowering tax rather than what state spending might be required.