Liz Truss resigns as Prime Minister, UK leader contest to conclude by Oct. 28

Liz Truss said on Thursday she was resigning as prime minister, brought down by her economic program that sent shockwaves through the markets and divided her Conservative Party just six weeks after she was appointed.

A leadership election will be completed within the next week.

Speaking outside the door of her Number 10 Downing Street office, Truss accepted that she could not deliver the promises she made when she was running for Conservative leader, having lost the faith of her party.

"I recognize though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party. I have therefore spoken to His Majesty the King to notify him that I am resigning as leader of the Conservative Party," she said.

"This morning I met the chairman of the 1922 Committee, Sir Graham Brady. We've agreed that there will be a leadership election to be completed within the next week. This will ensure that we remain on a path to deliver our fiscal plans and maintain our country's economic stability and national security."

This is a developing story, please check back for updates.

Residents in a traditional Conservative Party-voting area of Britain hailed Liz Truss' resignation as prime minister on Thursday, with one saying the state of the country was "an absolute disgrace" following her six weeks in office.

Truss was brought down by an economic program that shattered investor confidence and enraged much of her party.

Truss accepted that she had lost the faith of her party and said she would step down next week, becoming the shortest-serving prime minister in British history.

"Well, it’s an absolute disgrace, you know it makes you wonder whether you should vote Conservative again, but I’m delighted to hear that she’s finally gone,” said Fran Binns, 76, in the market town of Knutsford in northwest England.

"Well, it’s an absolute disgrace, you know it makes you wonder whether you should vote Conservative again, but I’m delighted to hear that she’s finally gone.”

Fran Binns

Dominic Carroll told Reuters that Truss had made "so many mistakes and so many U-turns," adding a strong politician should take the country by the "scruff of the neck" and sort it out.

Britain's Conservative Party leadership candidate Liz Truss speaks during a hustings event, part of the Conservative party leadership campaign, in Cheltenham, Britain, August 11, 2022. (credit: REUTERS/TOBY MELVILLE)

“It just had to be done because things were in such a state of chaos, and she obviously had no confidence," said a man who gave his name as Colin.

"The Conservatives had no confidence in her and it was developing into a bit of a shambles, so she had to do something."

There is no clear replacment

Most of the people interviewed in Knutsford, part of the traditionally Conservative constituency of Tatton, were at a loss as to who was fit to replace her. Tatton has delivered a conservative MP in all but one election since 1983.

Connie said she had mixed feelings about Truss's departure.

“I think she’s been hounded out, and she’s not the first one. I think that’s what the media do really ... but you know there’s a lot going wrong so, yeah."

Asked who should replace Truss, 75-year-old Jenny Norton replied: "No one I think I’ve got that much confidence in.”

In London, traditionally a Labour stronghold, several people called for a general election to restore stability.

"We need a general election because it's just a cycle of rubbish and they replace rubbish with more rubbish," Craig Randall, 35, told Reuters.

"We need a general election because it's just a cycle of rubbish and they replace rubbish with more rubbish."

Craig Randall

"None of them are fit for the job so yeah, I think we need a general election. We can't just keep having different leaders who ... they're ruining the country at the end of the day."

A woman who gave her name as Jill said people had the right to have a say, and were "very, very fed up."

"In this country, we have an unelected head of state, now we have an unelected government. That's not democracy is it?"

Former British Prime Minister Boris Johnson is flying back to the UK this weekend, a journalist at the Daily Telegraph newspaper reported on Thursday.

The Times newspaper had reported that Johnson, who is on holiday abroad, was expected to stand in the race to replace Liz Truss who resigned as Prime Minister earlier on Thursday.

Following are reactions from senior figures around the world to the resignation of Liz Truss, who said on Thursday that she was resigning as Britain's prime minister just six weeks after she was appointed.

U.S PRESIDENT JOE BIDEN

"The United States and the United Kingdom are strong allies and enduring friends — and that fact will never change. I thank Prime Minister Liz Truss for her partnership on a range of issues including holding Russia accountable for its war against Ukraine.

"We will continue our close cooperation with the UK government as we work together to meet the global challenges our nations face."

WHITE HOUSE CHIEF OF STAFF RON KLAIN

"We're going to work very, very closely with whomever succeeds Prime Minister Truss."

FRENCH PRESIDENT EMMANUEL MACRON

"We want, above all else, stability... On a personal level, I am always sad to see a colleague go."

French President Emmanuel Macron waits for the arrival of Prime Minister Yair Lapid at the Elysee Palace in Paris, France, July 5, 2022. (credit: REUTERS/Johanna Geron)

IRISH PRIME MINISTER MICHEAL MARTIN

"I think stability is very important and we would like to see the UK system within its capacity in a position to have a successor selected as quickly as possible ... during these times when a major war is underway on the continent in Europe."

DUTCH PRIME MINISTER MARK RUTTE

"I had a good contact with her (...) so I'm annoyed for her personally (...) We agreed on a whole range of views and I'm looking forward to work with who will be my next colleague. It will be the fifth one, I believe."

RUSSIAN FOREIGN MINISTRY SPOKESWOMAN MARIA ZAKHAROVA

"Britain has never known such a disgrace of a prime minister."

LONDON MAYOR SADIQ KHAN, SPEAKING IN BUENOS AIRES

"This morning I heard the news that my political opponent, the conservative Prime Minister of the UK, has resigned. Had I known that organizing the summit could lead to the resignation of the UK PM I'd have organized it sooner."

Former finance minister Rishi Sunak is "certain to stand" in the contest to succeed Prime Minister Liz Truss, a reporter at the Telegraph newspaper said on Thursday citing sources.

Former British prime minister Boris Johnson is expected to stand in the Conservative Party leadership contest to replace Liz Truss, who said earlier on Thursday she would resign, the Times reported.

"He's taking soundings but is said to believe it is a matter of national interest," Times Political Editor Steven Swinford said on Twitter.

Russia's foreign ministry on Thursday welcomed the departure of British Prime Minister Liz Truss, saying she was a disgrace of a leader who would be remembered for her "catastrophic illiteracy."

"Britain has never known such a disgrace of a prime minister," Foreign Ministry spokeswoman Maria Zakharova said in a social media post.

Truss has been the target of withering comments from Moscow since she visited in February as part of a fruitless drive by Western politicians to avert a Russian invasion of Ukraine.

Claiming illiteracy is no small piece

The claim of illiteracy appears to refer to that trip, when Truss was British foreign minister. In a meeting with Russia's veteran foreign minister, Sergei Lavrov, she appeared to confuse two regions of Russia with Ukraine, triggering widespread mockery in Russian media.

Russian officials took a dim view of Truss's premiership from the outset and have reveled in her numerous gaffes. Upon her appointment in September, Lavrov said Truss did not know how to compromise and questioned how the British leader could say she did not know whether French President Emmanuel Macron was a "friend or foe."

RUSSIAN PRESIDENT Vladimir Putin arrives for the Conference on Interaction and Confidence Building Measures in Asia (CICA), in Astana, Kazakhstan, yesterday. (credit: SPUTNIK/REUTERS)

Zakharova also on Thursday mocked Truss' high-profile photo shoot in Estonia last year, where she donned a flak jacket and helmet to ride in a tank during a visit to British troops stationed in the Baltic country.

Relations between Moscow and London had sunk to their lowest level in decades even before Russia invaded Ukraine, on the back of the poisoning of former Russian spy Sergei Skripal in the British city of Salisbury in 2018.

The contest to replace Liz Truss as prime minister and Conservative Party leader should be concluded by Oct. 28, Graham Brady, the chair of the Conservative Party's 1922 Committee said on Thursday.

The United States will have a close relationship with whomever replaces outgoing British Prime Minister Liz Truss after she announced her resignation on Thursday, White House Chief of Staff Ron Klain said.

Britain's Liz Truss resigned on Thursday, saying she would remain as Prime Minister until a successor had been chosen, which she said would happen within a week.

Following are latest events, comments and context:

POLITICS

* Truss said the Conservative party she heads would hold a leadership election to be completed within a week.

* Truss's resignation came after she lost her interior minister, Suella Braverman, less than a week after she fired her finance minister. Braverman cited "serious concerns" about the government.

MARKETS

* Sterling pared gains after Truss resigned. Britain's mid caps .FT jumped as much as 1%.

* Investors reined in bets of a full percentage-point interest rate increase by the Bank of England next month, after a top official saidit remained to be seen whether rates rise as sharply as the market has been expecting.

* The pound fell to one-week low vs euro and GBP/USD traded above 1.1200 with 1.1192-1.1240 in the Asian session range. 1.1186 was Wednesday's three-day low.

Britain's King Charles III during his first audience with Prime Minister Liz Truss at Buckingham Palace, following the death of Queen Elizabeth II on Thursday, in London, Britain September 9, 2022. (credit: YUI MOK/POOL VIA REUTERS)

* Worries over a deepening political crisis in the UK and rising interest rates globally kept London's main stock indexes under pressure, with shares of homebuilders edging toward a multi-year low hit recently.

* The biggest jump in food prices since 1980 pushed British inflation to 10.1 percent last month, matching a 40-year high hit in July in a new blow for households grappling with a cost-of-living crisis.

* British banks are bracing for a potential tax hit after a source said finance minister Jeremy Hunt was reviewing the current surcharge on bank profits.

WHAT'S BEHIND THE CRISIS?

* The Bank of England was forced into emergency bond-buying to stem a sharp sell-off in Britain's 2.1 trillion pound ($2.3 trillion) government bond market that threatened to wreak havoc in the pension industry and increase recession risks.

* The sell-off began after then-new finance minister Kwasi Kwarteng's tax-cut announcement on Sept. 23.

* After firing Kwarteng, a close friend and ally, on Friday, Truss announced that corporation tax would rise to 25% as intended by her predecessor Boris Johnson, reversing her earlier plan to freeze it at 19%. Kwarteng's cut to the highest rate of income tax had already been reversed.

* His replacement Hunt on Monday then scrapped "nearly all" of Truss and Kwarteng's economic plan and scaled back her vast energy support scheme, announced in September, in a historic U-turn to try restore investor confidence.

* The BoE interventions have highlighted a growing segment of Britain's pensions sector - liability-driven investment.

* LDI helps pension funds use derivatives to "match" assets and liabilities to avert risks of shortfalls in payouts, but the soaring interest rates have triggered emergency collateral calls for those funds to cover the derivatives.