Can Liz Truss survive her premiership?

And we're off

 

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Will King Charles take over

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?

 

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The one thing that everyone was complaining about in regards to Liz Truss was the economic dip they claim was down to the "Mini-budget", however what they didn't seem to take into consideration was that the £20 and £50 notes were being withdrawn at the same time. This mean the banks for that particular week would have been sitting on the old notes in countries outside of the UK and exchanging them in bulk on the last day. Most people outside of the UK likely converted their notes to whatever local currency they were using due to the global economic downturn, which meant the pound took a direct hit. (This could likely be proven through the Bank of England statistics as to where the notes were recovered from)

 

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Ah,so.
It was a mistake to ditch her on that case
Come back Liz,all is forgiven

 

The value of the pound was never the issue.

The problem was the yield on gilts, which shot up due to a "moron premium" being applied by the bond markets to economies where morons are in charge. This had the effect of increasing everyone's mortgage repayments, making it more expensive for business to take out loans in order to invest, nearly crashing the pension funds, and making the cost for country to service its debts shoot up. In other words, damaging the already fragile economy in multiple ways.

 

Well, she's still alive, so she survived her Premiership quite well in that regard.

But her Premiership certainly didn't survive. She resigned today, October 20, 2022.

 

She has resigned and left behind a disordered conservative party with no solutions and direction.

 

I'm not sure that's entirely correct. The value of most currencies have fallen against the dollar because that currency is particularly strong at the moment, so in that regard the GBP was not all that out of step with the EURO, for example. But it dipped significantly further due to the cockup by Truss. That puts prices of imports up, which stokes inflation etc. And that is an issue. It's an indicator of investor sentiment. When a currency drops, external investment in the country drops. Which is not helpful.

The increase on gilts has so far had fairly minimal impact on existing mortgages. What it does is have an impact on new/future mortgage deals, not existing ones. Most people (some 3/4 of all mortgages) in the UK are on fixed-rate mortgages, so these are, as the name suggests, fixed. Those on variable rates will be pegged in some manner to the base rate set by the Bank of England. Now, gilt yields will have an impact on the rate the bank sets at their next meeting, but it is only one factor, along with inflation, growth etc. And a significant hike is expected at their next meeting - I'd think at least 1%, possibly more. 2% wouldn't actually surprise me. It is that base rate that most significantly affects what mortgage lenders set their variable rates at, and the fact that 2-year fixed rates are now c.6.5% suggests they think the variable rate will average somewhere between 6-7% over those 2 years. Which would suggest a bank base rate of c.5%. Currently it's at 2.25%
So, yeah, gilt rate might affect the variable rate a bank charges for mortgages, but it would be minimal, with any big change coming when the BoE set the base rate, although they do take gilt rates into account in the setting of the base rate.

 

Fun, isn't it.

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Jonathan Pie is always worth a watch:

 

No, but some of the more competent members don't have the desire to be PM, especially if, as I suspect, they feel they will certainly lose the next election. So are they bereft of talent willing to be a temporary PM? Beyond maybe one or two who might contest the race, yes, they are.
However, that leads to why some would like to see BoJo back: they feel he will be their best chance of having a hope at the next election. Despite all his bluster, antics, lying, dishonesty, lack of integrity etc, they feel he has the charisma to help the Conservative party overcome the opposition, who are somewhat lacking in that department (Starmer, Labour's leader, is decidedly lacking, and the Lib Dem leader has been fairly absent throughout the whole matter).
There are some, though, that think bringing him back will result in the party splitting rather than uniting, such is the feeling against bringing him back among many of the MPs.

 

If he wins the Tory leadership contest will his pitch to the electorate be "Trust me I am not a Tory"?

 

He'll spew some utter guff about how he has been humbled by being asked to resign in the first place, how he has learnt his lesson, and that now is the time to crack on with delivering the benefits of Brexit, and that he is the best person for doing that! None of which is true. But since when has that made any difference.

 

Is the Westminister Tory party irredeemably split and are they just trying to pick who will win the most seats in a very near election?

 

Love his segues

 

I think it will be simpler than that. He will claim his last premiership was great, awesome, never better, everyone says so, and that he'd be honored to serve again.

 

Nah, we leave that to Trump.

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They won't vote for an early general election early, as it will likely mean most will lose their jobs. They'll struggle on for another 2 years trying to correct the problems they've caused, and hopefully (as far as they're thinking) not as many of them will lose their jobs. But if Johnson steps back in, I do see him as being divisive, although at that stage maybe they'll think the most decent thing for the country is to do their best to work with him. Who knows. They're not irredeemably split, though. They're certainly more like a collective of right-leaning groups rather than a cohesive whole, and we last saw a group split off with UKIP, who presumably are now back in the fold. I just see Johnson as being the biggest threat to that, but ironically he's possibly also their biggest asset in trying to win an election - or at least damage limitation.