Truss issues: The challenges facing the incoming prime minister

When Liz Truss arrives in No 10 on Tuesday she will immediately face a series of daunting challenges at home and abroad which will define her premiership.

Here are some of the most pressing issues in her prime ministerial in-tray.

– The economy

The Bank of England has warned that inflation is set to soar to more than 13% – other analysts have forecast that could be even higher – and the economy will be plunged into the longest recession since the financial crisis.

The Bank increased interest rates from 1.25% to 1.75% – the biggest rise for 27 years – in August, something that will add to pressure on household finances for mortgage-holders.

Gross domestic product (GDP), a measure of the size of the economy, is forecast to shrink in every three-month period from October to the start of 2024, falling by as much as 2.1%, the Bank said.

– Cost of living

The grim state of the economy is already having an impact on consumers, with prices rising, average annual energy bills going up by 80% in October from £1,971 to £3,549, and widespread anger over wages failing to keep pace with the increase in inflation.

Ms Truss campaigned on a promise to cut taxes, rather than offer handouts, but the scale of the crisis facing households and business means that a multibillion-pound support package will be required and she has not ruled out freezing the cap.

– Strikes

Industrial unrest has already hit the transport networks, criminal barristers in England and Wales are going on strike, and further action could be taken by public sector workers, including nurses, teachers and civil servants.

Ms Truss has accused “militant trade unionists” of “holding our country to ransom” and has promised a package of measures to limit strike action.

There would be a minimum level of service on vital national infrastructure, the minimum threshold for voting in favour of strike action would be raised from 40% to 50% of the workforce, and the notice period would be raised from two weeks to four weeks.

– Ukraine

The UK’s commitment to supporting Ukraine is expected to continue, but after six months of the war with Russia there is a risk that fatigue will set in among Western allies.

Ms Truss will have to play a leading role in ensuring the allies maintain military and diplomatic backing for Kyiv at a time when the conflict is pushing up gas prices and causing economic problems around Europe.

She is expected to go to Ukraine to see President Volodymyr Zelensky as one of her first overseas visits as prime minister to demonstrate the UK’s continued support.

– China

The sweeping review of foreign and defence policy carried out under Boris Johnson labelled China a “systemic competitor”, while Nato’s new strategic concept has branded Beijing a “challenge” to “our interests, security and values”.

But China’s economic clout means it will be necessary to balance trade benefits with caution over Beijing’s political motivations.

The risk of tensions between China and Taiwan boiling over will also feature highly in the new prime minister’s foreign policy concerns.

Ms Truss has described the “increasingly assertive” and “authoritarian” Xi Jinping administration as a “very deep security concern”.

– Health and social care

Covid backlogs, record waiting periods in A&E and unprecedented pressures on ambulance services are just some of the challenges in the NHS in England facing the new prime minister.

She will also have to oversee the introduction of the new social care system from October 2023, which will see nobody pay more than £86,000 for the personal care they need, while also coping with an ageing population and rising demand.

Ms Truss has promised to reallocate billions of extra funding earmarked for the health service, putting it into social care instead.

“We have people in beds in the NHS who would be better off in social care. So put that money into social care,” she said.

Improving primary care and access to GP appointments will also be a priority for Ms Truss.

– Brexit

Boris Johnson may have campaigned on the slogan “Get Brexit done” but the reality is a long way from that.

Ms Truss will risk further straining relations with Brussels by pushing ahead with the Northern Ireland Protocol Bill, allowing the UK Government to override elements of the UK-EU deal – something which is likely to provoke a fierce parliamentary battle in the Lords as well as outrage in the Berlaymont.

Ms Truss has not gone out of her way to develop an entente cordiale with France, declaring that the “jury is out” on whether President Emmanuel Macron is a “friend or foe” to the UK.

Meanwhile, the desire to take advantage of Brexit opportunities by tearing up Brussels-inspired red tape could boost business but also risks erecting further barriers with the UK’s nearest trade partner.

– Climate change

The spike in gas prices has increased attention on the way the UK’s energy is generated and meeting the commitment on net zero emissions by 2050 will also demand major changes.

Support for renewables and nuclear power are seen as ways to both improve energy security and meet commitments to reduce carbon emissions – but Tory opposition to onshore wind means that one of the cheapest forms of generation is effectively off the table.

Ms Truss wants to encourage fracking “in areas that support it” and do more to exploit North Sea gas, insisting that it was important to prioritise energy security while also pushing ahead with net zero commitments.

The new prime minister will also face the challenge of improving the energy efficiency of the UK’s housing stock and supporting the transition to electric vehicles.

– Migration

The number of people risking the dangerous crossing of the English Channel has already hit more than 23,000 and is on course to beat 2021’s record number, despite efforts to crack down on the problem.

But as well as coping with the small boats issue, Ms Truss will also have to deal with industry demands for more migrant workers to be given visas to come to the UK, with labour shortages one of the main concerns voiced by employers across a range of sectors.

– Reuniting the party 

The leadership contest has seen weeks of vicious “blue on blue” infighting involving some of the party’s biggest names.

Finding a way to end the enmity among senior figures who have been tearing strips off one another will be a challenge for Ms Truss, as will managing the bruised egos and simmering resentment among those who miss out on a seat at the Cabinet table in her new administration.

– Boris Johnson 

He may now have more time to spend writing his long-awaited Shakespeare book, but, like Banquo’s ghost, Mr Johnson has the potential to haunt his successor.

Never one to avoid the limelight, Mr Johnson has made little effort to conceal his resentment at being forced out of office and could make life very difficult for his replacement in Downing Street.

Mr Johnson has said “only time will tell” what kind of ex-prime minister he will be “but my intention and what I certainly will do is give my full and unqualified support to whoever takes over from me”.

Relations with Ms Truss will certainly be warmer than they would have been with her defeated rival for the leadership Rishi Sunak, whose resignation as chancellor helped oust Mr Johnson from No 10.