By Geoffrey Smith
Investing.com -- Liz Truss is to succeed Boris Johnson as the U.K.'s new Prime Minister, after winning a run-off for the leadership of the ruling Conservative Party.
Truss, currently Foreign Secretary, defeated her rival Rishi Sunak by a margin of 81,326 to 60,399, after fighting a campaign based on a promise of tax cuts and increased spending on defense. She's also mooted ending the Bank of England's independence.
Concerns about how those pledges would be financed have helped drive the pound and U.K. government bond prices down sharply over the course of the last month. The pound fell below $1.15 for the first time in over two years in early trading on Monday, hurt by a fresh surge in the price of natural gas amid the ongoing economic war between Russia and Ukraine. It's now only a whisker above its lowest level since 1985.
Likewise, the 10-year U.K. government bond yield rose another 8 basis points on Monday to trade above 3% for the first time since 2014.
In a short acceptance speech, Truss repeated her pledge to lower taxes and also pledged to "deliver" on the energy crisis facing the country, both with regard to the short-term issue of soaring energy bills and with the longer term issue of supply. She had earlier promised a package of energy-related measures within a week of being confirmed in office. Her speech appeared to lend weight to unconfirmed reports that Truss may announce a freeze on household bills, meaning that the 80% rise in average prices outlined by the regulator Ofgem, last month, would not take place.
Her previous comments have indicated she intends to incentivize new drilling for oil and gas in the largely depleted North Sea basin, while taking a more skeptical approach to rolling out renewables (singling out the use of agricultural land for solar farms in particularly disapproving terms).