The shortest term prime minister, 45 days to send the queen away, buried pounds
Time： 2023-03-09 16:33
What changes have taken place in Britain during the 45 days in office
"I will take bold action to let all of us through these difficult times, promote our economic growth, and unleash the potential of Britain" - -- Truss
It is indeed bold, and the British people are also more difficult. On October 19, the National Bureau of Statistics announced that the CPI rose 10.1% year-on-year in September, and the GDP is expected to shrink by about 2.1%. The exchange rate of the pound against the dollar fell to a record low of 1.035. The UK evaporated US $500 billion from the UK bond market in a month, and the Conservative Party collapsed. It took 45 days for Truss to step down.
Two major initiatives in office
Truss wasted 105 billion pounds on two major initiatives: tax reduction policy, 45 billion pounds; Subsidized energy, £ 60 billion. Although she was well aware of the principle of "taking it from the civilian and the people", she forgot that Britain itself was also short of money, and could not print money and then borrow on a large scale.
Large-scale debt raising led to capital outflows, the first to be hit by the UK's 3 trillion pension. Because the market level fell below the risk line, leading to a margin call, investors need to supplement margin or reduce their positions. The pension base is huge, and the institution can only sell assets to reduce its position without so much cash. However, it is the largest institution in the market, and its continuous sales will make the asset price continue to fall, and it will be chased by the risk line and enter a dead cycle.
On the other hand, investment institutions have bought a large part of the pension funds into stable treasury bond, and turned treasury bond into a speculation type of transaction through leverage, obtaining stable interest and margin profit at the same time. When the tax reduction triggered a bond sell-off, pension institutions could not run away from small institutions and could only sell the stocks, real estate funds and other assets with good liquidity in their hands, thus triggering a global financial crisis that lasted for a month.
Although Truss is tough, he is not stubborn. After realizing the seriousness of the matter, he discussed with the central bank to rescue the market. The central bank stopped shrinking its watch and spent 10 billion pounds a day to buy bonds, but the window period was too short for the market to buy. Truss could only sell his teammates to appoint a new finance minister and publicly apologize and said he would stick to it.
Dramatically, Truss claimed to be a fighter on the 19th, and returned to the field on the 20th. Although the term of office is only 45 days, it is a rare "elder of the two dynasties". This comedy full of British humor is the end, but the direction of the UK and even the global economy is still uncertain.