LONDON—U.K. Foreign Secretary Liz Truss won the race to lead the ruling Conservative Party and become Britain’s next prime minister, taking the helm of a nation heading into an economic storm.
Ms. Truss, 47, will formally replace Boris Johnson as prime minister on Tuesday. In the leadership race, she touted herself as a low-tax libertarian who will shrink the British state and revitalize a moribund economy, much like the U.K.’s first female prime minister, Margaret Thatcher, did in the 1980.
“I campaigned as a Conservative and I will govern as a Conservative,” she said after the victory.
The new prime minister faces a daunting array of challenges. The U.K. economy is spiraling toward recession as inflation ramps up. Ms. Truss has only a narrow base of loyalists within the Conservative Party and polls show limited support for her across the country at-large.
“It is going to be a very difficult ride for her,” says John Kampfner, a director at the Chatham House think tank. “She will need extraordinary amounts of resilience.”
Ms. Truss defeated her rival, former Chancellor of the Exchequer Rishi Sunak, by 57% to 43%. Some 172,000 Conservative Party members were eligible to vote in the contest, which was triggered by Mr. Johnson’s resignation as party leader in July amid a revolt by cabinet members and top officials following a series of scandals.
During the race, Ms. Truss and Mr. Sunak differed mostly in their approach to taxes. Casting herself as a reformer, Ms. Truss vowed to cut taxes immediately to boost growth, leaving Mr. Sunak in the role of cautious technocrat, pledging to first focus on taming the highest inflation rate among Western economies.
While Mr. Sunak began the contest as the favorite, Ms. Truss quickly overtook him as party members went for her more optimistic vision of growth, versus her rival’s focus on sound finances.
“We do not have to resign our great country to managed decline,” she told supporters recently. “I am ready to be bold and will do whatever it takes to unleash our full potential.”
First, Ms. Truss will be under pressure to detail how the government will help households and businesses cope in the coming months. Crippling increases in energy prices, spurred by the war in Ukraine, are feeding the highest inflation in decades and threaten to tilt the economy into a long-lasting recession. Inflation is set to rise above its current rate of 10% by the end of the year and real wages are falling at their fastest pace in 20 years. Ms. Truss said that she would announce a package to help struggling households in the coming days. Analysts are expecting large-scale state intervention, including possibly capping the price of wholesale gas prices.
Longer term, Ms. Truss is proposing to junk regulations put in place when the U.K. was part of the European Union and strengthen the Bank of England’s focus on fighting inflation.
An array of obstacles stand before her. During a period of deep economic pain, the new prime minister will have to corral a party that has developed a taste for revolt. Conservative lawmakers have ousted two of their own leaders in the past three years amid heated internal debate over the direction of the country following its departure from the EU. Meanwhile, the Conservatives trail the opposition Labour Party by 10 percentage points in the polls.
Ms. Truss, who has served in government since 2014, was backed by only a third of Conservative lawmakers in the first rounds of voting, so she comes to power without a large support base in the House of Commons.
Meanwhile, she inherits a very broad voter-base that was stitched together during a Conservative election victory in 2019 by a desire for Brexit. The party’s voters stretch from postindustrial working-class districts in northern England to rich enclaves of London. With Britain now out of the EU, it isn’t clear what Ms. Truss can sell this disparate base to keep them united.
Britain’s Conservative Party has been in power since 2010 and will at the next election seek a record fifth consecutive term in office.
Already, some analysts are predicting Ms. Truss’s quick demise. She will “likely to end up holding the shortest tenure in office of any prime minister over the past half-century before elections in 2024 prompt a change in government,” says Elliot Hentov, head of macro research at asset manager State Street Global Advisors.
Ms. Truss will travel to Scotland on Tuesday to meet with Queen Elizabeth II, who will formally appoint her as prime minister. She is expected to announce a new cabinet in coming days, as well as steps to help cushion the shock from skyrocketing energy prices. On Monday she pledged to “deliver, deliver, deliver.”
In October, British households will see their energy bills increase 80% to about £3,500 a year on average, equivalent to roughly $4,000, when a government price cap is increased. A protest movement calling for people to refuse to pay these bills is gaining traction. Several strikes are being planned for later in September, as wage growth lags behind inflation.
Until Mr. Johnson’s sudden resignation this summer, few imagined that Ms. Truss would one day be leading the nation. Until recently she was mostly known as a long-serving government minister with stilted presentational skills, colorful Instagram posts where she dressed like her political hero Margaret Thatcher and loyalty to her leaders.
People who have worked with Ms. Truss describe her as a steely operator, a fan of free markets and individual liberty. The daughter of left-wing parents, she was once a member of the Liberal Democrat Party and an antimonarchist. After attending the University of Oxford, she discovered conservatism and performed an ideological U-turn.
Since entering Parliament she has sided with the libertarian wing of the Conservatives. She co-wrote a book called “Britannia Unchained,” which among other things claimed British workers were the idlest in the world. She says a co-author wrote those particular words.
“I’ve never liked being told what to do. And I don’t like to see other people being told what to do,” she said in a speech in 2018. She named one of her daughters Liberty.
In 2016, Ms. Truss sided with then-Prime Minister David Cameron in voting to keep the U.K. in the EU. When Britons voted to quit that union, she became a vocal advocate for a total break with the trading bloc.
During a subsequent stint as Britain’s secretary of state for international trade, she toured the world signing trade deals similar to ones Britain had while part of the EU. During cabinet meetings she backed free trade, saying that Britons should benefit from cheaper food imports even if it put some local farmers out of business, according to an official present. A spokeswoman for Ms. Truss declined to comment.
Under Mr. Johnson, Ms. Truss was promoted to foreign secretary. She was instrumental in leading the hard-line response from the U.K. against Russia after its re-invasion of Ukraine. She visited Moscow just before the war to warn against such an attack. Ms. Truss pushed through tough sanctions to punish a range of oligarchs and Russian business people. She also used her position to try to rally the West to take a harder line against despotic countries.
“Let’s be honest: In recent years, the free world has taken its eye off the ball,” she said in a speech last year. “Societies turned inwards. Rather than engaging with the big ideas shaping the world, failed ideas ran rife, like the postmodern philosophy that there is no objective truth.”
The foreign-secretary job also gave her a platform to act tough against the EU. Under her watch, the government introduced a law that, if passed by Parliament, allows ministers to unilaterally alter a Brexit divorce treaty signed with the bloc. That could spark a trade war, resulting in more frictions for business trading with the EU. The idea that Britain could rip up an international treaty has caused consternation in some quarters of her party.
Overall, the Conservative Party’s decision to pick a reformer rather than a steady manager during the time of crisis is a bold bet, says Mr. Kampfner. “Can you be the disrupter in a world and in a country that is already deeply disrupted?”