LONDON – Ms Liz Truss – a hawkish diplomat and free-market champion – formally took over Tuesday as the new British prime minister, with broad promises to immediately address the worst cost-of-living crisis to ever hit Britain in decades.

“I will deal hands-on with the energy crisis caused by (Russian President Vladimir) Putin’s war.  I will take action this week to deal with energy bills and secure energy supplies,” Ms Truss said in her first speech as prime minister in front of 10 Downing Street.

She did not elaborate, but she has been reported to be readying what looks set to be Europe’s biggest energy crisis support package.

Mr Truss is said to be planning to freeze household energy bills at current levels for this winter and next, paid for by government-backed loans to suppliers, a scheme that could cost at least £100 billion (S$162 billion).

“We shouldn’t be daunted by challenges. As strong as the storm may be, I know the British people are stronger… I am confident we can ride out this storm,” she said.

Queen Elizabeth II named Ms Truss prime minister – her 15th since Winston Churchill – at her Balmoral estate in Scotland instead of Buckingham Palace.

Singapore’s Prime Minister Lee Hsien Loong congratulated Ms Truss in a letter his office released shortly after her audience with the Queen.

“Your premiership comes at a time of significant challenges, as well as opportunities in an uncertain global environment,” said Mr Lee.

US President Joe Biden said in a Twitter post he was looking forward to "deepening the special relationship between our countries and working in close cooperation on global challenges, including support for Ukraine as it defends itself against Russian aggression".

Ms Truss, 47, replaced Mr Boris Johnson, who was forced out of office by his own Conservative Party after an often tumultuous three years at 10 Downing Street that were plagued by a spate of scandals.

Her challenges and priorities

She is taking office amid a sharply polarised political climate in Britain – the anxiety and dissatisfaction fuelled by a deep, debilitating crisis marked by soaring energy bills, a looming recession and labour unrest.

She will be tackling these challenges without a broad public mandate, as she was chosen by Conservative lawmakers in Parliament and dues-paying members of the party – less than 1 per cent of the population.

Polling by YouGov also showed that half the population said they were fairly or very disappointed to have her as prime minister.

Ms Truss also listed the economy and healthcare as her priorities.

She promised to deliver on her promises of tax cuts.

“I will get Britain working again,” she said. “I have a bold plan to grow the economy through tax cuts and reform. I will cut taxes to reward hard work and boost business-led growth and investments.”

Ms Truss said she would also make sure “that people will get doctors’ appointments and the NHS services they need”.

“We will put our health services on a firm footing,” she said.

“By delivering on the economy, on energy and on the NHS, we will put our nation on the path to long-term success,” she said.

Her plan to boost the economy through tax cuts while also potentially providing around £100 billion to cap energy costs, though, has already rattled financial markets, prompting investors to dump the pound and government bonds in recent weeks.

Ms Truss, 47, is Britain’s fourth prime minister in the six years since it voted to leave the European Union, and only its third female leader, after Mrs Margaret Thatcher and Mrs Theresa May.

'This is it, folks'

In his final speech as prime minister, Mr Johnson pledged to support Ms Truss “every step of the way”.

“This is it, folks,” he said. “What I say to my fellow Conservatives: It’s time for politics to be over, folks. It’s time for us all to get behind Liz Truss and her team and her programme.”

Mr Johnson used his departure speech to boast of his successes, including an early vaccine programme during the Covid-19 pandemic and his early support for Ukraine in its battle against Russia.

He also listed “delivering Brexit” as one of his main achievements, although polls now show that a majority of people think that leaving the EU was a mistake.

Mr Johnson’s speech was full of the bombast and jokes characteristic of a man once loved by much of the British public but also loathed by many.

He has refused to show any remorse over the scandals that brought him down, including “Partygate”, a series of boozy gatherings in Downing Street while the country was under Covid-19 lockdown, for which he was fined by police.

Post-Boris

Ms Truss was announced winner of an internal vote of Conservative party members on Monday, after a gruelling contest that began in July.

The appointments are due to be finalised before she hosts her first Cabinet meeting and faces questions in Parliament on Wednesday.

Business secretary Kwasi Kwarteng is expected to become finance minister, with attorney-general Suella Braverman moved to the tricky brief of home secretary, and Mr James Cleverly to foreign affairs.

If confirmed, it would mean no white men in any of Britain's four main ministerial posts for the first time ever.

Britain, under Conservative rule since 2010, has stumbled from crisis to crisis in recent years and there is now the prospect of a long energy emergency that could drain the savings of households and threaten the futures of smaller businesses that are still weighed down by Covid-19-era loans.

Household energy bills are due to jump by 80 per cent in October.

Government-backed loans to energy suppliers, repaid either by levies on future bills or via general taxation, are being considered, according to the source.

But the scale of the package, plus the fact that the energy crisis could run for a couple of years, has spooked investors.

The pound has fared worse against the US dollar than most other major currencies recently.

In August alone, sterling shed 4 per cent against the greenback and it marked the worst month for 20-year British government bonds since around 1978, according to records from Refinitiv and the Bank of England.

Britain’s public finances also remain weighed down by the government’s huge Covid-19 spending spree.

Public debt as a share of economic output is not far off 100 per cent, up from about 80 per cent before pandemic. REUTERS