London Daily

Focus on the big picture.
Thursday, Sep 17, 2026

Liz Truss resignation sparks recovery for pound, shares and government borrowing costs

Liz Truss resignation sparks recovery for pound, shares and government borrowing costs

The markets are likely to reflect jitters in the coming days on whether the new occupant of Number 10 will want to change direction again following the mini-budget U-turns of the past few weeks.

There has been a positive market reaction to the resignation of Liz Truss after just 44 days in office, following the fierce backlash against her economic plan and humiliating climbdown.

News that the prime minister was to make a Downing Street statement sparked a rally for sterling versus the dollar - leaving the UK currency almost a cent up on the day at one stage at almost $1.13 before settling at $1.12 in the late afternoon.

It originally rose half a cent following confirmation she was to leave office.

Shares also moved upwards initially on the FTSE 100 before closing higher than opening trading while government borrowing costs fell.

The 30-year gilt yield fell back to 3.8% - continuing its recovery since the post mini-budget highs of around 5% that sparked Bank of England intervention. As the afternoon progressed the figure rose to the 3.9% of Thursday morning.

It took a series of U-turns on the tax-cutting growth plan, demanded by new Chancellor Jeremy Hunt after the sacking of Kwasi Kwarteng, for market damage to ease.

The reaction to the departure of Ms Truss signalled a measure of relief that the architect of the Growth Plan - outlined during her campaign for the Tory leadership - was on her way out.


Nevertheless, there was also a measure of uncertainty at play for values, given the complete lack of vision on who would replace the prime minister in Number 10.

It will not be Mr Hunt, who has ruled himself out, leaving him free to continue preparations for the Halloween statement that is to set out the government's new medium-term fiscal plan.

There will be some jitters over whether its direction is likely to change - or even be delayed to allow the new Tory leader to get their feet under the desk.

There has been no indication that the statement will be delayed as it is expected that the successor will be in place before 31 October.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said of the market moves: "Sterling is highly sensitive to economic policy uncertainty and even though the ship Britannia will still be left largely rudderless, with a successor still to be chosen, as far as investors are concerned, the future is marginally brighter without her in charge.

"Ten-year gilt yields eased further today, as speculation soared about her resignation, a sign of tacit approval from the bond vigilantes who punished the UK by deserting its government's debt as worries raced up about fiscal responsibility."

Business appealed for a more stable period ahead.

Tony Danker, the director-general of the CBI, said: "The politics of recent weeks have undermined the confidence of people, businesses, markets and global investors in Britain.

"That must now come to an end if we are to avoid yet more harm to households and firms.

"Stability is key. The next prime minister will need to act to restore confidence from day one.

"They will need to deliver a credible fiscal plan for the medium term as soon as possible, and a plan for the long-term growth of our economy."

Pantheon Macroeconomics, the economic research consultancy, said in its October UK economic chartbook: "The economy is heading for a prolonged recession … the MPC [the interest rate setting Monetary Policy Committee] will hike Bank Rate further, but will relent at about 4%."

Newsletter

Related Articles

0:00
0:00
Close
Asthma Charity Warns of Major Gaps in Childhood Diagnostic Testing Across England
TUC Chief Paul Nowak Appointed to Bank of England Court
Bristol Opens £35 Million Deep-Tech Innovation Hub at Temple Quarter
Oxfordshire Village Votes Symbolically to Leave UK Over Asylum Housing Plan
Andy Burnham Deepens UK Defense and AI Cooperation With NATO and Canada
UK Government Announces Neonatal Safety Reforms After Thirlwall Inquiry
Bank of England Weighs Rate Decision as UK Inflation Rises to 3.1%
UK Health Unions Warn of Staffing Pressures as Public and Private Pay Growth Diverges
Rockstar Games Faces Tribunal Claims From 23 Former Grand Theft Auto VI Developers
UK Treasury Faces Tighter Budget Constraints as Borrowing Costs and Pension Spending Rise
Prime Minister Andy Burnham Sets Out Ten-Year Plan for Greater Public Oversight of Utilities
UK Economy Grows 0.4% in July as Services and Technology Activity Strengthen
Scotland, Wales and Northern Ireland Leaders Coordinate Push for UK Constitutional Change
Police Tighten Public-Order Measures After Anti-Immigration Protests in Dover and Portsmouth
UK Ministers Pressed for Answers After US Diplomat Accused of Child Abuse Images Leaves Britain
Jaguar Land Rover Pursues NATO Defense Contracts for Defender Vehicles
British Service Member Dies in Road Accident While Deployed in Ukraine
George Osborne Calls for Britain to Rejoin EU Customs Union
Anthropic Chief Dario Amodei Urges Faster UK Action on Advanced AI Risks
UK State Pension Set for 3.9% Rise Under Triple Lock
UK Labour Market Cools as Payrolled Employment Continues to Decline
Reform UK’s £72 Million in Donations Faces Scrutiny Under Proposed Retrospective Funding Rules
UK Doctors Warn Expanded Pharmacy First Scheme Could Put Patients at Risk
British Airlines Cut Short-Haul Capacity as Jet Fuel Costs Rise
UK News Publishers Forecast 40% Search Traffic Drop as AI Overviews Expand
Axel Springer Wins Approval for £575 Million Daily Telegraph Acquisition
London Mayor Sadiq Khan Opposes Heathrow Third Runway Over Climate Targets
Scotland, Wales and Northern Ireland Leaders Hold Summit Seeking Greater Autonomy
UK Energy Price Cap Set to Rise to £1,723 in October
UK Treasury Warns Middle East Conflict Is Threatening Economic Growth
Labour Moves to Retrospectively Cap Overseas Political Donations After Reform UK Funding Surge
HMRC Warns Nearly Seven Million Adults Are Unclear About State Pension Entitlements
UK Parliament Passes Sovereign Grant Reform Before Conference Recess
British Rail Passengers Gain Automatic Right to Switch Operators During Disruptions
Burnham Hosts Downing Street Business Summit as UK Fiscal Pressure Builds
Labour Government Moves to Challenge £72 Million in Reform UK Crypto Donations
UK Advertising Industry Warns Wider Junk Food Rules Could Put £1 Billion in Media Spending at Risk
Cornwall Opens Devolution Talks With UK Government Over Transport and Local Services
UK Parliament Considers Sovereign Grant Reform Setting Royal Funding at £99.9 Million
Trades Union Congress Calls for Income-Based Energy Tariff Funded by Higher Bank Levy
UK Prime Minister Rejects Second Scottish Independence Referendum
House of Lords Begins Scrutiny of Bill to Lower UK Voting Age to 16
Anthropic Says Claude Was Exploited in Weapons-Related and State-Linked Cyber Activity
Institute of Directors Urges UK Government to Avoid Business Tax Increases in Autumn Budget
Rising Gilt Yields Cut UK Fiscal Headroom to About £13 Billion Ahead of Budget
UK Economy Grows 0.4% in July as Services and Technology Activity Strengthen
UK Government Promises Clearer Student Loan Guidance After Repayment Backlash
Charities Warn Unpaid Carers May Die Before Receiving Government Compensation
Dover Unrest Prompts Review of UK Counter-Extremism Strategy
Celtic Summit Leaders Reassert Right to Pursue Independence From UK
×