London Daily

Focus on the big picture.
Monday, Mar 09, 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
Trump Declines UK Offer to Deploy Aircraft Carriers to Middle East Amid Iran Conflict
Prince Harry and Meghan Markle to Return to Australia After Seven Years for Philanthropic and Business Engagements
UK Government Signals Independence From Washington as Cooper Says Britain Does Not Agree With Trump on Every Issue
UK Experts Warn AI Chatbots Are Fueling Surge in Claims of Organised ‘Satanic’ Ritual Abuse
UK Political Parties Divided Over Strategy as Iran Conflict Reshapes Foreign Policy Debate
Britain Discloses Secret Military Repair Hubs Operating Inside Ukraine
Trump Says US No Longer Needs UK Carrier Support After Delayed Offer Amid Iran Conflict
Why Britain Has Become Involved in the US-Israel Military Campaign Against Iran
UK Gas Storage Falls to Under Two Days as Iran Conflict Jolts Global Energy Markets
UK Warned to Brace for Economic Shock as Iran War Drives Global Energy Price Surge
Starmer and Trump Hold First Call After Public Dispute Over Iran Conflict
UK Dentists Returned £1.3 Billion to Government as Shift Toward Private Care Accelerates
Expert Warns UK Must Build Emergency Food Stockpiles to Prepare for Climate Shocks or War
UK Plans Charter Flight to Evacuate British Nationals from Gulf as Regional Conflict Disrupts Air Travel
Families of Zimbabwe’s Liberation Fighters Call on Britain to Help Locate Skulls Taken During Colonial War
Iran’s Ambassador Warns Britain to ‘Be Very Careful’ Over Deeper Role in Expanding Middle East War
UK Military Leadership Defends Britain’s Defensive Role in Expanding Middle East Conflict
Four U.S. Strategic Bombers Arrive in Britain as Iran War Intensifies
Soham Murderer Ian Huntley Dies After Violent Attack in High-Security Prison
UK Lawmakers and Experts Condemn Scale of Overseas Human Remains Held in British Museums
Royal Navy Aircraft Carrier HMS Prince of Wales Placed on Standby for Potential Deployment
United Kingdom Confirms U.S. Military Using British Bases for Operations Targeting Iranian Missile Sites
Starmer Defends UK Role in Iran Conflict After Renewed Criticism from President Trump
Blue Owl Reveals £36 Million Exposure After Collapse of UK Lender Serving Wealthy Clients
UK Asylum Reform Plan Triggers Fierce Debate Over Border Control and Humanitarian Impact
US Stealth Bombers Head to UK Base as Trump Issues Stark Warning to Iran
UK Deputy Prime Minister Says Legal Case Could Exist for British Strikes on Iranian Missile Sites
Investigators Link Mysterious Parcel Fires Across Europe to Russian Intelligence Operation
Debate Intensifies Over Britain’s Legal Justification for US Military Operations Launched From UK Bases
Britain Faces Heightened Energy Price Risks as Iran-Linked Tensions Threaten Global Oil and Gas Supplies
British Counter-Terror Police Arrest Four Suspected of Spying on Jewish Community for Iran
Axel Springer Agrees $770 Million Deal to Acquire Britain’s Daily Telegraph
Iceland Supermarket Drops Trademark Challenge Against Icelandic Government in Long-Running Naming Dispute
UK Defence Secretary Visits Cyprus Following Scrutiny of Britain’s Response to Drone Attacks
Questions Grow Over Britain’s Military Readiness as Response to Iran Conflict Draws Scrutiny
UK Offers Failed Asylum Seeker Families Up to Forty Thousand Pounds to Leave Voluntarily
Saharan Dust Could Bring ‘Blood Rain’ to Parts of the UK as Weather Systems Shift
UK Deploys Additional Typhoon Fighter Jets to Qatar and Helicopters to Cyprus Amid Rising Middle East Tensions
Experts Urge Britain to Accelerate Renewable Energy Push as Global Conflicts Drive Up Costs
British Public Shows Strong Reluctance to Join Wider War in Iran
First UK Evacuation Flight Departs Middle East After Lengthy Delay
United Kingdom Imposes New Visa Requirements on Travelers from St. Lucia and Nicaragua
Iran Conflict Strains U.S.–U.K. Alliance as Trump and Starmer Clash Over Military Strategy
UK Interest Rates Could Rise Above Four Percent Again if Energy Shock Continues, Think Tank Warns
Starmer Defends Britain’s Iran Strategy as Badenoch Urges Stronger Military Support
Labour MP Says She Saw No Sign Husband Broke Law After Arrest in China Espionage Investigation
UK Jobless Rate Overtakes Italy’s for First Time in Years as Labour Market Weakens
United Kingdom Suspends Student Visas for Four Countries in Unprecedented Immigration Move
Campaigners Warn UK Student Visa Ban Could Push Migrants Toward Dangerous Channel Crossings
First U.K. Charter Flight for Stranded Nationals Set to Depart Oman Amid Middle East Crisis
×