The Race Is On to Find the U.K.’s Next Prime Minister

Liz Truss is out as Britain’s prime minister, ending a 44-day tenure punctuated by market turmoil and a humiliating U-turn on nearly all her major policies. The country’s news media had a field day with her departure, but the leadership vacuum created by her exit leaves real questions about what lies ahead for Britain’s economy and business community.

The U.K.’s already embattled economy needs government stability, fast. After initially improving on the Truss news, the pound and British government bond yields gave up their gains. Markets are already wary of what the next prime minister — who would be its third this year (potentially; more on that below) — will put forth, though it’s unlikely that person would propose anything like Truss’s highly unpopular and unfunded tax cuts.

The next leader will face a daunting set of economic problems: inflation that’s above 10 percent, rising interest rates, growing government borrowing, spiraling energy prices and a cost-of-living crisis.

Who will replace Truss? The ruling Conservative Party is planning a lightning-fast process of picking a new leader, with the goal of having someone in place within a week. Potential candidates include Rishi Sunak, the former chancellor who lost to Truss last time; Penny Mordaunt, who came in third; and former Prime Minister Boris Johnson, who resigned this summer under pressure from lawmakers.

There are other potential causes for concern. Cybersecurity experts are worried that an online component of the selection process could be vulnerable to hacking. And some political commentators worry that picking yet another prime minister without a general election would result in a leader without a true political mandate.

Businesses have had enough of the chaos. “We don’t need more Cirque du Soleil,” said the chief of BusinessLDN, a trade group. What the corporate community is now hoping for, a senior executive at a big multinational told DealBook, is stability and moderation.

Whoever becomes prime minister is unlikely to go beyond the cautious approach of tax increases and spending cuts that Jeremy Hunt, who has been chancellor of the Exchequer for a week, has promised. Going beyond that risks inviting another backlash from the markets, this person predicted: “It’ll be about getting the economy under control and getting spending down.”

An aside: The Economist’s latest lead editorial, comparing Britain’s economic straits to Italy’s, generated no small amount of derision — particularly from Italians — over both the facts and the cover art.

Instacart delays its I.P.O. plans. Worries about jittery markets prompted the food delivery company to push back its timeline for going public, The Times reports. The company had planned to publicly disclose its financial data, a key step to a public offering, this week.

Courts block challenges to President Biden’s student debt relief plans. A federal judge in Missouri rejected a lawsuit by six Republican-led states, while Justice Amy Coney Barrett of the Supreme Court turned back one by a Wisconsin taxpayers’ association. Both suits were likely dismissed on technical grounds, rather than on the merits of their arguments; other lawsuits are still pending.

Texas sues Google over facial and voice recognition. The state’s attorney general, Ken Paxton, accused the tech giant of violating a state consumer protection law requiring consent before capturing biometric information. It’s the latest effort by Texas to crack down on Big Tech.

New data suggest China is continuing to lose its manufacturing edge. The country is still ceding ground to Asian rivals in the making and exporting of goods like clothing, footwear, minerals and technology, according to CNBC. Reasons include Beijing’s zero-Covid policies and U.S. tariffs pushing companies to make products outside of China.

A commodity giant warns of a global copper shortage. A senior executive at Trafigura said yesterday that inventories now stand at less than five days, well short of the traditional weeks’ worth. It’s a worrying sign, given copper’s widespread use in batteries, plumbing and more.

Twitter shares fell more than 6 percent in premarket trading on Friday as already jittery investors grappled with a new report that the Biden administration was weighing national security reviews for some of Musk’s business ventures. That could include Twitter, should his $44 billion bid for the company close as expected next week.

Bloomberg reports the White House is concerned about Musk’s recent tweets that seemed pro-Kremlin, and that he’s lined up foreign investors, including Prince Alwaleed bin Talal of Saudi Arabia, Qatar’s sovereign wealth fund and Binance, a crypto exchange founded by the Canadian-Chinese businessman Changpeng Zhao. The terms of Musk’s deal for Twitter are strict — he cannot have an equity investor that may require government approval.

Also weighing on the company is a Washington Post report that Musk plans to slash Twitter’s work force by nearly 75 percent, from 7,500 workers to a bit over 2,000.

Such cuts would be more drastic than Musk had outlined. His original pitch to investors in the spring included shedding hundreds of workers, but bulking up on engineers. Since then the financial markets have tumbled — and Musk is likely now in a race to cut costs as he faces huge interest payments on the $12.5 billion in loans he plans to take out. The big question: Where would Musk make cuts? Marketing? Sales? Content moderation?

Musk has been racing to line up equity, CNBC reports, as a number of big institutional investors have passed. According to The Post, those include T. Rowe Price, TPG and Warburg Pincus. In a victory for Musk, Ken Griffin of Citadel has reportedly pledged $20 million for the deal. (A spokesman for Citadel declined to comment to DealBook.)

Snap reported on Thursday that its sales rose 6 percent in the third quarter — its slowest pace of growth since going public in 2017 — and net losses soared 400 percent to $360 million. Those disappointing results sent shares of Snapchat’s parent company tumbling 27 percent.

The results spooked more than just Snap’s investors. Shares of Pinterest, Facebook’s owner Meta and Google’s owner Alphabet were down as well. Snap is the first of the advertising-reliant social media companies to report their earnings, so investors and analysts often use Snap as a sign of what’s to come for the rest of the group.

But Snap faces deeper challenges than some of its peers. Its revenue growth began slowing a year ago, long before investors were worried about an economic slowdown. And Snap has been hurt more than others by Apple’s change in its privacy controls. Nonetheless, Snap’s earnings have only heightened investors’ fears. Next up: Alphabet reports on Tuesday, and Meta follows a day later.

Bruce Usher’s specialty in environmental, social and governance investing was considered niche when he began focusing on it about 20 years ago. His classes at Columbia Business School’s center for social enterprise now typically have a wait list. The author of a new book, “Investing in the Era of Climate Change,” Usher spoke with DealBook about the rise of climate finance, and what everyone is getting wrong in the E.S.G. wars. The interview has been edited and condensed.

What makes this a defining E.S.G. moment?

When I first started, there was practically nothing to invest in and no scale. We didn’t have solutions. Everything has changed. Today, between electric vehicles and renewable energy, there is a potential to reduce emissions by half. And tools to address the other 50 percent and get to net zero are under development.

What developments excite you most?

Carbon capture is technologically feasible and has great potential. It’s advanced enough to attract early stage capital, but it’s still a highly risky bet; these are not typical investors. The most exciting area is green hydrogen. Producing hydrogen for steel, heating, transportation and other sectors is expensive because it takes a lot of energy. But renewable energy makes it cheap — this creates a third solution for decarbonization.

What do you make of the growing resistance to E.S.G.?

It’s a wonky, complex topic so the politicization is surprising to me. The opponents of E.S.G. may be good politicians, but I don’t think they are good investors. We’re going to be forced to decarbonize the economy. Climate change is about economic change, and that means there will be winners and losers. The losers are pushing back, and pushback will get more vocal as the change continues.

Is green investing effective?

What’s upside-down about the E.S.G. debate is that it’s effective from a company and investor perspective, and there is evidence — but there is little evidence to show it’s good from a planet perspective, that it impacts climate change. For a real estate company, incorporating climate risk into financial analysis and not building in a flood zone is smart. But that doesn’t reduce the risk of climate change in the big picture.

We were impressed by the New York Fed’s research earlier this week that found that Americans who now work from home have collectively regained 60 million hours of personal time. All those minutes in which we’re not stuck in morning traffic, or waiting for a tardy train or crosstown bus, truly add up.

What are you doing with this extra time? Adding a morning stroll to your daily routine? Learning a new language? Training the dog to sniff out truffles? Getting more beauty sleep?

Email us at [email protected], with your name and location, and we may highlight your responses in a future newsletter.



  • James Bullard, the president of the St. Louis Fed, spoke at a closed-door forum hosted by Citigroup for its clients. (NYT)

  • The billionaire Ron Lauder donated $1 million to the Republican State Leadership Committee, which is supporting election candidates who dispute the 2020 election results. (CNBC)

  • Germany dropped its opposition to an E.U. initiative that could cap natural gas prices. (FT)

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