By Andrew MacAskill
LONDON (Reuters) - British foreign minister Liz Truss was elected leader of the governing Conservative Party and the country's new prime minister on Monday. She faces the task of navigating the economy through the worst cost of living crisis in decades.
Truss must tackle industrial disputes, surging inflation and foreign policy challenges that include implementing Brexit and the war in Ukraine.
Below are the main problems facing her:
COST OF LIVING CRISIS
By far the biggest challenge will be how to help people cope with the highest inflation in four decades, surging energy prices and warnings of a prolonged recession.
An annual average household energy bill of 1,277 pounds last year will leap to 3,549 pounds from October and prices are expected to go higher next year.
Truss said last month that she favoured tax cuts over "handouts" to help people with the cost-of-living crisis. But she is now expected to offer wider support to households.
Truss has also promised an emergency budget soon after she takes office, with tax cuts. That would include a reversal of Sunak’s 1.25% point national insurance rise.
However, this would mainly help workers on higher salaries.
STRIKES
The new prime minister will immediately be confronted by the anger of union leaders. Workers ranging from rail workers, lawyers, healthcare and university staff are striking or planning to as inflation fuels demands for higher pay.
To combat this unrest, Truss has said she would bring in "tough and decisive action" to limit strike action by unions.
BREXIT
Truss will have to grapple with the practicalities of leaving the European Union while delivering on a promise to rewrite the deal agreed by her predecessor.As foreign secretary, she pushed through plans to enact the Northern Ireland protocol bill, which would rip up part of Johnson’s Brexit deal.
Britain has long complained that negotiations with the EU have failed to come to fruition and the legislation is seen as an insurance policy.
However, unless the new prime minister backs away from unilateral action, the EU may retaliate by cutting British scientists out of Horizon, the world’s largest research programme. The dispute could eventually lead to a trade war.
Truss has also promised to scrap all remaining European Union laws that still apply in Britain by 2023.
ASYLUM SEEKERS
Britain's government has for years struggled to reduce the number of migrants crossing to Britain in small boats.
Government officials have said that up to 60,000 people could arrive by small boat this year, double last year's record.To deter the flow of migrants, the government in April announced plans to send people arriving on its shores to Rwanda where they will have their asylum applications processed. The first planned deportation flight in June was blocked by a last-minute injunction from the European Court of Human Rights.Truss has pledged to extend the policy by sending asylum seekers to other countries. She is determined to make the policy work, saying Britain would legislate to leave the European Court of Human Rights if it continues to block the policy.
If that happened, Britain would join Belarus and Russia as the only countries in Europe not being part of the convention.
UKRAINE
Russian President Vladimir Putin is counting on a winter of economic pain to weaken the resolve against his war in Ukraine.
Britain has been one of Ukraine's biggest suppliers of military equipment, sending almost 7,000 anti-tank weapons, hundreds of missiles and armoured fighting vehicles. It is also training Ukrainian soldiers.Truss has promised to continue Britain’s military and economic support to Ukraine. The challenge will be what happens if international support for Ukraine begins to weaken.She said during the leadership contest Ukraine will "have no greater ally" than Britain if she is made prime minister.