Liz Truss announced as next UK Prime Minister

The former foreign secretary took 57% of the votes, defeating Rishi Sunak with 81,326 votes to 60,399. She said it was an "honour" to be elected and joked it was "one of the longest job interviews in history".

Trust is expected to make a short speech later this afternoon, and to finalise her choices for the Cabinet and other ministerial roles before being formally appointed by the Queen at Balmoral on Tuesday.

She is not due to announce any policy until she enters Downing Street but the cost-of-living crisis will likely be top of Truss’s agenda, amid reports she is considering a freeze on energy bills.

According to The Times, Truss will announce a vast support package on the scale of the Covid furlough scheme to deal with surging energy costs. It said that senior Tories lined up for appointments in her cabinet have been told "in no uncertain terms" not to scorn the idea that energy bills could be frozen.

The Times cited a senior government figure as saying that the scale of the package being looked at would "at least" be in the region of the £69bn cost of the furlough scheme and "could be more". "No one has come up with any option to do it for less," the source said.

Paul Dales, chief UK economist at Capital Economics, said: "The latest suggestions are that Truss would tackle the energy crisis by freezing utility prices (presumably for households and businesses) and compensate energy companies directly with government funds or loans to be repaid over many years. The implications would depend on the detail, but it could mean that CPI inflation is something like 4 percentage points lower than otherwise (so it may rise from 10.1% in July to a peak of 10.5% rather than 14.5% as we currently forecast) and that real GDP doesn’t fall as far. It’s been suggested that Truss will announce her package to counter the energy crisis within a week and that there will be a bigger fiscal event within a month (presumably announcing tax cuts).

"Such a large fiscal package would break the current fiscal rules, although they can legitimately be suspended during an economic shock like this and/or Truss and her Chancellor may just rewrite the rules to suit their looser fiscal plans.

"We doubt Truss will be able to prevent a recession. But her policies could limit its depth and length. Our current forecasts envisage real GDP fall by around 1% from its peak to its trough over a the course of a year.

"While freezing energy prices may mean inflation is lower than otherwise, the resulting support to the economy will go someway to boosting underlying inflationary pressures. So looser fiscal policy under Truss may just come alongside tighter monetary policy, with the Bank of England having to work harder to return inflation to the 2% target. Our forecast is that the Bank will raise interest rates from 1.75% now to 3.00%, but the risks are that rates may have to rise further."