Now comes the hard part

It’s an open secret that, barring a stunning upset, the UK’s next prime minister will be Liz Truss.It’s also a given that the new Conservati [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( It’s an open secret that, barring a stunning upset, the UK’s next prime minister will be Liz Truss. It’s also a given that the new Conservative Party leader to be announced today replaces Boris Johnson at a moment of immense jeopardy for the UK. A surge in energy prices has left millions of families struggling to pay their bills and thousands of small businesses potentially forced to shut down. Gas prices jumped 30% this morning after Russian energy giant Gazprom said that flows through the Nord Stream pipeline to Europe will remain halted. Key reading: - [UK Set to Find Out Next Prime Minister After Bruising Tory Race]( - [Truss Plan to ‘Turbo-Charge’ UK Economy Already Alarms Markets]( - [Even Liz Truss Supporters Worry She Could Wreak Havoc for the UK]( - [Markets Scream Warning Over New UK Prime Minister’s Mammoth Task]( - [Liz Truss Is On Course for a Collision With UK Economic Reality]( The problem for Truss, currently the foreign secretary, is that she’s spent the campaign to defeat her rival, former Chancellor of the Exchequer Rishi Sunak, playing to the Tory’s right-wing base, promising no new taxes and railing against “handouts.” And there’s a growing consensus, including among her own MPs, that the desperate situation is going to require...new taxes and handouts. There is already pressure for a U-turn. Treasury officials (whom Truss has identified as one of her enemies) are preparing to try to steamroller her into a new windfall tax, to follow Germany’s announcement this weekend. All the same, investors are worried that her determination to cut taxes could destabilize the budget. The pound tumbled last month as a result and borrowing costs for British companies rose. Some Tory MPs — two-thirds of whom voted against Truss in the first phase of the leadership election — are considering submitting letters of no-confidence in her before she’s even got through the door at 10 Downing Street. Others say that if she flubs this first challenge, the start of her premiership will get messy and the end of it may be swift.  — [Ben Sills]( Truss speaking to Conservative Party members on Aug. 31. Photographer: Hollie Adams/Bloomberg UK politics are entering a new era. Get the latest in your inbox with [The Readout]( from Allegra Stratton and share this newsletter with others. They can sign up [here](. Global Headlines Widening crisis | European ministers will discuss special measures to rein in soaring energy costs, from natural gas price caps to a suspension of power derivatives trading. They will be on a list of [emergency intervention options]( to be canvassed on Friday, according to a draft document seen by Bloomberg News. - Natural-gas prices [surged as much as 35%]( today after Russia halted its biggest pipeline to Europe indefinitely. - Germany’s government expects a big revenue boost by [tapping windfall profits]( generated by energy firms if they keep benefiting from disruptions in Europe’s electricity market. - Follow our rolling coverage of the race to stave off an energy catastrophe [via this link](. Covid closures | Chengdu, China’s sixth-largest city, [extended]( the lockdown of most of its 21 million residents, while the southern technology hub Shenzhen remained under restrictions as Covid-19 continued to spread in the country. All indoor entertainment venues, schools and restaurants for dining-in remain shut in Chengdu and mass-testing will continue through Wednesday. - China’s No. 3 official, Li Zhanshu, will visit Russia this week, becoming the nation’s most-senior leader to [travel abroad]( since the early days of the pandemic. Climate concerns | US President Joe Biden’s top climate emissary is “[hopeful](” that talks with China will resume after stalling following House Speaker Nancy Pelosi’s visit to Taiwan last month. The world’s two largest emitters must restart dialog “because that will shape the response of other countries,” John Kerry said in an interview. Best of Bloomberg Opinion - [Gorbachev Did Save One Communist Party — China’s: Minxin Pei]( - [NASA’s Artemis Is a Failure and Waste of Money: Adam Minter]( - [Homeless People Need Homes — and Money, Too: Francis Wilkinson]( Constitutional setback | Chileans voted to reject a new constitution in a blow to a three-year campaign to overhaul politics and temper free-market policies. The wide loss in the referendum marked a [major setback]( for President Gabriel Boric and his plans to reform the tax, pension and labor systems, boost social services and cut inequality. ‘No’ voters celebrate in Santiago yesterday. Photographer: Cristobal Olivares/Bloomberg Explainers you can use - [Why Gaza Is Epicenter of Israeli-Palestinian Conflict]( - [Indonesia Finally Raised Fuel Prices. What Comes Next?]( - [Why the Yen Is So Weak and What That Means for Japan]( Easing rivalries | Israel’s longest-serving prime minister pops up on Saudi state-run television from Tel Aviv. A prominent Saudi family invests in two Israeli companies and doesn’t bother to hide it. These events would have been unthinkable not long ago. But [previously clandestine links]( between Saudi Arabia and Israel are increasingly visible as some of the Middle East’s deep-seated rivalries cautiously give way to pragmatic economic and security ties. Bloomberg TV and Radio air Balance of Power with [David Westin]( weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online [here]( or check out prior episodes and guest clips [here](. News to Note - Kenya’s top court will deliver [judgment]( today in a case that seeks to overturn the results of last month’s presidential election and which has left the East African nation in political limbo. - China [accused]( a US spy agency of hacking a government-funded university with aeronautics and space research programs, in Beijing’s latest effort to hit back at Washington’s complaints of cyber-snooping. - Support for Japanese Prime Minister Fumio Kishida has fallen further, showing voters [aren’t convinced]( by his promise to sever ties between the ruling party and a controversial religious group. - An [explosion]( outside the Russian embassy in Kabul has killed at least two members of the staff, the Russian Foreign Ministry said. A Taliban spokesman confirmed the blast. - Poland will attempt [rapprochement]( with Hungary after a falling out earlier this year over the war in Ukraine, Prime Minister Mateusz Morawiecki said. Thanks for the 68 responses to our Friday quiz question and congratulations to Hector Martinez, who was the first to name Singapore as the country seeking to attract an exclusive group of expatriate workers by offering a flexible five-year work visa for foreigners making at least $21,500 a month. And finally ... President Vladimir Putin is moving to [shape attitudes]( to his war in Ukraine among young Russians. School teachers are being ordered to deliver a special lecture on Sept. 12 titled “Our Country — Russia” that says Moscow invaded to protect its security and stop the North Atlantic Treaty Organization from setting up bases in its neighbor. The intervention comes as opinion polls show youths are less enthusiastic about the war and prefer social media for information accessing views beyond the Kremlin’s control. Putin holds an open lesson “Talking about important things” in Kaliningrad on Sept. 1. Photographer: Alexey Maishev/AFP/Getty Images Like getting this newsletter? 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