In a short statement to the media, UK Prime Minister Liz Truss on Thursday announced an end to her time in office — after just over six weeks in the job and a day after she vowed to stay in office, saying she was "a fighter and not a quitter."

Truss has faced mounting criticism after a tax-cutting mini budget unraveled spectacularly last month, sending markets and the pound sterling into freefall.

What the prime minister said

"I came into office at a time of great economic and international instability," Truss said. "Families and businesses were worried about how to pay their bills, Putin's illegal war in Ukraine threatens the security of our whole continent and our country has been held back for too long by low economic growth."

"We set out a vision for a low tax, high growth economy that would take advantage of the freedoms of Brexit," she said, adding: "I recognize, given the situation I cannot deliver the mandate on which I was elected by the Conservative Party."

The head of the 1922 Committee of Conservative Party lawmakers Graham Brady had visited the prime minister at her 10 Downing Street residence and office earlier on Thursday. The committee arranges contests for a change of leader.

"We've agreed that there will be a leadership election, to be completed within the next week," Truss said in her statement. "This will ensure that we remain on a path to deliver our fiscal plans and maintain our country's economic stability and national security."

"I will remain as prime minister until a successor has been chosen."

What happens next?

The timing of the election indicates that the contest will not follow the usual process of being put to party members across the country by post. However, Brady has said there is an intention to consult them.

If there is more than one candidate, it is expected that Conservative members of parliament would decide.

According to UK media, former Cabinet members Rishi Sunak and Penny Mordaunt — who were both contenders in the last leadership contest — are believed to be in the running. Former Prime Minister Boris Johnson, Truss' predecessor, is also rumored to be considering entering the leadership race.

However, opposition Labour Party leader Keir Starmer demanded an immediate general election.

"The Tories cannot respond to their latest shambles by yet again simply clicking their fingers and shuffling the people at the top without the consent of the British people. We need a general election — now," the Labour Party leader said.

The Conservative Party "has shown it no longer has a mandate to govern," he added.

Truss won under a vote by Conservative Party members by 81,326, against 60,399 for Sunak, who was finance minister under Johnson.

As the leader of the party with a majority in the House of Commons, that made her prime minister despite having only won votes from less than 0.2% of the electorate and a minority of her own lawmakers.

Despite the resignation, the British government still intends to set out a medium-term fiscal plan on October 31.

Pound recovers, stocks climb

The London stock market bounced back following Truss' announcement she would resign, after weeks of uncertainty in the market due to her economic program.

The FTSE 100 index closed up 0.3 percent. The yield on 30-year government bonds fell to 3.90 percent.

The pound was also briefly trading at $1.1336, having surged more than 1% against the dollar. It had eased back to $1.314 by around 1445 GMT.

International reactions

US President Joe Biden said that he was not worried that the leadership crisis in the UK could affect the US economy.

He said that Washington would continue its "close cooperation with the UK government as we work together to meet the global challenges our nations face." He thanked Truss for "her partnership on a range of issues," including the war in Ukraine. Late last week, Biden called Truss' unfunded tax cuts a "mistake."

French President Emmanuel Macron and Irish Prime Minister Michael Martin called for "stability" following Truss' resignation.

"We want, above all else, stability," Macron said. "On a personal level, I am always sad to see a colleague go."

During her campaign for leadership of the Conservative Party, Truss had said of the French head of state that she wasn't sure whether he was "friend or foe" to Britain.

"Stability is important during these times when a major war is under way on the continent in Europe," Martin said, while also underscoring Ireland's economic ties with its eastern neighbor.

Dutch Prime Minister Mark Rutte said he agreed with Truss on many issues and pointed out that her successor would be the fifth British prime minister to be in office during his term.

Where did it all go wrong?

A number of Conservative lawmakers said they had submitted letters of no confidence in Truss to Brady, whose committee sets the rules for selecting and changing the party's leader. 

Last month, Truss's government unveiled a policy of tax-cutting policy and higher borrowing that triggered financial turmoil. It sent the pound plummeting toward parity with the US dollar and spooked the market for UK government debt.

While markets and the currency have since shown a degree of recovery, the political and economic crisis saw Truss fire her Treasury Chief, Kwasi Kwarteng.

Earlier this week, Kwarteng's replacement as Chancellor of the Exchequer, Jeremy Hunt, announced that he was abandoning almost all of Truss's fiscal plans.

The prime minister's tenure had seen a general breakdown of discipline in the governing Conservative Party, with many lawmakers openly saying the prime minister should quit.

Truss suffered a further blow on Wednesday when Home Secretary Suella Braverman resigned after breaking security rules by sending an official document from her personal email account.

Braverman used her letter of resignation as Britain's interior minister to condemn Truss, saying she had "concerns about the direction of this government."

Later on Wednesday, there was widespread confusion among Conservative lawmakers about whether a vote on the practice of fuel fracking was a confidence vote in Truss's administration. Many of them did not vote with the government.

It's expected that there will be a new party leader in place by October 28, meaning Truss will serve less time as prime minister than 19th-century leader George Canning, who died in office after serving for 118 days.

Conservatives will 'try' to avoid general election, Chatham House associate tells DW

Quentin Peel, associate at the Chatham House think tank and former commentator for the Financial Times,  told DW that the Conservative Party will "try" to avoid another general election, despite the fact that polls indicate that a "a clear majority of voters, well over 70%, want" one to be held.

Peel added that Conservative lawmakers would be liable to lose their seats in a general election. "Usually, turkeys don't vote for Christmas," he said, arguing that a new election wouldn't be in the Conservatives' interest.

Asked on whether Labor is truly interested in a new general election, Peel said that the party would be "torn," as any government would have to deal with a series of issues, including a "very severe" economic crisis, the consequences of the war in Ukraine and the aftermath of the COVID-19 pandemic.

The next general election must be held no later than January 2025. This means the Conservative Party could seek to govern into 2024 after selecting a new leader, assuming it can demonstrate a majority of MPs will continue supporting the new government, allowing it to function.

rc, sdi/msh (Reuters, AFP, dpa)