With Ms Truss replacing Boris Johnson in Downing Street, the British Chambers of Commerce (BCC) said it was vital for the government to demonstrate that “despite political upheaval” it can still manage the economy.
Opponents of Mr Johnson have claimed he has led a “zombie government” at a time of national crisis, refusing to intervene and taking multiple European holidays rather than come to the aid of an electorate fightened by what lies ahead.
Official data showed that consumer prices index (CPI) inflation rose to 10.1 per cent in July, a 40-year-high, and is expected to get worse before it improves.
BCC director of policy and public affairs Alex Veitch said: “It is vital that government sends business a clear signal that despite political upheaval it can still take action on the economy.
“Beginning a long-promised review of the shortage occupations list to ease the incredibly tight labour market would be a start.
“The autumn budget must then be the main priority of the new prime minister and chancellor – a chance for them to reset, rethink and get their house in order.
“This inflationary surge sits alongside a poor economic outlook and unless the government acts with urgency the chances of a recession will only increase.”
🗣️Alex Veitch: "The rise in CPI inflation to 9.4% is the ninth monthly increase and another record high.
“That represents a huge amount of cost pressure that businesses and households in the UK have had to absorb."
Our take on ONS inflation data 👇https://t.co/WaJ5xOxsFN
— BCC (@britishchambers) July 20, 2022
Karen Betts, chief executive of the Food and Drink Federation, said “old new policies” were needed from the next prime minister to “create the conditions for investment to boost productivity and competitiveness”.
The Tories’ opponents have also demanded greater action to combat the impact of soaring prices.
Shadow chancellor Rachel Reeves said the Tory leadership race had delivered “chaos, distraction and unfunded fantasy economics”.
“Rising inflation may be pushing family finances to the brink, but the low-wage spiral facing so many in Britain isn’t new,” she said.
“It’s the result of a decade of Tory mismanagement of our economy meaning living standards and real wages have failed to grow.
“We need more than sticking plasters to get us back on course – we need a stronger, and more secure economy.”
NEW: Inflation at 9.4% - causing yet more worry for families and pensioners.
Rather than fantasy economics, we need a real plan for a stronger, more secure economy.
Only a Labour government will build the high wage, high growth, and stable inflation economy we need. https://t.co/ZNvrw75DEU
— Rachel Reeves (@RachelReevesMP) July 20, 2022
There have been widespread reports of a rift between the government and the Bank of England over tackling inflation.
Ms Truss has previously criticised the Bank’s monetary policy and suggested she would “look again” at its mandate to make sure it is tough enough on inflation.
Bank of England governor Andrew Bailey did move on 4 August to make a 50 basis percentage point rise in the interest rate – taking it from 1.25 per cent to 1.75 per cent – as the institution looks to “act forcefully” on inflation.
Simon Clarke, the chief secretary to the Treasury and a Truss supporter, has denied suggestions that he or the government have been putting pressure on the Bank of England.
“I most certainly wasn’t,” he said.
Mr Clarke told ITV’s Good Morning Britain he respects the long-standing independence of the Bank of England, adding: “I think it’s imperative we take action to mitigate inflation, and I think the Bank understands that.
“I think there’s absolutely no question that we, as a government, need to play our role in conjunction with the Bank in maintaining wider pay and spending discipline, but they do have a vitally important role to play and interest rates are a critical lever in that fight.
“The issue, of course, is how and when to best deploy them, and I absolutely leave that to the independent Bank to determine.”