Rishi Sunak became Britain’s third prime minister in two months on Tuesday, tasked with tackling a mounting economic crisis, a warring political party and a deeply divided country in one of the greatest challenges to confront any new leader.
Sunak said he was not daunted by the scale of the challenge, pledging to lead the country through an economic crisis and rebuild trust in politics.
The 42-year-old former hedge fund boss, who has only been in elected politics for seven years, has been tasked with bringing an end to the political infighting and radical changes in policy that have horrified investors and alarmed international allies.
He warned that difficult decisions lay ahead as he looks to cut public spending and fix the “mistakes” that were made by Liz Truss during her short and chaotic tenure in Downing Street, just as the country slides into a recession.
Economy in trouble
Sunak, one of the richest men in parliament, will have to find deep spending cuts to plug an estimated 40 billion pound ($45 billion) hole in the public finances due to an economic slowdown, higher borrowing costs and a six-month programme of support for people’s energy bills.
With his party’s popularity in freefall, Sunak will also face growing calls for an election if he moves too far from the policy manifesto that elected the Conservative Party in 2019, when then leader Boris Johnson pledged to invest heavily in the country.
Economists and investors have said Sunak’s appointment will calm markets, but they warn that he has few easy options when millions are battling a cost of living crunch.
“With a recession in 2023 now increasingly likely, and the next general election in only two years’ time, Rishi Sunak can expect a challenging premiership,” Eiko Sievert at the Scope ratings agency told Reuters.
Economists and investors have welcomed Sunak’s appointment – Ryanair boss Michael O’Leary said the adults had taken charge again – but they warn he has few options to fix the country’s finances when millions are battling a cost of living crunch.
Sunak has warned his colleagues they face an “existential crisis” if they do not help to steer the country through the surging inflation and record energy bills that are forcing many households and businesses to cut back spending.
“We now need stability and unity, and I will make it my utmost priority to bring our party and our country together,” he said as he was elected by his lawmakers on Monday.
Spending plans
Sunak, Britain’s youngest prime minister for more than 200 years and its first leader of colour, replaced Liz Truss who resigned after 44 days following a “mini budget” that sparked turmoil in financial markets.
Sunak, who ran the Treasury during the Covid-19 pandemic, promised to put economic stability and confidence at the heart of the agenda. “This will mean difficult decisions to come,” he said, shortly after he accepted King Charles’s request to form a government.
Sunak also vowed to put the public’s need above politics, in recognition of the growing anger at Britain’s political class and the ideological battles that have raged ever since the historic 2016 vote to leave the European Union.
With debt interest costs rising and the outlook for the economy deteriorating, he will now need to review all spending, including on politically sensitive areas such as health, education, defence, welfare and pensions.
He will have to oversee tax hikes and public spending cuts as he tries to bring inflation and government debt under control. A wave of strikes over pay that has already seen walkouts by railway staff, telecoms workers, garbage collectors, lawyers and dockworkers is likely to spread.
Political machinations
Sunak, a Goldman Sachs analyst who only entered parliament in 2015, must unite his party, aware that voters are increasingly angry over the antics at Westminster as the economy heads for recession.
He was blamed by many in the party when he quit as finance minister in the summer, triggering a wider rebellion that brought down Boris Johnson.
While many expressed relief that the party settled on a new leader quickly, a sense of distrust remains among some while others questioned whether struggling families would relate, or ever vote, for a multimillionaire. “I think this decision sinks us as a party for the next election,” one Conservative lawmaker told Reuters on condition of anonymity.
Historian and political biographer Anthony Seldon told Reuters that Sunak would also be constrained by the mistakes of his predecessor.
“There is no leeway on him being anything other than extraordinarily conservative and cautious,” he said.
Sunak was chosen as Conservative leader after becoming the only candidate to clear the hurdle of 100 nominations from fellow lawmakers to run in the party election.
As well as stabilising the UK economy, Sunak must try to unite a governing party that has descended into acrimony as its poll ratings have plunged.
Conservative lawmaker Victoria Atkins, a Sunak ally, said the party would “settle down” under Sunak. “We all understand that we’ve now really got to get behind Rishi – and, in fairness, that’s exactly what the party has done,” she told radio station LBC.