New UK PM Rishi Sunak to Tackle Lingering Economic Crises

Picture of Written by: Liez Comendador
Written by: Liez Comendador
UK’s New Prime Minister, Rishi Sunak, to Confront the Lingering Economic Crises

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Rishi Sunak has won the Tory leadership contest to become the United Kingdom’s next prime minister and issued a dire warning about the “profound economic challenge” the UK faced in his inaugural speech.

He took over the role of Liz Truss, the former UK prime minister with the shortest tenure, who quit last week after serving only 44 days. Her economic plan overthrew her, which upset the banking system, increased consumer prices, and infuriated a large portion of her party.

Before dropping out of the contest, Boris Johnson, who was forced out of office as prime minister by his parliamentarians in July, was planning to mount an astonishing political return. Then early on and quickly, Mr Sunak gained the backing of his fellow lawmakers. 

Long before the deadline, he received the 100 nominations he needed, including those from MPs who had previously supported Truss or Boris Johnson. Penny Mordaunt, a competitor, fell short of 100 nominations to trigger a ballot. Boris Johnson, Sunak’s other opponent, withdrew on Sunday night even after claiming to have the support of 102 MPs.

Boris Johnson withdrew from the contest

Mr Sunak, a 42-year-old former finance minister and one of the wealthiest lawmakers in Westminster, formed a government. Mr Sunak will take office as prime minister when King Charles extends an invitation to Sunak. 

During the previous leadership contest, he battled with the former PM Liz Truss, calling her plan to borrow money during an inflation crisis a “fairy tale” that would destabilise the economy. Now he steps into the role of most immense responsibility as the country engages with a worsening economic picture following the chaotic fallout from the September mini-budget. 

After former finance minister Kwasi Kwarteng announced a slew of unfunded tax cuts that were perceived to benefit the wealthy even as the nation faced a worsening cost-of-living crisis, a mini-budget rocked stock markets, and sterling fell. The Bank of England was forced to launch a £65 billion emergency bailout.

A reliable pair of budgetary eyes, Sunak is credited with guiding the UK economy through the height of the Covid-19 pandemic. Shortly after Sunak’s victory was announced, the pound increased to $1.1326 against the dollar. 

With all this confidence Sunak inspires among the populace, he may also have to make difficult decisions. The head of Britain’s most influential business lobby group has warned the future prime minister Rishi Sunak against going down the path of austerity, calling it a “doom loop” that might bring about the slowest economic growth since the financial crisis.

Warns Rishi Sunak against going down
Sunak would have to consider ideas that might not be popular with members of the Conservative party, such as planning reform or immigration liberalisation, according to Tony Danker, chief of the Confederation of British Industry (CBI).

References

Gilchrist, Karen. 2022. ‘Rishi Sunak to Be Britain’s New Prime Minister as Rivals Quit Race’, CNBC (CNBC): https://www.cnbc.com/2022/10/24/rishi-sunak-set-to-be-britains-new-prime-minister-as-rival-penny-mordaunt-drops-out.html

Elgot, Jessica, Peter Walker, and Rowena Mason. 2022. ‘New Tory Leader Rishi Sunak Says Party Facing “Existential Threat”’, The Guardian (The Guardian): https://www.theguardian.com/politics/2022/oct/24/sunak-poised-become-uk-pm-mordaunt-johnson-withdraw

Jolly, Jasper. 2022. ‘CBI Boss Warns Rishi Sunak against Austerity “Doom Loop”– Business Live’, The Guardian (The Guardian): https://www.theguardian.com/business/live/2022/oct/25/hsbc-profits-european-gas-prices-weather-ftse-100-cbi-rishi-sunak-business-live

News, BBC. 2022. ‘Rishi Sunak: A Quick Guide to the UK’s next Prime Minister’, BBC News (BBC News): https://www.bbc.com/news/uk-63345272

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  • Junaid Usman

    Apart from being a partner at Legend Financial, Junaid is an expert on Business Tax including business management advisory services which has proven in the growth of company. He is a promising advisor with an ideology; "Any business success depends on the level of objectivity it maintains."

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