Rishi Sunak faces a huge task becoming UK Prime Minister

  • Sunak meets King Charles on Tuesday morning
  • Should start forming a cabinet
  • Sunak faces huge challenge to restore stability

LONDON, Oct 25 (Reuters) – Rishi Sunak on Tuesday became Britain’s third prime minister in two months, tasked with dealing with a growing economic crisis, a warring political party and a country deeply divided in one of the most great challenges facing any new leader.

The 42-year-old former hedge fund boss has been asked to form a government by King Charles and will seek to end the infighting and rows in Westminster that have horrified investors and alarmed international allies.

He will soon address the nation from Downing Street and then begin to assemble his cabinet of top ministers.

Join now for FREE unlimited access to Reuters.com

Sunak, one of the wealthiest men in parliament, will have to find deep spending cuts to plug an estimated £40bn ($45bn) hole in public finances due to an economic downturn, higher borrowing costs and a six-month support program. for people’s energy bills.

With his party’s popularity plummeting, Sunak will also face growing calls for an election if he strays too far from the political manifesto that elected the Conservative Party in 2019, when then-leader Boris Johnson, has pledged to invest heavily in the country.

Economists and investors have said Sunak’s appointment would calm markets, but they warn he has few easy options when millions of people are grappling with a cost-of-living crisis.

“With a recession in 2023 increasingly likely and the next general election just two years away, Rishi Sunak can expect a tough premiership,” Eiko Sievert of ratings agency Scope told Reuters.

Sunak has warned colleagues they will face an ‘existential crisis’ if they don’t help steer the country through soaring inflation and save energy bills that are forcing many households and businesses to cut their expenses.

“We now need stability and unity, and I will make it my top priority to bring our party and our country closer together,” he said when elected by his MPs on Monday.

FINANCIAL TURBULENCE

Sunak, Britain’s youngest prime minister in over 200 years and its first leader of color, replaced Liz Truss who resigned after 44 days following a ‘mini budget’ that caused turmoil in financial markets.

With the cost of debt interest rising and the economic outlook deteriorating, it will now have to review all spending, including in politically sensitive areas such as health, education, defence, social protection and retreats.

Reflecting the almost constant state of turmoil in British politics this year, politicians, journalists and photographers once again crowded Downing Street on Tuesday to hear a parting speech from Truss.

Speaking seven weeks to the day after taking over as prime minister, Truss made no apologies for her short tenure and said she knew Britain was ready for better days.

During his tenure, the pound hit a record high against the dollar, borrowing costs and mortgage rates rose, and the Bank of England was forced to intervene to protect pension funds from collapsing. .

Sunak will now begin forming his cabinet, with some conservative lawmakers hoping it will include politicians from all wings of the party.

He is expected to keep Jeremy Hunt as finance minister after the former foreign and health secretary helped calm bond market volatility by tearing up most of Truss’ economic programme.

Investors will also want to know if Sunak still plans to release a new budget alongside the borrowing and growth forecast on Oct. 31, which would help inform the Bank of England’s interest rate decision on Nov. 3.

POLITICAL MACHINES

Altara Goldman Sachs analyst who only entered parliament in 2015 must unite his party, aware that voters are growing increasingly angry at Westminster’s antics as the economy heads into recession.

He was blamed by many in the party when he quit as finance minister this summer, sparking a wider rebellion that brought down Johnson.

While many expressed relief that the party had picked a new leader quickly, a sense of mistrust lingers among some while others wondered if the struggling families would ever report or vote for a multi-millionaire.

“I think this decision sinks us as a party for the next election,” a Tory MP 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 for him to be anything other than extraordinarily conservative and cautious,” he said.

Many politicians and officials abroad, having watched a country once seen as a pillar of economic and political stability descend into brutal infighting, hailed Sunak’s appointment.

Sunak, a Hindu, also becomes the first British Prime Minister of Indian origin.

US President Joe Biden described it as a “revolutionary step”, while leaders in India and elsewhere hailed the news. Sunak’s billionaire father-in-law, NR Narayana Murthy, said he would serve the UK well.

“We are proud of him and wish him success,” the software giant Infosys founder said in a statement.

($1 = 0.8864 pounds)

Join now for FREE unlimited access to Reuters.com

Reporting by Kate Holton; Editing by Hugh Lawson

Our standards: The Thomson Reuters Trust Principles.

Leave a Comment

Your email address will not be published. Required fields are marked *