OCTOBER 25, 2022
Aaron Chown, AP–
LONDON – Former finance minister Rishi Sunak completed a political comeback Monday, when he was selected prime minister by Britain’s ruling Conservative Party, just seven weeks after he was beaten to office by Liz Truss.
Sunak, 42, officially became prime minister on Tuesday after meeting with King Charles at Buckingham Palace, where he received symbolic permission to take up the role during a ceremony known as the “kissing of the hands.”
Sunak is the fifth British prime minister in six years, the third in less than two months. He is Britain’s first leader of South Asian descent, its first Hindu prime minister, and the nation’s first leader of color. He is the youngest prime minister of modern times.
He won an internal party contest to be the country’s new leader following Truss’ Oct. 20 resignation. Her tenure was the shortest ever for a British prime minister and was marked by economic turmoil. British voters elect a party, not a specific leader, meaning the ruling party has latitude to change a prime minister without calling an election. Sunak won the party contest after his challenger Penny Mordaunt dropped out of the race.
Britain’s economic turmoil
He takes over as Britain faces exceptionally challenging economic times.
Forecasts suggest its economy has already fallen into recession and the country is being hit with some of the highest energy and borrowing costs in Europe, the latter exasperated by Truss’ move to aggressively cut taxes, which spooked bond market investors and led to a warning from the International Monetary Fund that it would further push up prices. Annual inflation in Britain hit 10.1% in September, a 40-year high.
Sunak said Tuesday Britain was facing a “profound economic crisis.”
He is a former banker and served as Chancellor of the Exchequer – finance minister – in Boris Johnson’s government. He oversaw Johnson’s package of economic support for businesses and employees during the coronavirus pandemic but resigned over the summer citing a “fundamentally different” economic approach to dealing with Britain’s cost of living crisis and government “standards,” a reference to Johnson’s gaffe-prone, controversial leadership style that has led to several allegations of misbehavior.
Conservative Party leadership candidate Rishi Sunak leaves the campaign office in London, Monday, Oct. 24, 2022. Former British Treasury chief Rishi Sunak is frontrunner in the Conservative Party’s race to replace Liz Truss as prime minister.
Johnson pulled out of the contest to replace Truss late Sunday, after signaling for several days that he was mounting a dramatic return to Downing Street after his own resignation in July. He ended his nearly three-year, scandal-laden premiership amid a wave of resignations from his Cabinet over allegations he broke his own coronavirus lockdown rules by holding a series of social events, and amid dissent over his handling of harassment claims made against a Conservative lawmaker.
Who is Rishi Sunak?
Sunak’s fast rise to the top of politics followed a privileged upbringing and lucrative marriage. Sunak is married to the daughter of the co-founder of Infosys, one of India’s largest technology companies. The couple met while studying at Stanford University. They have an estimated wealth of $1 billion, according to The Sunday Times Rich List, an annual gauge of the 1,000 wealthiest people and families resident in the U.K.
Sunak was born and raised in southern England. His mother was a pharmacist and his father a doctor. Before getting his MBA at Stanford, he attended Oxford University and Winchester College, one of Britain’s most prestigious preparatory schools.
Sunak has spoken often about his Indian roots and being a practicing Hindu. He has said lighting Diwali candles outside the office and home of the Chancellor of the Exchequer when finance minister was one of the proudest moments of his career. Sunak was named prime minister during the Hindu religious festival.
Truss was the fourth British prime minister to resign since the country’s 2016 vote to leave the European Union. Brexit, an economic and legal divorce, has ushered in unprecedented political division and chaos in a nation that is typically revered for being a model of stable and dependable governance. The Bank of England, Britain’s central bank, was forced to buy government bonds known as “gilts” after Truss unveiled a series of aggressive tax cuts days after taking office. The pound currency plummeted.
With Sunak occupying No. 10 Downing Street, there is unlikely to be any major impact on London’s economic and diplomatic relationship with Washington. There is broad alignment on all the big national security issues of the day, from support for Ukraine as Russia wages its war there to countering China’s global rise.
Sunak is a less strident voice compared to Truss on the issue of the Northern Ireland Protocol, legislation agreed with the EU designed to deal with the border between Ireland (part of the EU) and Northern Ireland (part of the U.K.).
U.S. lawmakers have expressed concern that if the protocol is not respected it could threaten fragile peace in Northern Ireland.
Multiple polls show that the majority of Britons, especially younger ones, would prefer to be part of the EU if given the option. However, there is little appetite for a new vote.
Sunak will need to make difficult tax and spending decisions during his first days and weeks in office as he seeks to stabilize Britain’s beleaguered economy.
Sunak fought off a challenge from Penny Mordaunt, a former defense and trade minister under Johnson who Truss appointed leader of the House of Commons. Mordaunt was a prominent backer of Brexit. She pulled out of the contest on Monday.
What is Rishi Sunak’s plan for the economy?
- During Sunak’s previous attempt to become prime minister he warned that Truss’ plan to cut taxes and borrow money during an inflation crisis would lead to financial chaos. That’s precisely what Truss did, and what happened.
- In a brief statement Monday given at the Conservative Party’s London headquarters, Sunak warned that Britain faced “profound” economic challenges. Sunak reiterated that message Tuesday while speaking outside Downing Street, saying the nation was in the middle of an economic “crisis” and that as prime minister he would work day and night to fix some of Truss’ mistakes.
- Still, Sunak has said little specific about how he intends to fix Britain’s economic woes. But markets view him as a relatively safe pair of hands from his time as finance minster, and restoring Britain’s economic credibility and calming rattled markets is in some respects his first priority. Britain’s FTSE 100 benchmark stock index gained in value after it was announced Sunak would become prime minister. The pound currency also gained in value against the dollar and euro currencies.
- Britain’s new leader has not yet said whether current finance minister Jeremy Hunt, appointed by Truss as part of a last-ditch effort to save her premiership, would be retained. However, Hunt is due to unveil a new economic plan for Britain on Oct. 31. Hunt has signaled that it will involve painful cuts to government spending.