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Rishi Sunak has been named the UK’s new Prime Minister and the country’s first colored leader.
Jeff J Mitchell | Getty Images News | Getty Images
LONDON – Britain’s new Prime Minister Rishi Sunak took office on Tuesday and with him one of the most daunting political inboxes in modern British history as he tries to steer the country through the current cost-of-living crisis, political and social discord. A looming recession.
The former finance minister was named leader of the Conservative Party – and therefore the country’s next prime minister – on Monday, after his only rival, Penny Mordaunt, dropped out of the leadership race before the nomination deadline.
The 42-year-old was officially installed in the role on Tuesday morning by King Charles III, who he met at Buckingham Palace after outgoing Prime Minister Liz Truss formally abdicated to the monarch.
Sunak’s work is significant because it marks Downing Street’s first Prime Minister of color and the UK’s youngest leader in modern times. It is also the first swearing-in of King Charles’ new government, coming just seven weeks after his late mother, Queen Elizabeth II, appointed Truce, who resigned after 44 days.
But also because it comes at a time of profound political and economic crisis for the country, with challenges such as economic instability, rising inflation, stretched public finances, industrial unrest and party politics in Sunak’s office from day one.
A focused economy
Sunak has so far kept little away about his plans once in office, ascending to the top job virtually in silence following a fast-track leadership race over the weekend.
However, as the former finance minister who steered Britain through the Covid-19 pandemic, recovering the UK’s troubled economy and the country’s position in the investment community is likely to be a top priority.
If fiscal rules are too loose… this will not rebuild credibility.
Ruth Gregory
UK Senior Economist, Capital Economics
In his inaugural speech as prime minister on Tuesday, Sunak said the challenges facing the country were “profound” and pledged to put “economic stability” at the center of his agenda.
“Right now, our country is facing a profound economic crisis,” Sunak said outside Downing Street.
“Some mistakes were made,” he continued, referring to the previous government of Liz Truce. “I was elected leader of my party and your prime minister, in part, to fix them. And that work begins immediately.”
“I will place economic stability and confidence at the center of this government’s agenda. This will mean tough decisions ahead,” he added.
Chancellor of the Exchequer Jeremy Hunt arrives at the back entrance of Downing Street in London.
Aaron Chown – Pa Images | Pa Images | Getty Images
Sunak is expected to retain current Finance Minister Jeremy Hunt, who is credited with calming markets following the Truss government’s disastrous mini-budget, and who is due to set out the country’s revised fiscal strategy on Monday.
Economists said it could go some way to restoring the UK’s economic stability, but added that investors would be closely watching the next budget to see how the pair planned to plug the £40 billion ($45 billion) gap in public finances. doing.
“If fiscal rules are too loose and/or policies announced to plug the fiscal hole are deemed inappropriate, that will not rebuild credibility with investors,” Ruth Gregory, senior UK economist at Capital Economics, wrote in a research note on Monday.
Inflation and industrial unrest
Still, while Sunak is seen as a safer financial hand than his predecessor, investors have warned that any relief rally in financial markets could be short-lived, as the new government has a long way to go in addressing the country’s widespread economic ills.
The UK is the only G-7 economy that has not regained its pre-pandemic GDP level by the second quarter of 2022. Indeed, the economy shrank by 0.3% in August, according to the Office for National Statistics, with some rating the UK’s forecasting agencies already in full-year recession.
The UK is still facing a storm of economic problems. There is a deep and painful recession, rising energy prices, inflation running over 10%.
Nigel Green
CEO, Deware Group
It comes as the UK faces a labor crisis and continued industrial unrest, with widespread strikes among postal workers, rail workers and public barristers.
Meanwhile, with UK inflation returning to a 40-year high of 10.1% in September, and energy prices continuing to rise following Russia’s war in Ukraine, some energy providers have warned of possible blackouts this winter.
“The UK is still facing a storm of economic problems,” DeVere Group CEO Nigel Green said in a note on Monday. “There’s a deep and painful recession looming, rising energy prices, inflation running above 10%, a labor gap, ongoing supply chain drama and the Bank of England’s intention to raise interest rates.”
Uniting a divided Conservative Party
Sunak’s task as prime minister is further complicated by deep-rooted divisions within the ruling Conservative Party.
Despite winning significant support from Tory members of parliament, Sunak is considered a divisive figure in the party, and is largely blamed for the demise of former Prime Minister Boris Johnson, who resigned as his finance minister.
Rishi Sunak is tasked with a daunting in-tray as the UK’s new prime minister, including a public finance crisis, political infighting and rising energy bills.
Chris McGrath | Getty Images News | Getty Images
Sunak’s success will therefore depend on his ability to strengthen his party and unite them under his new economic and political vision.
Sunak’s cabinet appointments will be closely watched in the coming days, providing him with an opportunity to reshuffle the party’s top ranks and appoint a wide swath of ministers from across the Tory factions.
UK Foreign Secretary James Chaturai told Sky News on Tuesday that Sunak’s government should have the best ministers available – rather than focusing on those who are loyal – as Truce has been criticised.
“We have to keep the first 15 on the pitch. I know Rishi understands that,” said Smart.
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