Britain’s new Prime Minister Rishi Sunak delivers a speech outside Number 10 Downing Street in London, Britain on October 25, 2022.
Hannah McKay | Reuters
LONDON — Rishi Sunak became Britain’s third prime minister of the year on Tuesday following a meeting with King Charles III.
Tradition has it that the monarch invites the leader of the party with the most MPs to form a government, which since the 2019 general election is the Conservatives.
In a speech outside 10 Downing Street after the meeting, Sunak said: “Our country is facing a deep economic crisis. The aftermath of Covid lingers, Putin’s war in Ukraine has destabilized energy markets and supply chains around the world.”
He paid tribute to his predecessor Liz Truss who he said was “not wrong” to want to improve Britain’s growth. But, he continued, ‘some mistakes were made’, not ‘supported by bad will or bad intentions’, but ‘mistakes nonetheless’ – and he was elected ‘in part to fix them. “.
“I will put economic stability and confidence at the heart of the government’s agenda. This will mean tough decisions ahead. But you saw me during Covid doing all I could to protect people and businesses with regimes like the leave. There are always limits, more so than ever, but I promise you, I will bring the same compassion to the challenges we face today.”
Sunak then indicated that he would implement the manifesto on which the Conservatives were elected in 2019.
The pound was trading up 0.4% against the dollar after the speech, at $1.1321. The pound has failed to gain a significant boost since Sunak’s appointment, but has recovered from lows below $1.10 it hit earlier in the month.
Meanwhile, yields on short-term and long-term British sovereign bonds, known as gilts, fell sharply on Monday as it became clear that Sunak would take office and continued to fall on Tuesday. Yields move inversely to prices.
Sunak is now expected to start appointing new Cabinet members in another reshuffle at the top of British politics.
He was elected party leader by his fellow Conservative lawmakers on Monday after Truss resigned on Thursday.
Aged 42, he will be Britain’s youngest prime minister since 1812 and the first person of color to lead the country, in what US President Joe Biden said on Monday was “a revolutionary step”. Sunak’s parents are of Indian descent and in the 1960s they moved from East Africa to the UK.
Sunak also has the greatest personal wealth of all his predecessors. His wife, Akshata Murthy, is the daughter of NR Narayana Murthy, the billionaire co-founder of Indian IT company Infosys.
Sunak and Murthy have a combined net worth of £730m ($824m), according to the Sunday Times Rich List, making them the 222nd richest person in the UK.
Earlier this year, Murthy made headlines over his non-domiciled tax status, which allows him to avoid paying millions in UK tax on international income. She said she would start paying UK tax on that earnings following the controversy.
King Charles III greets Rishi Sunak during an audience at Buckingham Palace, London, where he invited the newly elected leader of the Conservative Party to become Prime Minister and form a new government. Picture date: Tuesday October 25, 2022.
Aaron Chown | via Reuters
Before entering politics, Sunak worked as an analyst at Goldman Sachs and a partner at billionaire Chris Hohn’s Children’s Investment Fund Management. He was privately educated in the UK and studied philosophy, politics and economics at Oxford, like four prime ministers and dozens of high profile politicians before him, later followed by an MBA at ‘Stanford University.
He was elected as the Conservative MP for a North Yorkshire constituency in the 2015 general election and served as finance minister under former Prime Minister Boris Johnson from February 2020 to July 2022. Through this he oversaw the economic response from the UK to the pandemic, including the scheme to lay off millions of workers.
He ran for the party leadership after Johnson resigned in July and was backed by MPs in the two-candidate battle against Truss, but lost in a vote of the Conservative Party’s roughly 200,000 members, who supported Truss against Sunak by 57% to 42.6%.
Many members favored Truss’ tough stance on cutting taxes and regulation upon taking office, which Sunak warned was wrong in a time of central bank tightening and increased spending support for energy bills. His warnings that the plan would lead to a sell-off of UK assets, including gilts (sovereign bonds) and sterling, proved prophetic.
Truss’s resignation came just 44 days into his term, including 10 of which government business was put on hold due to the death of Queen Elizabeth II. A wave of Tory MPs have sent letters expressing a lack of confidence in their government after overseeing a controversial ‘mini-budget’ that rattled financial markets, making government borrowing more expensive and raising interest rate expectations. ‘interest.
Truss had sacked his finance minister, canceled the majority of the proposals and tried to reassert his position. But the pressure on her from within the party continued, particularly after a chaotic night that saw the resignation of her Home Secretary and reports from MPs in tears after being ‘bullied’ during a a vote on fracking, which was seen as a vote of confidence in the government.
Johnson’s departure was equally chaotic, following months of outrage among the public and MPs over a series of scandals. They included both Johnson and Sunak being fined by police for events held in Downing Street during the Covid-19 lockdowns, and Johnson’s appointment of a high-profile political figure despite knowing of allegations of past misconduct against him.
Sunak now faces a jam-packed receiving bin that includes many predictions that the UK is heading into a recession; a cost of living crisis with inflation above 10%; the continuing problems of the European energy crisis and the war in Ukraine; the weak pound; the revamped budget due October 31, which Finance Minister Jeremy Hunt says will contain “tough decisions” on spending; and the need to reassure the financial markets of the economic competence of the United Kingdom.
He will also navigate calls for a general election, as advocated by the opposition Labour, Scottish National, Liberal Democrat, Plaid Cymru and Green parties, as well as a few Tory MPs who did not back Sunak.
Many Tory MPs are resisting an election given the party’s current low poll numbers. The next election will be in January 2025, unless called earlier by the Prime Minister. It is also possible that an election will be forced if a majority of Britain’s 650 MPs vote for one.
Truss held his final cabinet meeting on Tuesday morning. In a speech outside 10 Downing Street, she said: “It has been a huge honor to be Prime Minister of this great country, especially to lead the country in mourning the death of Her Majesty The Queen after 70 years of service and accession of His Majesty King Charles III.”
Britain’s new Prime Minister Rishi Sunak salutes outside Number 10 Downing Street in London, Britain on October 25, 2022.
Hannah McKay | Reuters
Truss did not take office until September 6. She cited her administration’s short-lived achievements in supporting households and businesses with lower energy bills and reversing the planned National Insurance tax hike, one of the only remaining tax cuts. of the fiscal policy package that it was forced to back down after the market chaos.
Picking up on the themes on which she has campaigned and governed, she said: “We simply cannot afford to be a low-growth country, where the government appropriates a growing share of our national wealth and where it There are huge gaps between parts of the country. need to take advantage of our Brexit freedoms to do things differently.”
“That means lowering taxes so people can keep more of the money they earn. And that means generating growth that will lead to more job security, higher wages and more jobs. opportunities for our children and grandchildren.”