Liz Truss resigned as British Prime Minister on the 20th of October, after a contentious 44-day term.
Sir Graham Brady, the head of the 1922 Committee, said that Sunak was the only nomination the committee received after Penny Mordaunt withdrew from the contest for the Tory leadership. In addition, Sunak was the only politician able to garner support by at least 100 MPs.
Sunak was thus declared by Sir Brady to be the new party leader and, as a result, the new Prime Minister.
On October 25, 2022, King Charles III appointed Sunak as the country’s prime minister, making him the country’s first Hindu and British Asian leader.
Here’s a summary of what we know about Rishi Sunak:
Background and Early Development
Rishi Sunak was born to Punjabi Hindu parents, Usha his mother, and Yashvir his father. His parents, who are both of Indian descent, immigrated to the UK from east Africa. In Southampton, where his mother was a pharmacist and his father a general practitioner, Sunak was born on May 12, 1980, and is currently 42 years old.
Mr. Sunak is married to Akshata Murthy, the daughter of multimillionaire businessman Narayana Murthy. The PM has held positions at two hedge funds, including the investment bank Goldman Sachs. The couple’s fortune is valued at approximately £730 million, according to the Sunday Times Rich List.
Sunak attended Winchester College before attending Oxford University to study politics, philosophy, and economics. He was also a Fulbright Scholar while earning his MBA at Stanford University (USA). Prior to entering politics, Rishi worked internationally in business and finance. He helped co-found an investment company that works with businesses across the globe. He subsequently applied that knowledge to support the expansion of innovative, small British businesses.
In May 2015, Johnson won a seat as a Conservative MP for Richmond (Yorks). From June 2017 until his nomination as a minister, he worked as a Parliamentary Private Secretary at the Department for Business, Energy, and Industrial Strategy.
From 9 January 2018 to 24 July 2019, he served as Parliamentary Under Secretary of State at the Ministry of Housing, Communities, and Local Government. From 24 July 2019 to 13 February 2020, he served as Chief Secretary to the Treasury.
From 13 February 2020 to 5 July 2022, he served as Chancellor of the Exchequer.
The World’s Reaction to Britain’s First PM of Colour
In response to Rishi Sunak’s confirmation as the new prime minister of the UK, the value of the pound has risen to its greatest levels since before Liz Truss’s mini-budget.
Mr Sunak correctly foresaw financial issues under Truss. During the previous leadership contest, he battled with the former PM, calling her plan to borrow money during an inflation crisis a “fairytale” that would destabilize the economy.
He oversaw the Covid support funds at the time. The financial assistance during lockdowns, including furlough compensation and the restaurant “Eat Out to Help Out” program, was the brainchild of Mr. Sunak, Mr. Johnson’s Chancellor. Sunak ran an anti-regulation and pro-Brexit campaign. One of his longtime favourite concepts is the premise of “free ports,” which are locations close to ports or airports where items can be imported and exported without paying taxes in order to promote trade.
The incoming British Prime Minister Rishi Sunak and US Vice President Joe Biden agreed in their discussions on Tuesday to cooperate in supporting Ukraine and defying Russia, according to the White House. Biden and Sunak also agreed, according to the White House, to “address the challenges posed by China,” which is currently seen as Washington’s main geopolitical and economic opponent on the international arena. In a read-out of the call, the White House noted that the two leaders also underlined the “special relationship” that exists between the United States and Britain and pledged to cooperate to enhance world security and prosperity.
Although the London FTSE 100 had dropped 0.51 points earlier in the week, or 0.01%, to close on the 25th of October at 7,013.48 – largely fueled by the decline in banking equities, the markets generally recovered a large amount of ground from their intraday lows as a result of broader optimism following the former chancellor’s confirmation as prime minister. At the end of trade, the value of the pound had risen significantly, gaining 1.77% against the Dollar and was up 0.79% against the Euro.
Where does Sunak Stand ?
Sunak underlined the significance of “economic stability and confidence” in his debut statement on Tuesday outside Downing Street while announcing “tough decisions to come.”
In contrast to the contentious tax-cutting proposals outlined in Truss’ “mini-budget” amid a backdrop of double-digit inflation, he is anticipated to support the current Finance Minister Jeremy Hunt’s planned return to tightening the budgetary belt.
In order to stop the impending collapse of pension funds, subsequent movements in long-dated U.K. government bonds compelled the Bank of England to begin a two-week emergency bond buying operation. Additionally, bank officials emphasised that additional “substantial” interest rate increases were needed to offset the inflationary effects of Truss’ fiscal spending.
Now that the bond purchase program has come to an end, the bank has indicated that its delayed gilt sales will start at the end of the month. As far as the U.K., it is crucial to the story of prospective stability. The idea that the central bank will now be less proactive in raising interest rates has alarmed the markets.
Rishi’s popularity skyrocketed after he promised to do everything in his power to aid those affected by the pandemic in the spring of 2020 and disbursed $350 billion in support. The UK’s economy remained turbulent, however, and Mr. Sunak had to cope with the consequences of being fined by the police in June 2020 for violating lockdown regulations in Downing Street.
The recently elected PM left the cabinet in July, citing the fact that he believed his economic policies were fundamentally too divergent from those of Prime Minister Boris Johnson. Some of the former PM’s allies won’t forget how crucial the action was in Mr. Johnson’s subsequent resignation.
Here’s what we can expect
Sunak pledged during the previous leadership campaign to spend substantially to help people who were most affected by the cost of living increases and to temporarily abolish the 5% VAT on home energy bills.
Sunak’s long-term fiscal strategy would almost certainly adhere to the plans he set when chancellor. He announced in March that he would raise corporation tax from 19% to 25% in April 2023, and he confirmed in July that if elected, the increase would take effect. The short-lived first chancellor of Truss, Kwasi Kwarteng, rejected the proposal, stating that the tax would remain at 19% and ultimately permit businesses to keep more of their revenues. When Hunt became chancellor, he reversed course on that choice, effectively reintroducing Sunak’s strategy.
It is probable that the markets will perceive more predictability and consistency between fiscal policy and central bank policy with the appointment of the new prime minister and chancellor. AJ Bell financial analyst, Danni Hewson said: “At least PM-in-waiting Rishi Sunak knows he’s got the markets on his side. Investors clearly hope Sunak will stabilise the economy and the political situation – though it’s hard to work out at this point which is the harder task. As well as the recovery in Sterling and the reduced cost of government borrowing, Sunak will be pleased to see European gas prices going in the right direction thanks to mild temperatures across the continent. And while the outlook is still filled with dark clouds, for the first time in a while it is possible to spy a chink of light.”
Sunak has made various public statements regarding the conflict in Ukraine. During the contest for the position of prime minister, he declared that neither President Zelensky nor Ukrainians should have any reason to worry that the UK will remain a trustworthy partner. Additionally, Rishi Sunak declared on Twitter that whenever he is appointed prime minister, he will travel to Kiev.
The current leader of the British government openly endorsed Boris Johnson’s approach to Ukraine in his foreign policy. The lawmaker vowed, “If I become prime minister, I will redouble my efforts and strengthen our policy of total support for Ukraine, which was so skillfully carried out by Boris.”
Fracking was once again banned in England after the new British prime minister overturned his predecessor’s decision to lift the restriction. It is possible that England, like the rest of Europe, would look to Africa for gas as an alternative to Russia’s supplies as the nation needs to bolster its energy supply. As revised economic policies and bilateral oil and gas agreements begin to take shape we can expect to see inflation rates remain at current levels in the short run and a gradual decline in the long run.
Overall, the huge downside risks to the economy posed by a protracted period of political unrest and a significant fiscal tightening have diminished as a result of the emergence of Rishi Sunak as the new Prime minister. However, there is still the concern of an impending recession as new data from PMI revealed that UK business activity contracted for the third successive month, dropping to its lowest level since January 2021 and confirming a likely recession still looms.