London New British Prime Minister Rishi Sunak has promised “economic stability and confidence” to the troubled kingdom. In his inaugural speech at 10 Downing Street, the 42-year-old said: “Mistakes have been made. I’m here to correct them.”
In doing so, the conservative politician distanced himself from his predecessor Liz Truss, who resigned last week after a false start in terms of economic policy and only 44 days in office. “We are facing a serious economic crisis,” said Sunak, preparing his compatriots for “difficult decisions”. He didn’t want to leave behind a mountain of debt for future generations.
Jeremy Hunt, Chancellor of the Exchequer, who has just been reappointed by Sunak, wants to present a budget next Monday that, in addition to the tax increases he had previously announced, should also include a number of spending cuts.
He knows how difficult the situation is for many Britons, said Sunak, whose personal wealth is greater than that of King Charles III, according to British media estimates. supposed to be, and promised he’d show “sympathy.”
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The new course was well received by the financial markets in London, with interest rates on most British government bonds falling to the level they had been before the Truss government’s disastrous ‘mini-budget’ on 23 September. “There is some relief that an adult now appears to be in charge,” said Paola Binns, wealth manager at Royal London Asset Management.
Economists: Sunak needs to put finances in order
However, economists are increasingly asking how the new government intends to boost Britain’s chronically weak economic growth. “The new prime minister has to get the finances in order before he can make new growth plans,” said David Marsh, chairman of the London think tank Official Monetary and Financial Institutions Forum (OMFIF).
Sunak faces great challenges
Tony Danker, head of the industry association CBI, warned of a repeat of post-financial crisis austerity policies, followed by “very low growth, zero productivity and low investment”.
Before his inaugural speech, Sunak, the third British prime minister in just three months, received a letter from King Charles III. receive the government mandate. His predecessor Truss said goodbye with a statement in which she once again defended her risky tax policy decisions. Before Truss, ex-Prime Minister Boris Johnson fell over the “Partygate” scandal during the pandemic in the summer.
Sunak not only broke with the policies of his predecessor, but also pledged “integrity, professionalism and responsibility” in his administration, taking a dig at Johnson. “I know that I have to regain trust,” he said, rejecting opposition calls for new elections. The Tories were given a mandate by the electorate in 2019 and that electoral mandate is not “owned by any one person”. He wants to fulfill the campaign promises made by the Conservatives.
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Whether and how he can succeed depends on which team Sunak gathers around him. This is all the more true as the first British prime minister with Indian roots has little government experience. Sunak was elected to the House of Commons just seven years ago and served as Chancellor of the Exchequer under Johnson for two years from 2020 to 2022.
Rishi Sunak addressing the nation.
(Photo: Getty Images)
Hunt’s confirmation as Treasury Secretary had been expected. His fiscal austerity course coincides with the ideas of the new prime minister. Economy Minister Jacob Rees-Mogg from the right wing of the party resigned. He had called Sunak a “socialist” because of his restrictive tax policy. A total of eleven ministers and state secretaries from the previous government submitted their resignations by the evening.
Sunak must consider his party’s balance of power
While the new prime minister has promised to form “a cabinet of talents,” he must also watch out for the balance of power in his fractious party. In addition to the Ministry of Finance, the focus is on the other three classic departments of the Ministry of the Interior, the Ministry of Foreign Affairs and Defense.
Filling the interior ministry is particularly difficult, since Sunak has to decide whether to hand over the key ministry to a representative of the party right. This is also politically important, as Sunak wants to relax the strict immigration policy due to the acute shortage of skilled workers on the island, while the hard Brexit supporters want to keep the borders largely closed.
The election of a foreign minister was no less complicated. The previous and future incumbent James Cleverly had supported Boris Johnson in the party’s internal race to succeed Truss. Ben Wallace will also keep his job as Secretary of Defense.
Wallace also backed Johnson, insisting that UK defense spending should rise to 3% of gross domestic product (GDP) by 2030. So far, Sunak has not wanted to promise that, so as not to restrict his scope for necessary savings in the state budget.
Former deputy prime minister Dominic Raab is returning to government, taking up his old posts as deputy prime minister and justice minister. The new general secretary of Sunak’s Conservative Party will be Nadhim Zahawi, who recently campaigned for Johnson’s return to Downing Street. The appointment is seen as an attempt to involve the camp around Johnson, whose relationship with Sunak is considered to be heavily burdened.
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