The Challenges Of Being Rishi Sunak – Analysis


By Harsh V. Pant

Rishi Sunak’s taking over as the prime minister is a great moment for British democracy. It’s an important marker in how far Britain has travelled in accommodating the aspirations of its minorities and also highlights the growing role of Indian diaspora in the nation’s polity.

It is also a tribute to Sunak’s competence that he is viewed as the best person to manage the problems facing British economy at this critical juncture. He has acknowledged that “mistakes were made” by his predecessor as he sought to bring some semblance of stability to the U.K. after tumultuous few months that had seen British credibility at its lowest ebb.

His leadership campaign in the summer that he lost to Liz Truss was a carefully crafted narrative in which he refused to budge on economic fundamentals that could have endeared him to the ideological base of the Tories.

Truss ended up winning by presenting herself as the self-styled heir to Margaret Thatcher but was unable to bring the party together after a bruising leadership battle. Sunak had targeted her economic policy by suggesting that he would rather lose the Tory leadership race than “win on a false promise”. He lost the battle but seems to have won the war, at least for now.

The authority of Truss disappeared as quickly as she had garnered it when she won the leadership contest against Rishi Sunak who had warned of the dangers of Truss’s reckless economic views. But her ideological conviction in cutting taxes had won her the support of the Conservative Party rank and file.

Once in office, she went ahead and tried to execute it, resulting in the ensuing disaster. The new Chancellor Jeremy Hunt, who was appointed after Truss was forced to sack her close ally Kwasi Kwarteng, admitted that his predecessor’s mini-budget went “too far, too fast”.

The Bank of England had to warn that interest rates may need to rise by more than previously expected as inflation is increasing at almost its fastest rate in 40 years.

The U.S. President, Joe Biden, called Liz Truss’s original economic policies “a mistake” and said the economic turmoil that followed the government’s mini-budget had been “predictable”.

Even the head of the U.K.’s supermarket chain, Tesco, openly came out and said that the Conservatives “did not have a growth plan” and is warning of the challenges as a result of rising cost of living.

The story of Britain over the last few years has been one of one disaster after another. Brexit was a huge shock to the system and the nation is yet to recover from the costs imposed by moving out of the European Union.

Whatever the political arguments be, the economic rationale today looks quite weak and there has been no attempt by British policymakers to come to terms with this big shift in substantive ways.

Boris Johnson’s term that started off on such a great political majority ended up with a series of scandals and the party has not been able to find a suitable successor.

In the meanwhile, the Labour Party under Keir Starmer, has been on an offensive, emerging as the party of governance. It has capitalised on the political chaos ushered in by the Tories’ inability to get their act together and looks set to emerge as the winner in the next general election, likely to be in December 2024.

To manage this turmoil, Rishi Sunak had to step in. His history-making arrival in 10 Downing Street is fraught with challenges. It is certainly not for the faint hearted.

He has to steer the British economy at a time of its worst crisis in recent memory. He has to make the Conservative Party look like a party that still has in it to govern after the debacle of Boris Johnson and Truss periods.

At a time when The Labour Party seems set to win the next general elections, Sunak will have to work harder than usual to give the Tories a fighting chance. For this, he will have to make himself endeared to the rank and file of the Conservative Party. His economic policy is not going to be liked by them so he will have to present a tougher posture on issues like immigration.

For that he is already under pressure by bringing back Suella Braverman as the home secretary. The opposition parties are accusing him of doing a “sleazy backroom deal” with Braverman to gain the top post as they have questioned Braverman’s reappointment as home secretary after she admitted sending an official document to someone not authorised to receive it. She represents the right wing of the Conservative Party and her backing was key to Sunak getting the prime ministership. Certainly, Sunak would be hoping that he would not be prime minister only for the next 18 months when elections are due.

On the foreign policy front, continuity will persist as the U.K. continues to search for a post-Brexit external engagement. Much like his predecessor, he will continue with the U.K.’s steadfast support for the Ukrainians but it is clear that across Europe, the costs of this war are becoming more palpable. There is no real solution in sight at the moment as the two sides seem to be digging in for the long haul. There is already pressure on him to increase defence spending that he will find difficult to accept at a time of rising cost of living for ordinary Britons.

India-U.K. ties are likely to grow, given the convergence of interest between the two nations. But the U.K.-India Free Trade Agreement will be an important test of how much political capital Sunak is willing to invest in this important initiative.

The Indian Prime Minister Narendra Modi has already talked to Sunak and underscored “the importance of early conclusion of a comprehensive and balanced FTA”. Sunak will be observed closely at home in his dealings with India, so New Delhi’s expectations should be tempered with a sense of realism even as it welcomes Sunak’s emergence as the U.K.’s first prime minister of Indian descent.

This article originally appeared in The Bloomberg.

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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