New PM Rishi Sunak Warns UK Faces ‘Profound Economic Challenge’

Rishi Sunak called on his warring Conservative Party to unite as the UK’s incoming prime minister bids to fix the crisis facing the economy.

New PM Rishi Sunak Warns UK Faces ‘Profound Economic Challenge’
New UK Prime Minister Rishi Sunak. (Photo: Bloomberg)

Rishi Sunak warned the UK faces a “profound economic challenge” as he prepares to take power after emerging victorious in the race to succeed Liz Truss as prime minister.

In a short address just hours after Penny Mordaunt pulled out of the race for 10 Downing Street leaving the route clear for him, the former Chancellor of the Exchequer, 42, vowed to make it his “utmost priority” to unite both the nation and his warring Conservative Party. “I will work day in and day out to deliver for the British people,” he said.

Sunak faces a formidable challenge to steady the UK economy in the face of headwinds including double-digit inflation, rising interest rates, and a surge in mortgage costs. After Truss’s disastrous seven weeks in power left the Tories languishing in opinion polls, he also has a tricky task to unite the different Tory factions, with many of the party’s Members of Parliament blaming him for the downfall of Truss’s predecessor, Boris Johnson, earlier in the year.

Watch: Rishi Sunak calls for stability and unity.Source: ITN)
Watch: Rishi Sunak calls for stability and unity.Source: ITN)

Earlier, Sunak told Tory MPs their party faces an “existential threat,” according to Simon Hoare, a Tory lawmaker present at his address behind closed doors. His call for unity echoed Mordaunt’s words in her concession shortly before 2 p.m. local time. She had urged the Tories to “unite and work together for the good of the nation.” 

By dropping out, Mordaunt ensured there was no need for a runoff vote among grassroots party members, which had been scheduled to run until Friday. The handover of power to Sunak from Truss is now likely to take place as soon as Tuesday, though the prime minister’s spokesman, Max Blain was unable to confirm the timing, saying it will be worked out later on Monday. Nevertheless, he told reporters it won’t take place on Monday.

It is a remarkable turnaround in Sunak’s political fortunes, after the former Chancellor of the Exchequer quit Boris Johnson’s government in July and then lost out to Truss in the last Tory leadership contest over the summer. But his repeated warnings that her plans would trigger economic chaos proved correct and put him in pole position when Truss’s premiership imploded.

Johnson’s Shadow

Even so, Sunak was no shoo-in given the bitterness and division in the Conservative Party. He’s still tarnished in the eyes of many Tory MPs for his role in Johnson’s downfall, and the former prime minister’s flirtation over the weekend with what would have been an outrageous comeback just months after being ousted briefly threatened to derail Sunak’s hopes.

In the end, Johnson withdrew without ever showing he had the support of 100 Tory MPs needed to formally contest the leadership. Likewise, Mordaunt pulled out shortly before influential Tory MP Graham Brady was due to announce which candidates had surpassed that threshold.

It effectively meant a coronation for Sunak, 42, who becomes the UK’s first Hindu prime minister and the country’s youngest in more than 200 years. Grassroots Tory members, who had the final say when Truss beat out Sunak last time, will have no input this time around.

— Bloomberg UK (@BloombergUK) October 24, 2022
New PM Rishi Sunak Warns UK Faces ‘Profound Economic Challenge’

But Sunak now faces a daunting task to try to bring that unity to a party that has been through months of upheaval and is still tearing itself apart over fundamental issues including Brexit and the economy. The party is trailing badly in opinion polls and must call an election by January 2025 at the latest.  

But some Tory MPs have said the party no longer has a mandate to govern, after a second change of leader since Johnson won the general election in 2019. “It will now be impossible to avoid a GE,” former Culture Secretary Nadine Dorries said earlier on Twitter. But Sunak told his MPs there will be no snap election, according to Hoare.

Tory ‘Psychodrama’

On Monday, there were signs that Tory MPs are prepared to rally behind their new leader. After Sunak’s address, former Tory leader Iain Duncan Smith -- a Brexiteer on the ideological right of the party -- told reporters: “It’s time to end this psychodrama.” And Alex Chalk, a Remainer from the party’s moderate One Nation faction hailed Sunak’s “incredible speech.”

“We’ve got to move forward,” Chalk said. “He said it with an articulacy and a power that brought the room to life.”

Truss’s decision to step down followed weeks of turmoil as investors jettisoned UK assets. Her economic plan, including borrowing to pay for massive tax cuts, rattled markets and turned voters further against the Tories in record numbers.

A Long To-Do List for the UK’s Next Leader: Balance of Power

After firing her first finance minister and long-time political ally, Kwasi Kwarteng, Truss brought in Jeremy Hunt -- who backed Sunak on Sunday -- to try to restore calm.

Hunt managed that to a degree, but also put the government on course to impose another punishing round of austerity at a politically sensitive time as Britons struggle with soaring living costs.

In a column for the Telegraph newspaper late Sunday, Hunt indicated that he and Sunak are aligned on how to tackle the economy. Sunak will “turn the page on what went wrong, take decisions in the national interest and rebuild the extraordinary potential of our economy,” Hunt said.

Hunt is due to deliver a major statement on the Treasury’s tax-and-spending plans on Oct. 31, a date picked to better inform the Bank of England on how quickly it should raise interest rates. UK bonds surged at Monday’s open on expectations of a Sunak premiership.

--With assistance from .

(Updates with details on timing of handover in third paragraph.)

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