Rishi Sunak Is Tories' Last Hope To Shore Up Image And Economy Ahead Of Next Election

Rishi Sunak is set to become prime minister of the U.K., making him the first ethnically diverse and the youngest leader of the country.

“I want to fix our economy, unite our party and deliver for our country,” Sunak had said as he announced his candidature for the job. 

He won the post unchallenged as his chief competitor Penny Mordaunt dropped out of the race at the last minute, endorsing support for Sunak. “It is clear that colleagues feel we need certainty today… Rishi has my full support,” she said.

The opposition may challenge this with a no-confidence motion, but for now that is not expected. Several publications had called for an early general election, including a petition to this end from the Independent, after the Liz Truss government imploded. Moreover, Sunak's win comes from a vote among members of parliament rather than a larger democratic process. This may be raked up time and again in Sunak's tenure. 

Still, there could not be a better situation for Sunak to take over as the British government's leader. While the task before him remains daunting from tightrope walk between rising costs and spurring growth to address the cost of living crisis, the threshold for tolerance of Sunak's policies should be quite high. 

“If we are to serve the British people successfully, the Conservative Party needs unity, stability and the skills to fix the challenges we face,” said Suella Braverman who resigned as U.K.'s home secretary under Liz Truss triggering the fall of the short-lived government.

Sunak is now practically the party's last hope to unify behind a leader and effect change in the run-up to the next general election in January 2025. It is in the interest of the party to avoid this by backing Sunak unquestioningly, hoping that his policies will help shed the morally compromised image cast by Johnson or that of political immaturity set by Truss. 

“Rishi is the leader to raise this country back to where it belongs,” said Huw Merriman, member of parliament, and the chair of Transport Select Committee. “We have adopted his policies. It's now time to have him leading our country and delivering them.” 

“The opportunities--if we make the right choices--are phenomenal,” Sunak said. There is an urgency to address the energy crisis exacerbated by Russia's increasing offensive against Ukraine and the high inflation pressure on households.  

Yet, despite the pressure to effect change quickly, Truss' will be a cautionary tale for Sunak with regards to consensus building before big announcements. As he collates the leadership team under him, rather than focusing on diversity or pure political affiliations, MPs expect Sunak to find a balance between the established and the new. He is likely to hold off rubbishing actions taken before him for a slower approach to change, while putting higher emphasis on U.K.'s unity initially. To start with, observers will look for his approach to Wales and Scotland, that remained neglected under Truss. 

Sunak has the advantage of experience and continuity. Much of his term as chancellor (or finance minister) was overcast with the Covid pandemic rescue efforts. Understanding what the government faces will perhaps come easier to Sunak than his peers. 

It is for this reason that through his initial run of PM in July, Sunak steered clear of promising big-ticket tax breaks. At the same time, tuning out the opposition completely backfired for Truss. Sunak, who remains silent on the win till this went to print, would do well to take a balanced approach. 

The first issue Sunak is expected to address is the country's debt crisis that plunged the pound over the last month. The country stares at a £34-billion expense gap to fill which according to the current chancellor Jeremy Hunt may require government job cuts and austerity measures. The bond market recovered on Monday on hopes of action from Sunak. What that action could be remains a question, given the lack of politically palatable options. 

Sunak's earlier project to improve the National Health Service is expected to be resurrected, but that too will come at a cost. Truss had offered to scrap the National Insurance levy of 1.25% that had come into effect since April to better fund the NHS and reduce the huge backlog that has accumulated due to added pressure from the pandemic. The rollback of the levy was expected from Nov. 6, but with the collapse of that government may remain unchanged. Among those looking to destabilise him, the charge could certainly haunt a new PM trying to address cost of living. 

The solution the Truss government found to low-cost energy was to resume fracking, or extracting gas by drilling into the ground. However, the practice was scrapped in 2019 after local environmentalists protested. A motion to resume under Truss turned highly controversial and did not pass. There are other initiatives that were launched by the Johnson administration in nuclear power generation, including Rolls Royce's mini-nuclear reactor--but it is not likely to yield results in the immediate term. The earliest testing deadlines are forecast in 2025. Sunak will likely need to find solutions to securing energy soon. 

The newly appointed premier will need policies to boost trade and negate the impact of Brexit being felt on the island nation. While Sunak was a supporter of Brexit, over the last year he has refrained from making public statements on it. Ahead of PM Johnson's resignation the issue had reached a crescendo over trade policies with Northern Ireland. This will put his diplomatic skills to the test. He must stand firm on the U.K.'s resolve and still create soft trading relations with continental Europe which is reeling from many similar issues.

Lastly, observers will test Sunak's approach on the Russia-Ukraine offensive. Will Sunak take Ukraine's tweet--“Better call Johnson”--in jest? 

The charter set for Sunak remains large, but this is a better win than he had secured it in September. He is seen as a more leader who will stem the uncertainty and restore balance in the U.K.

Deepali Gupta is a London-based senior business journalist and the author of `'Tata Vs Mistry: The Battle for India's Greatest Business Empire'.

The views expressed here are those of the author and do not necessarily represent the views of BQ Prime or its editorial team.