Rishi Sunak Is Making All the Wrong Friends

(Bloomberg Opinion) -- Rishi Sunak is winning lots of friends in all the wrong places. The international elite may have embraced the UK’s prime minister as one of their own but voters’ don't share their enthusiasm. His Conservative party is polling at 25%, just as it was in early January.

At the White House next week, President Joe Biden will give Sunak the warm welcome that befits a serious player who helps rally the West behind Ukraine. Also high on their agenda is AI regulation, now the fashionable focus of doom-mongers everywhere. Sunak, a Stanford MBA, knows his Silicon Valley, and Britain is ranked third only behind the US and China in developing the revolutionary technology.  

Elsewhere on the international stage, European Commission President Ursula von der Leyen greets the prime minister as “Dear Rishi.” Even Brexit-phobic President Emmanuel Macron of France hugs him close. At their last meeting, Macron kicked officials out of the room before getting down to more than an hour of “tech-bro” talk. Last week, Kristalina Georgieva, the International Monetary Fund’s managing director, also gave her seal of approval to Sunak’s fiscally orthodox economics. The IMF has scrapped its forecast that the British economy will go into recession this year. And the UK won't be the worst-performing country in the G7 either. 

All politics, however, is local. None of these panjandrums gets to vote in the UK’s general election, due within 18 months. The history of modern democracy — from Winston Churchill in 1945 to George H.W. Bush after his Gulf War — is littered with fallen leaders who cut a dash abroad but are rejected by their domestic voters.

What of the prime minister’s standing at home? The elites here like him too. Even hostile commentators struggle to say anything unkind about him personally. Their best shot is that he is in hock to a rigid Thatcherite ideology unsuited to modern times — though the critics struggle to match this analysis with his pump-priming of the economy during the pandemic when he was chancellor. 

In fact, the loudest grumbling comes from his own side. The Tory magazine despairs of “Red Rishi,” who steals Labour’s windfall tax and regulation plans and has imposed the highest tax burden since the war. Last week, No. 10 floated the idea of voluntary price controls on “basic” supermarket items. His free-market heroine, Thatcher, must be turning in her grave.

Yet it is hard to dislike a man whose only vice appears to be a sweet tooth. Young dads everywhere applauded his achievement at running a 10k in 47 minutes last week. Young mums like a hard-working family man too. Hardly surprising then that “Brand Rishi” is much more popular among millennials than that of his toxic Conservative party — he can’t believe in all that hardline stuff on immigration and Brexit, can he? (Well, yes, he can).

In theory, that should count for a lot. Millennials make up 26% of the electorate and represent the largest demographic cohort in more than 50% of British parliamentary constituencies. Yet, unfortunately for Sunak, who wasn’t even born when Thatcher entered Downing Street in 1979, he is not getting their vote. 

A survey of 8,000 millennial voters aged 25-40, conducted by Onward, the center-right think tank, describes them as “shy capitalists.” Millennials are socially liberal, support spending on public services, especially the National Health Service, but resent paying record levels of taxation and high marginal rates. Squaring these contradictions is a headache for all political leaders, but Sunak is operating with one hand tied behind his back. Millennials’ demand for affordable housing comes smack up against the government’s Nimbyism on house building, designed to appease both its owner-occupier pensioner vote and rebellious Conservative backbench MPs. Labour’s offer to liberalize planning in the green belt is far more attractive.

Other Tories fear that if Sunak, in practice, stands for tax and spend and greater government intervention, then why shouldn’t millennials, or for that matter Brexit voters in the North and Midlands, turn to Labour who really believe in these policies?

The opposition leader Keir Starmer, damned by his critics as dull, still beats Sunak when it comes to “best prime minister” ratings. Polls puts Sunak’s personal ratings in negative territory, at -14. Boris Johnson’s “friends” also gleefully point out that, despite the scandals attached to his name, he is 10 points more popular than Sunak among those who voted Tory in 2019. By no coincidence, Johnson publicly voiced doubts this week that Sunak can win an election without making a more attractive offer on tax.

The line from the chief Tory strategist Isaac Levido is that the party walks a “narrow path to victory.” Last week, however, that path almost vanished in the mist when the Office for National Statistics revealed that inflation hadn’t dropped by nearly as much as forecasts had anticipated. Core inflation — excluding energy and food — was actually up. The cost of borrowing has increased from 0.1 percent in December 2021 to 4.5% today. Only a third of these rises have yet fed into the economy. The danger is that further rises will choke off growth.

Chancellor of the Exchequer Jeremy Hunt has said he is willing to risk recession as long as inflation comes under control. That’s hardly an election-winning formula even if he and his boss get top marks from the IMF for economic virtue. Former US Treasury Secretary Larry Summers on Thursday told the BBC that the economy was riding for a fall with interest rates at the current level. Bond yields have reached levels unseen since the market turmoil that ejected Sunak’s predecessor, Liz Truss, from office last October. The markets now anticipate that interest rates will peak at 5.5%. Those who bought houses at inflated prices a few years ago will find the cost of servicing their mortgage soar once their fixed-rate terms come up for renewal.

Sunak is swimming against the tide. Standards of living are falling for most people. Many prime ministers before him have gone down to defeat even if they were more personally popular than their opponents. As a Thatcherite, he will know that the Iron Lady would never have got her feet in the door of No. 10 if it had been a personal popularity contest. Still, she too became popular on the international circuit out of office.   

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Martin Ivens is the editor of the Times Literary Supplement. Previously, he was editor of the Sunday Times of London and its chief political commentator.

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