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As finance minister, Rishi Sunak put Britain on track for its heaviest tax burden since the 1950s. He also called for more public spending, while promising more discipline and less waste. He today he arrives at Downing Street to try to show that his plan is effective in putting a brake on a recession in sight.
In a statement issued on Sunday announcing his candidacy, Rishi Sunak had already outlined the main challenge he would face if he won the votes needed to be the British prime minister: a “profound economic crisis”.
It was precisely the economic program that brought down his predecessor, Liz Truss, just six weeks in office, as it roiled financial markets, raised the costs of living for voters and angered much of her own party.
After being elected, Sunak told Conservative lawmakers that his first priority was to provide economic stability, and the financial market seemed to begin to pave the way for him to do so.
UK government bond prices rose sharply on Monday after the former Goldman Sachs analyst scored a victory, immediately removing at least one source of uncertainty for investors.
The parliamentarian who arrives to accommodate the economy
Sunak, one of the richest politicians in Westminster, was finance minister between February 2020 and July 2022. And although he has said little publicly about how he intends to run the country and how he will deal with the multiple economic and political crises, the truth is that It will have on its shoulders to deal with very high inflation and enormous indebtedness.
Campaigning for the last race to which Liz Truss ended up defeating him, Britain’s first non-white leader of Indian descent criticized his rival’s tax-cutting agenda, saying he would instead only cut taxes once inflation was under control.
At the time he outlined a plan to cut income tax from 20% to 16% by 2029. Sunak has also backed the independence of the Bank of England.
Sunak receives an economy headed for recession
The UK faces an economically toxic combination of recession and rising interest rates. The Bank of England is trying to rein in double-digit inflation as consumers grapple with rising costs and falling real incomes.
Britain needs to restore its international financial credibility, after outgoing leader Liz Truss’s plan for unfunded tax cuts and a costly energy price subsidy spooked the bond market and forced the Bank of England to to intervene.
To balance a deficit worsened by rising borrowing costs, Sunak will likely have to closely monitor spending cuts and tax increases. On October 31, you must present your financial plan.
With Reuters and EFE
