Rishi Sunak’s tryst with destiny | The Financial Express

Rishi Sunak’s tryst with destiny

His challenge is to deal with the economic crisis, a divided party and nation.

Rishi Sunak’s tryst with destiny
Rishi Sunak (Reuters)

The UK’s new prime minister Rishi Sunak will doubtless hit the ground running to address the serious problems faced by the economy and cost of living crisis affecting millions of Britons. As the third premier since the Conservatives came to power in 2019, he is the youngest in the nation’s modern history. He is also the first Asian of Indian origin to assume high office, exemplifying the rise of global Indians to positions of importance in politics and business in the developed countries—like Kamala Harris as vice- president of the United States and Leo Varadkar in Ireland, to name a few instances. Sunak has vowed to come to grips with the “profound economic challenge” facing the country while seeking to bring the deeply divided Conservative Party and the nation together. Another major challenge is also to reset and calibrate the UK’s ties with important nations in a post-Brexit world of diminished British influence, geopolitical tensions due to the ongoing war in Ukraine and the rise of China. All eyes naturally will also be on what the new PM will do to bolster ties with his country of origin.

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The new PM’s topmost priority, however, will be to tackle the UK’s economic crisis on a war-footing. The country’s economy is virtually in recession, and in fact declined much more due to Covid-19 in 2020—by 11%, the largest in more than 300 year—according to the revised data of the Office of National Statistics. The latest October numbers also indicate economic activity has contracted at its fastest pace in almost two years. The policy imperative will be to reassure markets by ensuring that borrowing costs are held down after they vetoed the outgoing PM’s plans to boldly cut taxes to grow the economy, which resulted in a massive fiscal hole of 40 billion pounds. Sunak is a fiscal conservative although some sections of the Conservative Party consider him a socialist for his penchant to raise taxes. For such reasons, he is expected to be in step with chancellor Jeremy Hunt’s efforts to push through a mix of tax hikes and spending curbs to steadily reduce debt over a five-year period. The big question is whether his fractious party will rally behind him. At a time when recessionary winds are blowing through the economy, the impending rate hikes by the Bank of England to check inflation will also deepen the pain of millions of Britons who are experiencing the biggest squeeze on their incomes since World War II, according to the Financial Times.

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Given Sunak’s background, there is a need to dampen unrealistic expectations that he will strongly bat for closer relations with his country of origin. Nothing could be further from the truth. At the end of the day, he is a Briton and will uphold the national interest in the UK’s relations with the rest of the world, including India. Look no further than the hardline views on visa concessions—a critical area of interest of India in its FTA negotiations with UK—by the previous home secretary, Suella Braverman who also has Indian origins. Sunak has also in the past expressed a preference for a higher level of ambition when considering services. Nevertheless, considering the long historical association between the two nations, there are grounds to be cautiously optimistic that bilateral ties will acquire more economic ballast during his premiership.

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First published on: 26-10-2022 at 04:30 IST