The road ahead for Rishi Sunak

Low growth, high inflation and a fragmented party are key challenges that await the United Kingdom prime minister

Rishi Sunak on Tuesday became the first person of colour, the first Hindu, and the youngest (he is 42) in 210 years to be named prime minister (PM) of the United Kingdom (UK). But celebrations (including in India, where his family’s roots in undivided India, and the fact that he is married to the daughter of the country’s best-known technology entrepreneur, have made his rise to the top a matter of national interest, and even pride) will have to wait. That’s because Mr Sunak, the UK’s third PM in a month-and-a-half, faces tough economic and political challenges.

Looking beyond his immediate challenges, the UK’s new PM is not expected to deviate from the Conservative Party’s core ideology. (Reuters)

The former Chancellor of the Exchequer will have to help the UK — the only major economy yet to reach its pre-pandemic size — navigate its way out of a period of low growth and high inflation. That will mean unpopular cuts on government spending, and it could mean more unpopular tax hikes (on top of rates that are already seen to be too high) as Mr Sunak works to bridge a gaping $40 billion deficit in the budget. Details of these will emerge on October 31, which means the new PM has just around a week to finalise a plan that could very well decide the future of his prime-ministership, and that of his party and the economy. Bond markets have already reacted positively after Mr Sunak won the leadership race within his party. On the political front, he will have to unite a fragmented party. There are deep divisions within the Conservative Party, largely on the issue of economic policy. The Conservatives have governed the UK since 2010 (till 2015 in alliance with the Liberal Democrats, and then on their own), but, according to opinion polls, would lose if elections are called today — one reason why the party is keen on finding a leader it can unite under and continue to govern till 2024 when the general elections are due. To be sure, unless Mr Sunak is able to work a miracle, both with the party and the economy, Labour does look like the likely winner then.

Looking beyond his immediate challenges, the UK’s new PM is not expected to deviate from the Conservative Party’s core ideology — he is a Brexiter; has shown fiscal conservatism in his economic policies; and supports a stronger policy on immigration. But these, while relevant, will take a backseat for now — how Mr Sunak tackles his immediate economic challenges will decide whether or not the UK sees an early election in 2023.