PM vows to lead UK out of economic crisis

| October 26, 2022

Rishi Sunak has become the United Kingdom’s third prime minister in two months and pledged to lead the country out of a profound economic crisis and rebuild trust in politics.

Sunak quickly reappointed Jeremy Hunt as his finance minister in a move designed to calm markets that had baulked at his predecessor’s debt-fuelled economic plans.

The former hedge fund boss said he would unite the country and was expected to name a cabinet drawn from all wings of the party to end infighting and abrupt policy changes that have horrified investors and alarmed international allies.

Speaking outside his official Downing Street residence, Sunak praised the ambition of his predecessor Liz Truss to reignite economic growth but acknowledged mistakes had been made.

“I have been elected as leader of my party and your prime minister, in part to fix them,” said Sunak, who broke with the tradition of standing beside his family and cheering political supporters.

“I understand, too, that I have work to do to restore trust, after all that has happened. All I can say is that I am not daunted. I know the high office I have accepted and I hope to live up to its demands.”

Sunak said difficult decisions lay ahead as he looks to cut public spending.

Hunt, who Truss appointed to calm markets roiled by her dash for growth, has been preparing a new budget alongside borrowing and growth forecasts due out on Monday, and repeated his warning on Tuesday that “it is going to be tough”.

The new prime minister also restored Dominic Raab to the post of deputy prime minister, a role he lost in Truss’s 44 days in office, but reappointed James Cleverly as foreign minister and Ben Wallace at defence.

Penny Mordaunt, who ended her bid to win a leadership contest against Sunak on Monday, also retained her position as leader of the House of Commons, a role that organises the government’s business in the lower house of parliament.

Sources had said she wanted to become foreign minister.

With his new appointments, Sunak was seen to be drawing ministers from across the Conservative Party while leaving others in post – a move that should ease concerns that Sunak might appoint loyalists rather than try to unify the party.

Sunak, one of the richest men in parliament, is expected to slash spending to plug an estimated 40 billion pound ($A72 billion) hole in the public finances created by an economic slowdown, higher borrowing costs and an energy support scheme.

He will now need to review all spending, including on politically sensitive areas such as health, education, defence, welfare and pensions. 

But with his party’s popularity in freefall, he will face growing calls for an election if he ditches too many of the promises that helped the Conservatives win election in 2019.

Economists and investors have welcomed Sunak’s appointment but they warn he has few options to fix the country’s finances when millions are battling a cost of living crunch.

Sunak, who ran the Treasury during the COVID-19 pandemic, promised to put economic stability and confidence at the heart of the agenda. 

“This will mean difficult decisions to come,” he said, shortly after he accepted King Charles’ request to form a government.

Sunak also vowed to put the public’s need above politics, in recognition of the growing anger at the UK’s political class and the ideological battles that have raged ever since the 2016 vote to leave the European Union.