Britain’s Rough Justice for Rishi Sunak

He’ll need luck to pull that off. The beef with Ms. Truss was that her policies would push up interest rates on government debt and residential mortgages. But with inflation running above 10%, further increases to interest rates are inevitable—as Ms. Truss’s media critics are starting to admit now that they’ve goaded the Tories into ditching her. Rising rates threaten the kind of strain on financial markets and household budgets that was pinned on Ms. Truss. Now this is Mr. Sunak’s problem.

And what is his solution? As Chancellor under Boris Johnson, Mr. Sunak imposed tax increases on payrolls and corporations, plus a stealth tax hike on incomes via freezing income brackets amid inflation. That was set to drag the government tax share of GDP to its highest level in 70 years.

These tax increases contributed to the current stagflation by depressing productive private investment. The new Prime Minister at times has hinted he was unenthusiastic about some of those policies, which he blamed on Mr. Johnson. Now he’s stuck with a mandate to implement them anyway. He also is stuck with many of the net-zero climate policies driving up energy costs, which Mr. Sunak didn’t fully eschew as a leadership candidate.

One thing he lacks is a plausible plan to revive economic growth. He and his backers have cultivated the view that the British economy will grow as long as markets keep funding bonds at low rates, so high-tax policies that soothe bond investors are pro-growth. If this were true, Britain would have boomed in recent years as bond rates hit historic lows. Instead, a house-price bubble inflated and financial markets grew distended with easy money.

Markets cheered Mr. Sunak’s rise to power, with yields on government bonds falling and the pound stable at about $1.13 after his victory was announced. Interpret this cautiously, since investors expect Mr. Sunak to take political pressure off the central bank to raise rates more aggressively. Ms. Truss planned to increase incentives for productive investment to take some of the sting out of normalizing rates. Mr. Sunak plans to placate bond markets by immiserating households and businesses with higher taxes and lower growth to forestall the higher yields bond investors fear.

The Tories seem to think this is a winning electoral strategy, and good luck to them. An early election is becoming harder to resist by the day. Mr. Sunak can try to hang on until January 2025, the latest date at which an election must be held. But recent months have laid bare the Tories’ political divisions and intellectual exhaustion after 12 years in power. The rough political justice for Mr. Sunak is that he will have to lift the economy, and the Tories, out of the deep hole he helped to dig.