Former British finance minister Rishi Sunak is set to become Britain’s next prime minister as his rivals quit the race, which analysts said, relieved some of the nervousness around the outlook for the UK economy, boosting domestic markets.
The 42-year-old will become the country’s third prime minister in less than two months, after his predecessor, Liz Truss, was brought down after just six weeks in office by an economic programme that roiled markets.
The former chancellor, who won Tory leadership contest on Monday, is poised to walk through the door of 10 Downing Street in London after an audience with King Charles III in Buckingham Palace, which is likely to be on Tuesday.
Prime Minister Narendra Modi on Monday congratulated British Prime Minister-elect Rishi Sunak and said he looked forward to working closely together on global issues and implementing the Roadmap 2030 for bilateral relations. “Warmest congratulations @RishiSunak! As you become UK PM, I look forward to working closely together on global issues, and implementing Roadmap 2030. Special Diwali wishes to the ‘living bridge’ of UK Indians, as we transform our historic ties into a modern partnership,” Modi tweeted.
The Roadmap 2030 for India-UK future relations was launched last year.
Sunak, the country’s first Hindu PM and the youngest to the position in 200 years, warned that the UK faces a “profound economic challenge” as he prepares to take power after emerging victorious in the race to succeed Liz Truss as prime minister.
The pound bounced back into positive territory against the dollar, having briefly turned negative, while FTSE 100 rose 0.6 per cent, supported by consumer sectors and industrials, but is underperforming the broader European markets, where the STOXX 600 was up 1.2 per cent.
Sterling fell 0.1 per cent against the dollar to $1.1291, having ricocheted between the day’s high of $1.1402 and the low of $1.1275 in volatile trading.
In a short address just hours after Penny Mordaunt pulled out of the race for 10 Downing Street leaving the route clear for him, the former Chancellor of the Exchequer, 42, vowed to make it his “utmost priority” to unite both the nation and his warring Conservative Party. “I will work day in and day out to deliver for the British people,” he said.
Rishi Sunak called on his warring Conservative Party to unite as the UK’s incoming prime minister bids to fix the crisis facing the economy.
Sunak’s fate was sealed after his last remaining rival, Penny Mordaunt, pulled out of the race for 10 Downing Street.
“We all owe it to the country, to each other and to Rishi to unite and work together for the good of the nation,” Mordaunt said in a statement on Twitter. The ruling Conservative Party confirmed Sunak, who is due to address rank-and-file MPs at 2.30 pm, has been elected leader.
Penny Mordaunt Pressed to Exit UK Leader Race as Sunak Advances
It is a remarkable turnaround in Sunak’s political fortunes, after the former Chancellor of the Exchequer quit Boris Johnson’s government in July and then lost out to Liz Truss in the last Tory leadership contest over the summer. But his repeated warnings that her plans would trigger economic chaos proved correct and put him in pole position when Truss’s premiership imploded.
Even so, Sunak was no shoo-in given the bitterness and division in the Conservative Party. He’s still tarnished in the eyes of many Tory MPs for his role in Johnson’s downfall, and the former prime minister’s flirtation over the weekend with what would have been an outrageous comeback just months after being ousted briefly threatened to derail Sunak’s hopes.
Rivals drop out
In the end, Johnson withdrew without showing he had the support of 100 Tory MPs needed to formally contest the leadership. Likewise, Mordaunt pulled out shortly before influential Tory MP Graham Brady was due to announce which candidates had surpassed that threshold.
Grassroots Tory members, who had the final say when Truss beat out Sunak last time, will have no input this time around.
But Sunak now faces a daunting task to try to bring unity to a party that has been through months of upheaval and is still tearing itself apart over fundamental issues including Brexit and the economy.
Some Tory MPs even say the party no longer has a mandate to govern, after a second change of leader since Johnson won the general election in 2019. “It will now be impossible to avoid a GE,” former Culture Secretary Nadine Dorries said on Twitter.
Josh Mahoney, senior market analyst, IG Group, London, said, “The news of Rishi Sunak’s successful bid to become the new Prime Minister has spared markets any additional uncertainty today (Monday), with the UK essentially set to be steered through this crisis by two chancellors.”
“Gilt markets have certainly responded positively, with falling yields bringing hope that we will see borrowing costs continue to ease after a turbulent Truss tenure. Nonetheless, with the pro-growth policies a thing of the past, the pound finds itself under pressure given the warning signs provided by the collapsing PMI surveys released on Monday morning,” he said.
Paul Johnson, director, institute for fiscal studies, speaking to BBC television, said, “One of the problems I think that the new prime minister and his new chancellor will face is that, given all the uncertainty that’s been created over the last few weeks, they may have to make more difficult decisions than they otherwise would have had to. Because the markets are still somewhat spooked and they are going to be wanting to see some clear and decisive action, perhaps more than they would have required (if) we had not had all this upset over the last few weeks.”
