What challenges await Rishi Sunak as the new PM of the UK?

Just seven weeks after losing the race for 10 Downing Street, former British chancellor Rishi Sunak addressed Britain as its prime minister on Monday.

Sunak’s elevation to Britain’s highest office marks many firsts. He is the first Hindu, a practising one, and first person of colour to hold the job. Not to mention the first UK PM of Indian and South Asian descent. At 42, Sunak is Britain’s youngest leader in more than 200 years and the first millennial to enter 10 Downing Street.

A teetotaller, Sunak was born in Southampton in southern England five months into the 1980s to Hindu parents of Punjabi Indian background who had migrated to Britain in 1960s. His father, a retired doctor, and his mother, who ran a pharmacy, were born and brought up in present-day Kenya and present-day Tanzania respectively.  

The eldest of three children, Sunak attended the exclusive 640-year-old Winchester College boarding school before graduating with a first-class degree in Philosophy, Politics and Economics from the University of Oxford in 2001.

In 2006, he completed MBA from Stanford University as a Fulbright Scholar. This is also where he met his now-wife Akshata Murty, the daughter of billionaire Infosys co-founder NR Narayana Murthy. 

Akshata, an Indian citizen, holds a 0.93% stake in the software giant valued at about $718 million. The fashion designer and Sunak married in Bengaluru in 2009 in a two-day ceremony attended by 1,000 guests.

Britain’s third prime minister in seven weeks, Sunak had a career in finance before entering politics. He worked for American investment bank Goldman Sachs as an analyst from 2001 to 2004. In 2006, he joined London-based activist hedge fund TCI, founded by billionaire Chris Horn, and consequently became a multi-millionaire in his mid-20s. 

He left TCI in 2009 to set up his own hedge fund Theleme Partners with a colleague. As a result, he is now also the first former hedge fund manager to be a British premier.

Sunak’s political career began in 2010 when he started working for the Conservative Party. He was first elected to parliament in 2015 from the safe Conservative constituency of Richmond in northern England. Since then, his rise in British politics has been nothing short of phenomenal. He joined former PM Boris Johnson’s Cabinet in 2019 and later that year was re-elected in the general election with a bigger majority.

In February 2020, he became one of the youngest British finance ministers in history and earned praise for providing unprecedented pandemic financial support to help Britain’s economy cope with lockdowns. Sunak quit Johnson’s government in July this year after it was hit by one scandal after another. 

Sixteen weeks later, as he comes back as the Prime Minister following a successful second attempt, a two-front battle awaits him.

Not only will he have to hold together a fractured and divided Conservative Party, he will also have to steer the Ship of State through an economic crisis that got the better of his predecessor Liz Truss. Meeting both these challenges will be vital if Sunak wants to restore Britain's credibility, which has taken a beating on the global stage.

Liz Truss’s economic programme of tax cuts had roiled the markets and sent the British pound to a record low against the dollar. The Bank of England was forced to intervene in the bond markets to stablise borrowing costs. 

Even as the British economy faces a slowdown and the threat of a recession, the inflation rate has hit a four-decade high. British households have been hit hard by rising energy costs, which are the result of a volatile global energy market owing to Russia’s ongoing invasion of Ukraine. 

The cost-of-living crisis directly impacts significant portions of the population that Sunak needs to win over to shore up his position amid political instability. The Sunak government will also have to restore Britain's fiscal credibility.

The urgent task ahead for the Brexiteer will be to plug a 40-billion-pound gap in Britain’s public finances. This will call for deep spending cuts, a difficult proposition at a time when his party's standing has taken a hard knock.

His father-in-law and billionaire Narayana Murthy said he is confident Sunak will do his best for Britain as Prime Minister. 

  

Markets echoed the sentiment as the pound rose on Tuesday. It remains to be seen whether his party and the general citizenry will support him in equal measure going ahead.