“Liz, we have to be honest. Borrowing your way out of inflation isn’t a plan, it’s a fairytale,” the UK’s new Prime Minister Rishi Sunak, then in the running for the post,said back in July about the unfunded tax cut promises of former Prime Minister Liz Truss. Ms. Truss resigned last week after a tumultuous 45-day stint marked by a deep economic crisis.
Observers are saying Mr. Sunak had his “I told you so” moment when Ms. Truss’ tax plans in September’s “mini-budget” not only proved to be “fairytale economics” but plunged British markets into a mess that saw the Pound Sterling reach record lows against the dollar and the government’s borrowing rates skyrocket. Mr. Sunak’s cautionary statements came well before the IMF and Bank of England intervention that followed.
After Boris Johnson, his former boss, and Ms. Penny Mordaunt, the only other contender, pulled out of the race citing Britain’s need for “unity” and “certainty” in unprecedented times, the path was clear for Mr. Sunak to become the uncontested leader of the Conservative Party.
First elected as an MP in the 2015 general election and re-elected in 2017 from Richmond (Yorks), the Indian-origin Conservative politician and former investment banker had a fairly quick rise to power. He first served as the Parliament Under-Secretary in former Prime Minister Theresa May’s second term followed by his appointment as the Treasury Chief Secretary when Boris Johnson took charge in 2019. Ultimately, he took over the country’s second most important government position, Chancellor of the Exchequer, in 2020.
The highs and lows
The new Prime Minister’s political journey has been a ratings rollercoaster. He was the “rising star” politician for the Tories and the suave “Dishy Rishi” for British lifestyle magazines and tabloids when he took over as the Chancellor at a time when the pandemic-hit U.K. was facing its most difficult economic challenge since the 2008 recession. Mr. Sunak’s announcement of a $190 billion emergency spending plan in his first budget, authenticated his pledge of being a “whatever it takes” Finance Minister.
In late 2021, he doled out a £1 billion fund to help pandemic-hit businesses. His furlough program, which paid the salaries of millions of workers when they were temporarily laid off, made him the most popular member of the government. It was around this time that poll ratings and political pundits in Britain pegged him as more popular than his ex-boss Mr. Johnson. The 41-year-old Finance Minister was already being seen as one of the frontrunners to become the U.K.’s next Prime Minister.
His trajectory began to change in March this year when the former Chancellor faced criticism for his handling of Britain’s worst cost of living crisis since 1972. Interestingly, while Ms. Truss’ recent tax plans were criticised for being unequal, it was Mr. Sunak’s tax plans in the March minibudget, which faced criticism for failing to help the U.K.’s poorest families, instead of reducing the burden of the crisis. Multiple think tanks and economists said that the plan, while hiking taxes to record-high levels, would push 1.3 million people in the country below the poverty line next year.
While this was already affecting his undented approval ratings, it was followed by what British dailies called “exclusive” news about his wife Akshaya Murthy’s tax status. Ms. Murthy, the daughter of N.R. Narayana Murthy, the co-founder of Infosys, claimed a non-domiciled tax status in the U.K.
Ms. Murthy held a 0.93% or a $900 million (£690 million) stake in Infosys, meaning she received an annual dividend benefit on her holdings, but didn’t have to pay British taxes owing to the non-domiciled status. While Ms. Murthy eventually announced that she would be paying all her taxes in the U.K. to avoid the matter from becoming a “distraction” for her husband’s political career, another blow to his ratings was on its way.
In April, Mr. Sunak along with Mr. Johnson, was fined for a controversy dubbed ‘Partygate’, for reportedly breaching COVID-19 restrictions by attending the Prime Minister’s birthday gathering in June 2020. Mr. Sunak also was criticised for holding on to his American green card, which signified an intent to settle in the U.S., for two years after he became Britain’s Finance Minister.
In the aftermath of the successive rows and dissatisfaction over his economic policy moves, the politician’s once-soaring favourability ratings turned negative for the first time on April 13, dropping 26 points in a month to minus 20. The once ‘Dishy Rishi’ was accused by his political rivals of being “out of touch” with the everyday struggles of Britons.
When he was running for Prime Minister in July, rivals dug up a clip from an old television documentary about the class system in which the 21-year-old Mr. Sunak said he had friends who were “aristocrats” and had no “working class” ones.
Before he lost to Ms. Truss on September 5, he said about his economic plans in an interview: “I would rather lose having fought for the things that I passionately believe are right for our country, and being true to my values, than win on a false promise.”
His ratings turned around once again for the better as a YouGov poll of Tory members revealed last week that if given a chance to vote again, 55% would now vote for Mr. Sunak while just 25% would vote for Ms. Truss.
Banker to politician
Rishi Sunak was born in 1980 in Southampton on England’s south coast to parents of Indian descent who were both born in East Africa. He grew up in a middle-class family— his father was a family doctor and his mother a pharmacist— and says he inherited their hard-working ethos. Mr. Sunak studied in Winchester College, one of Britain’s most expensive and elite private boarding schools.
He received a degree in Philosophy, Politics and Economics from Oxford. His first job was at the American investment banking firm Goldman Sachs, from 2001 to 2004, after which he pursued an MBA at Stanford. He then dabbled in hedge fund management, between 2006 and 2010, and in 2013, he went on to establish his own start-up investment firm, Catamaran Ventures UK, with his wife.
The year 2015 marked the beginning of his political career when he was elected to Parliament. He has also found himself in the news for being one of the wealthiest MPs in the U.K., owning luxury cars, four properties and a blind trust fund earning him substantial income from his investments.
As a Brexit supporter and a former Johnson loyalist, he stuck with the former Prime Minister for the larger portion of the controversies that marked the end of his term. However, it was Mr. Sunak’s resignation from Mr. Johnson’s Cabinet on July 5 citing economic policy differences that paved the way for nearly 50 more resignations and eventually the exit of Boris Johnson from No. 10, Downing Street.
Having now become Britain’s first South Asian, Indian-origin and Hindu Prime Minister, who took his 2017 Parliamentary oath on the Bhagavad Gita, Mr. Sunak has a monumental task ahead of him.
While the Pound did recover a bit as news of Mr. Sunak’s new leadership role emerged, he is inheriting a U.K. economy that was headed for a recession even before the tax cut travesty spearheaded by Ms. Truss and her finance minister Kwasi Kwarteng. The country’s inflation is at a 40-year high and private sector output at a 21-month low this month. While investors hope for the new leader to stabilise the economy, he will also have to overcome allegations by rivals that he was a turncoat for quitting Mr. Johnson’s government as it foundered amid ethics scandals.