New PM Rishi Sunak pledges to lead Britain out of economic crisis

  • Sunak meets King Charles on Tuesday morning
  • He vowed to restore faith in the country
  • Cabinet formation is expected to begin
  • Sunak has a big challenge to restore stability

LONDON, Oct 25 (Reuters) – Rishi Sunak became Britain’s third prime minister in two months on Tuesday, pledging to pull the country out of a deep economic crisis and rebuild trust in politics.

Sunak quickly reappointed Jeremy Hunt as finance minister in a move designed to calm markets that had been swayed by his predecessor’s debt-fueled economic plans.

The former hedge fund boss said he would unite the country and is expected to name a cabinet drawn from all branches of the party to end infighting and sudden policy changes that have spooked investors and international allies.

Speaking outside his official Downing Street residence, Sunak praised his predecessor Liz Truss’s ambitions to replicate economic growth but admitted mistakes had been made.

“He has been chosen as the leader of my party and your prime minister, in part to correct him,” said Sunak, who broke with his family’s tradition of standing and cheering political supporters.

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

Sunak said tough decisions lie ahead in terms of cutting public spending. Hunt, who Truss hired to calm the market with her dash for growth, is preparing a new budget with debt and growth projections due on Monday and warned on Tuesday that “it’s going to be tough”.

The new prime minister reinstated Dominic Raab as deputy prime minister, a role he lost during Truss’ 44-day tenure, but reappointed James Chaturai as foreign minister and Ben Wallace as defense minister.

Penny Mordaunt, who ended her bid to win the leadership contest against Sunak on Monday, retained her position as Leader of the House of Commons, the role that organizes government business in the lower house of parliament.

Sources said that she wants to become the foreign minister.

With his new appointments, Sunak appeared to be bringing in ministers from the Conservative Party and leaving others in office — a move that would ease concerns that Sunak might appoint loyalists instead of trying to unite the party.

Tough decision

Sunak, one of the richest men in parliament, is expected to cut spending to plug an estimated 40 billion pound ($45 billion) hole in public finances caused by the economic slowdown, high borrowing costs and an energy support scheme.

It will now require a review of all spending, including politically sensitive areas such as health, education, defence, welfare and pensions. But with his party’s popularity in freefall, the Conservatives will face growing calls for an election in 2019 if they miss many of their promises to win the election.

Economists and investors have welcomed Sunak’s appointment – Ryanair boss Michael O’Leary said the adults had taken over again – but they warn he has few options to improve the country’s finances as millions struggle to survive.

Sunak, who ran the Treasury during the Covid-19 pandemic, pledged to put financial stability and self-confidence at the center of the agenda. “This will mean difficult decisions,” he said shortly after accepting King Charles’ request to form a government.

Sunak has vowed to put the needs of the public above politics, amid growing anger at Britain’s political class and ideological battles that have raged since the historic 2016 vote to leave the European Union.

Workers heading to London’s financial district said Sunak, Britain’s youngest prime minister at 42 for more than 200 years and its first leader of colour, appeared to be the best of the worst.

“I think he was capable, and that’s really what we should expect at this point,” said James Eastbook, a 43-year-old management consultant.

With two prime ministers appointed in two months without a popular vote, some now call for a general election but others hope Sunak will stay until the next scheduled election, in January 2025.

Political maneuvering

Sunak, a Goldman Sachs analyst who only entered parliament in 2015, is challenged to end the factionalism that has weakened his party. Many Conservatives resent him for quitting as finance minister in July and fueling the widespread rebellion that ended Boris Johnson’s prime ministership.

Others wonder how a multimillionaire can lead a country when billions struggle with rising food and energy bills.

“I think this decision sinks us as a party for the next election,” one Conservative MP told Reuters.

Historian and political biographer Anthony Selden said that Sunak would also be constrained by the mistakes of his immediate predecessors.

“He has nothing but being extraordinarily conservative and cautious,” he told Reuters.

Many politicians and officials abroad welcomed Sunak’s appointment as a country once seen as a pillar of economic and political stability plunged into brutal strife.

Sunak, a Hindu, became Britain’s first Indian-origin Prime Minister.

US President Joe Biden described it as an “unprecedented milestone”, while leaders from India and elsewhere welcomed the news. Sunak’s billionaire father-in-law NR Narayan Murthy said he would serve the United Kingdom well.

“We are proud of him and wish him every success,” the founder of software company Infosys said in a statement.

($1 = 0.8864 pounds)

Written by Kate Holton and Elizabeth Piper; Edited by Hugh Lawson and John Boyle

Our Standards: Principles of Thomson Reuters Trust.

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