By Gauri Patel
Staff Writer
Prime Minister Liz Truss announced her resignation after a short 44 days in office, the shortest tenure in the last 300 years of British history, according to AP. Her term was marked by economic turmoil after the introduction of her tax cut plan aimed at the highest earners and biggest corporations in the country, rocking financial markets and resulting in rebellion within her own Conservative party. Former finance minister under Boris Johnson’s premiership, Rishi Sunak, is set to take over as the leader of the Conservative Party.
“We set out a vision for a low-tax, high-growth economy that would take advantage of the freedoms of Brexit,” Truss explained in a statement outside 10 Downing Street. “I recognize though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party.”
When Truss was first elected in September, she proposed an agenda aimed at kickstarting economic growth, but her plan soon resulted in an immediate economic meltdown, according to The Conversation, with investors worrying that Britain could not afford the tax cuts she proposed. The value of the pound plummeted and the cost of mortgages increased, hurting people and businesses already struggling from an economy still bearing the effects of the pandemic, as stated by AP.
The Bank of England has intervened to restore market functioning in light of the significant repricing of the British and global financial assets by carrying out temporary purchases of long-dated government bonds.
This financial tumult resulted in Truss replacing her finance minister and closest political ally, Kwasi Kwarteng, with Jeremy Hunt. Hunt is now under pressure to find tens of billions of pounds of savings to reassure investors of the United Kingdom’s economic credibility and rebuild the country’s fiscal reputation, according to the BBC. He is due to present a new budget on Oct. 31 that is likely to cut spending and raise taxes in order to raise around £32 billion per year, as reported by Reuters.
The search to find Truss’s successor began immediately after her announcement.
The final two candidates included Rishi Sunak and Penny Mordaunt, CNBC, with Mordaunt dropping out of the race moments before the members of Parliament (MP) were due to announce their votes, meaning that Sunak became the U.K.’s first Prime Minister of South Asian descent, an important milestone for a country with an extensive colonial past.
According to USA Today, Rishi Sunak studied Politics, Philosophy and Economics at Oxford University. He was also a Fulbright Scholar at Stanford University where he studied for his MBA. He was elected as the Conservative MP for Richmond (Yorks) in May 2015 and served as a Parliamentary Private Secretary at the Department for Business, Energy and Industrial Strategy beginning in June 2017. Before entering the world of politics, he had a successful career in business and finance, working for Goldman Sachs and managing a hedge fund. He also co-founded an investment firm working with small, entrepreneurial British companies and helping them grow.
He resigned from his position as finance minister this past July due to his ‘fundamentally different’ ideas about how to address the economic crisis at hand. His triumphant return to politics is marked by his election as Prime Minister. As a member of the right-wing, Sunak is expected to have a moderate economic approach compared to his predecessor, and he is likely to favor pro-business policies. Previously in his career, he was a vocal supporter of Brexit and almost always voted for pro-Brexit policies in Parliament.
Sunak takes the reins at a time when the U.K. is in a political and economic crisis of historic proportions and will face many challenges in his new role, as it is up to him to right the ship after the tumultuous period under Truss.
“There is no doubt we face a profound economic challenge,” said Sunak at the Conservative Campaign headquarters in London in his first statement to Parliament as prime minister. “We now need stability and unity, and I will make it my utmost priority to bring our party together because that is the only way we will overcome the challenges we face and build a better, more prosperous future for our children and our grandchildren.”
