Rishi Sunak has become the next Prime Minister of Britain after winning the race to lead the Conservative Party. His opponent, Penny Mordont, withdrew his candidacy because of lack of support from Conservative Party lawmakers. For Rishi Sunak, who reached the post of PM, there is little possibility of the road ahead being easy. There is still a possibility of Britain being surrounded by political and economic crisis and the same challenges await the new PM of Britain. The toughest challenge before the new British youngest prime minister is to get Britain’s economy back on track. Sunak has also admitted that there is a need to take immediate action on the economic front.
how it all started
It all started when the Liz Truss government presented its “mini-budget”. In this, he and his chancellor, ie Finance Minister Chancellor Kwazi Quarteng, announced a ‘mini budget’. This budget remained only between these two. Truss later admitted that he had never included the rest of the cabinet members.
In this budget of the truce, there was a fierce plan to increase government spending and reduce government taxes. Its purpose was to give relief to the people from inflation and to accelerate the stalled economic development of the country. However, this plan backfired. In this, there was talk about a tax cut of 45 billion.
latest video
This destabilized the market and caused an almost financial meltdown in the UK. This budget failure was pre-planned and did not come suddenly. Liz Truss, who replaced Boris Johnson as prime minister after defeating Rishi Sunak, was repeatedly warned by Sunak against extravagant tax cuts and increased spending.
During one of the debates, Sunak said, “There is no plan to take the credit route to get out of inflation; It’s a fairy tale fantasy.” Sunak was right and it turned out to be not a fairy tale but a nightmare and so scary that not only did Kwazi Quarteng lose his job, but Truss also lost his PM post. Now he’s in the UK Will be remembered as the Prime Minister who has been PM for the shortest time in three centuries in the history of India.
These are the political challenges
Boris Johnson is famous as the infamous former PM of Britain. He was sacked in July 2020 for attending a party during the Kovid lockdown and later lying about it. According to Indian time, on Monday morning, Johnson had decided to stay out of the race for the post of PM.
The match was between Penny Mordont and Rishi Sunak, but in this also Sunak won. Sunak is seen as an able economic policy maker who speaks in a straight and honest manner. Right now the UK also needs a leader like this. He is the black PM of this country.
There may be some doubt or prejudice among the general public of the country because of taking office as Britain’s first non-white prime minister. Sunak is the second replacement for the Tories’ elected PM post to maintain the 2019 electoral mandate. It is seen by many in the UK as a spectacle of democracy.
The use of truss for the country’s economy is clearly a tragedy. In other words, despite Sunak’s victory, the fate of the Conservative Party is still in danger. It is not only because of the economic crisis caused by the policy of the truce, but because of the political crisis of credibility (or lack thereof) that the Tories are facing.
The first challenge in Rishi Sunak’s politics is to control the Conservative Party. Even though this party has the largest majority in the British Parliament, there is no unity in it. MPs have different views on issues like Brexit. Rishi Sunak was in support of Brexit, but some people in the party are soft on the European Union. Sunak may also have to face pressure on the ongoing talks with Brussels on the important issue of trade with Northern Ireland.
No less financial problems
1- The key challenge facing the UK economy in the near future is the terms of trade. Here the prices of imports are increasing as compared to exports. The effect of this is that inflation is increasing here and household income is decreasing. It is feared that its impact will be seen in both the domestic and corporate sectors in the coming years. The important question is how will this loss be compensated.
2. This shock of rising cost of goods will affect those households who are least able to bear it. A sharp rise in mortgage costs in the medium term can take any consumer recovery till 2024. That is, it will be impossible to recover in the same year.
3. The UK is plagued by recession and rising interest rates. The Bank of England is trying hard to control inflation. The British are facing the problem of rising cost of things and declining income. The biggest challenge before Sunak is to balance the budget and cut expenses.
4. Weakness in the supply side of the UK economy is now an immediate concern. Whereas production is also 2.6 percent less than the trend before the Kovid epidemic.
5. Unemployment is expected to increase in the near future due to falling demand.
7. Inflation is expected to increase. Even though it is expected to fall from its peak (12 per cent), it is expected to remain at the maximum level during 2023.
troublesome circumstances
This is what the IFS report finally says is most worrying for any British policy maker. According to the IFS, “Britain’s economic policy oscillates between the risk of a self-spread recession on the one hand and the risk of de-anchoring inflation on the other.” A difficult transaction is on a damaging path.” De-anchoring means that short-term price hike shocks can replace long-term expectations.
Simply put, with retail inflation in double digits on the one hand, there is a crisis of livelihood. On the other hand there is the problem of stalled economic growth, which in turn leads to low revenue and high debt. The problem is that the government curbs spending to control inflation. This step further slows down the pace of economic growth.
Any attempt to spur growth by keeping interest rates low and increasing government spending only worsens inflationary conditions. This reduces the buying power of the people. In such a situation, it will be interesting to see what policy response Rishi Sunak chooses in such situations.
Also read:
Even after the resignation of Liz Truss, the path of Rishi Sunak is not easy, know where is the obstacle?
