Former Chancellor Rishi Sunak has won the race to become the next Prime Minister of the United Kingdom.
Sunak beat off competition from former Prime Minister Boris Johnson and Leader of the House Penny Mordaunt.
Mourdaunt took to Twitter and said:
Sunak will now replace Liz Truss whose premiership lasted for just 44 days. Truss Swept to power having beaten Sunak in this summer’s Conservative party leadership contest, in which she won 57.4% of member’s votes
But the former Chancellor faces a much tougher task as he takes up the hot seat than he would have should he have won that race.
In her short tenure, the shortest of any UK Prime Minister in history, Truss inflicted significant damage on the economy.
Unfunded tax cuts and no definitive plan on repayments saw the Pound plummet and the cost of Government borrowing soar.
And the mortgage market was not immune with rates hitting levels not seen since the financial crisis and lenders being forced to pull products en-masse in the face of market volatility.
To maintain market stability it looks certain that he will keep Chancellor Jeremy Hunt in post but the new Prime Minister will now set about building his cabinet.
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Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown:
‘’Gone are the days when Rishi Sunak was prepared to open the government coffers up to see the UK through a crisis. The pandemic spending spree is well and truly over and the former Chancellor will take the top job in the guise of a strict and austere headteacher.
“He will be determined not to see the bond market run amok again, threatening the country’s financial stability. He will be revelling in the fact that his curriculum of higher taxes and curtailed spending, which he preached on the campaign trail, is already being followed. However, it’s likely he will take an even harder line now on government budgets, given the punishment threatened to be handed out again comes in the form of much higher government borrowing costs. He will also want to show he is co-operating with the Bank of England by being ultra conservative fiscally in a bid to tame high inflation.
“Ties of loyalty to Boris Johnson still run deep though, and Rishi Sunak will find it hard to shake the traitor tag attached at the time of Johnson’s downfall. Garnering support across a divided party for highly unpopular spending cuts will be a hard task. He is likely to stay highly reliant on the hard Brexit wing of the party for support, which is likely to mean that hopes of a softening approach in talk with the EU on trade are likely to be wishful thinking.Â
“Rishi Sunak is set to stay a Brexiteer through and through and is also expected to continue to take a hard line on immigration, despite the struggles of businesses grappling with intense labour shortages. However, there may well be more progress with an Indian free trade agreement, which was put on ice, following a row over student visas. It’s likely he will push hard for a breakthrough, given the dearth of any positive news on the trade front for the UK.Â
“He is also set to style himself as a tech evangelist Prime Minister, given this record in funding tech start-ups while at the Treasury. With his experience as a hedge fund manager and the time he’s spent in California, right in the heart of the big tech industry, he will be expected to give a rocket boost to home grown tech talent. This will be no quick fix though, and new tech listings are likely to still be few and far between in the UK given the risk premium still attached to UK assets. ‘’
