Kingdom in strife: Rishi Sunak's 3 immediate challenges as UK PM

Rishi Sunak is set to take over as UK Prime Minister, replacing Liz Truss whose tenure lasted just 44 days - making it the shortest in British history. Sunak's dramatic return after nearly two months when he lost out to Truss reflects the scale of the crisis in the UK. The Conservative Party's swift move against Truss, whose disastrous economic policies exacerbated the market turmoil, shows the expectations the party will have from Sunak. The former chancellor himself has termed the crisis facing the country as "profound" and said that he would work day in, and day out for the British people to fix the economy.  

Also Read: As Rishi Sunak becomes UK PM, Anand Mahindra shares Winston Churchill’s 1947 comments on Indians
 

Key challenges ahead of Sunak  

Economy - inflation and growth slowdown   

Sunak's immediate challenge would be to assure the people and markets that he has plans to deal with inflation and the energy bill crisis. In the UK, inflation is currently at a decades-high of over 10%, making things costlier for the UK residents. He has advocated tough measures to control inflation by tightening government spending and tax hike. Sunak will, however, have to be mindful of the slowdown, as excessive tightening may lead to a recession - a situation the ruling party can't afford. The IMF has projected 0.3 per cent growth for the UK next year - this may spell trouble for Sunak as persistently high inflation with stagnate growth will in no way make things easier for him.   
  
Energy crisis 

Russia's attack on Ukraine and subsequent sanctions by the West on Moscow have disrupted the energy supply to Europe. In the UK, the annual energy prices per household have soared three times to £3,549 from £1,277 a year ago. The Truss administration has capped energy bills and prepayment meter costs until next April at £2,500 a year. 

As the winter sets in, the Brits will need more energy to keep warm - the higher demand will push the cost higher. Sunak will have the task of keeping the prices stable or downwards for households while staying conscious of the fiscal position as he will not have enough room for the debt - a move his predecessor took spooking the investors and sending the markets southwards.      

In the run-up to elections in September, Sunak had laid down a plan which included raising revenue by energy tax. He had said he was prepared for some limited and temporary, one-off borrowing as a last resort to get through this winter. "Given energy prices continue to rise, it is also likely the government will raise more revenue from the Energy Profits Levy that I introduced," he had said. 

Political control 

Sunak's third biggest challenge is to revive the confidence of the people in the Conservative Party, which is losing the public space against the Labour Party in popularity polls. With record three prime ministers in three years, the ruling party's popularity has plunged to a historic low of 14 per cent - that means if elections were to be held today, only this percentage of people would vote for the Conservative Party. The ruling party's decline will embolden the opposition, which may make things difficult for Sunak in the House of Commons.