Rishi Sunak has become the third Prime Minister of the UK in a matter of weeks after winning a leadership battle against Penny Mordaunt following the demise of Liz Truss.
His first televised statement at Tory HQ warned that the country faced a ‘profound economic challenge’ ahead, but what does his appointment mean for the UK economy?
The last few months of turmoil have damaged the UK’s international reputation as well as its economic standing but despite this, a growing optimism seems to be found across the markets as investors look to Sunak to stabilise both the economy and political situation.
President Biden is said to be looking forward to speaking with the Prime Minister with warm welcomes also pouring in from Former PM David Cameron, President of the European Council, Charles Michel and Irish Taoiseach (Prime Minister) Michael Martin.
After six weeks of tax reductions being reversed, energy caps being uncapped and embarrassing U-turns, actions speak much louder than words and cutting through all of the congratulatory messages are the market reactions which seem equally as positive.
Global stocks and the British Pound rose on Monday in reaction to the news that Sunak was the UK’s next Prime Minister. The FTSE 100 rose by 0.6% on the day, supported by consumer sectors and bringing it above the 7,000-point mark for the first time in a week. The pound also rallied higher at $1.13 as Boris Johnson exited the contest.
European and American equities also climbed despite data showing Britain headed for recession which coincided with hopes that the US federal reserve would slow the place of interest rates hikes and the news that European gas prices were at a four-month low.
Investors see the new Prime Minister as a source of stability and many are looking to him to rebuild confidence, provide clarity and stabilise the conservative government – thought to be on its final chance. His previous titles as Chancellor of the Exchequer which he held from 2020 to 2022 and a previous role of Chief Secretary to the Treasury are also being cited as evidence that Sunak can stabilise the UK economy.
With “economic stability and confidence at the heart of the government’s agenda”, do you believe Sunak can make it happen?