UK Politics

UK politics
Written By Chloe Wong

From Liz Truss to Rishi Sunak: What Is The Fate Of The UK’s Economy?

Liz Truss famously yelled “I am a fighter and not a quitter!” during a heated session of Prime Minister’s (PM) Questions. However, she resigned from her role as Prime Minister (PM) a day after making that statement, resulting to be known as the shortest-serving PM in British politics. Her ideology, which was evident in her economic policies as PM, was to have a free market and lower taxes, but unfortunately such economic policies were the main reason of the downfall of her premiership due to its significant negative impact on the UK’s economy, in which the Bank of England had to intervene to calm the turmoil in financial markets amid the collapse in the value of pound triggered by the mini-budget which the ex-chancellor, Kwasi Kwarteng, had introduced. Truss’ response to the economic crisis was always going to define her time as PM.

Truss’ policy for economic growth relied on trickle-down economics, whereby corporations and high earners are favoured, resulting in boosting the wider economy through their wealth trickling down to those in the lower economic chain. However, the £45 billion tax cuts, funded by even more government borrowing, alarmed global investors and caused the value of the pound to suffer a sharp fall to a record low of almost $1.03!

Since the UK is a net importer of food and fuel, the decrease in the pound’s value causes importing prices to increase, thus increasing the cost-of-living in the UK. Furthermore, with the pound being worth less against other currencies, business and government borrowing becomes more expensive, causing the financial sector to suffer further as businesses decrease their activities. This results in the UK government receiving less tax, and hence the UK economy suffering less economic growth. Ironically, many economists and politicians warned Truss of the negative economic repercussions of her mini-budget. Indeed, Rishi Sunak, during the conservative leadership contest, cautioned that this policy would fuel inflation and increase mortgage rates. Also, days before Truss became PM, economists Gerard Lyons and Julian Jessop warned her that the markets were highly nervous and the policy changes needed to be handled with care.

As a result of the backlash and negative economic response to the mini-budget, the policy was quickly scrapped and Truss used Kwarteng, her ‘ideological soulmate’, as the scapegoat to save her premiership. The negative domino effect of the mini-budget on the UK’s economic crisis highlights Truss’ short time in office, which some are mockingly calling an ‘internship’. Global investors were glad to see her leave office, as evidenced by how the pound leapt almost 1% in the immediate aftermath of her resignation. Many hope that the appointment of Rishi Sunak as the new PM will turn the United Kingdom’s (UK) economic crisis around and away from the looming recession, partly worsened by Truss’ economic policies in office.

On Wednesday, Rishi Sunak was faced with his first gruelling session of PM Questions. Keir Starmer, the leader of the Labour Party, did not hesitate to question Sunak’s appointment as PM as Sunak was voted in through an internal election of the Conservative Party MPs and not by the Conserevative party members. Starmer also reminded Sunak that “even his own side knows he’s not on the side of the working people '' and to “let the working people have their say, and call a general election”. 

This view is supported by many that see Sunak as unfit to tackle the economic crisis and represent the vulnerable, especially due to his prospering wealth. Sunak has faced backlash on all social media platforms for being the richest PM in history, with a net worth of £730 million! This makes him richer than King Charles III and Queen Elizabeth before she passed (worth £370 million). Furthermore, Akshata Murty, Sunak’s wife, used the loophole of non-domiciled tax status to avoid paying British taxes on her global income. Although her daughter has agreed to pay those taxes in the future, this tax avoidance raises a fairness issue that paints Sunak in a bad light, especially if he implements tax raises and spending cuts. Steven Fielding, Professor of political history at Nottingham University, argued that the Labour Party would lose voters if they simply ‘go after Sunak for being Sunak’. Instead, pinpointing how Sunak is personally benefiting from the tax break that most see as illegitimate would undermine his seriousness in resolving the UK’s economic crisis and helping the vulnerable.

Another point of contention was Sunak’s appointment of Suella Braverman, who resigned just last week for a security violation – sending out a sensitive government email from her private account. Opponents questioned her reappointment before an investigation of her ethics breach. Since she is a popular figure on the party’s right, many believe Sunak brought her back into cabinet to garner more votes. Starmer called Sunak out for doing a “grubby deal, trading national security, because he was scared to lose another leadership election”. Defending himself, Sunak said Braverman recognised she made an “error of judgement”, but was confident that she would protect Britain’s borders. 

However, on a more  positive note Sunak is the first Asian-British PM. Sunak was born to parents of Punjabi descent, where his grandparents were born in India and emigrated to the UK from East Africa in the 1960s. Muslim-Pakistani London mayor Sadiq Khan said this was a “source of pride” that demonstrates that those that work hard can “achieve almost anything”. Moreover, it shows that the UK celebrates and tolerates diversity, as Khan highlights how the UK has “a Christian King, a Hindu Prime Minister, and a mayor of Islamic faith”. Additionally, people of colour have been expressing pride through mediums such as TikTok. For example, a video has resurfaced of Sunak lighting candles outside Number 10 in 2020 as a religious ritual for Diwali. This has warmed many POCs’ hearts in seeing him be proud of his religion in such a public setting.

Regardless of all this discussion, we can only decide the value of Sunak’s time as PM once he begins implementing his economic policies that will hopefully save Britain’s economy. ………………………………………………………………………………………………………………………………………

Chloe Wong
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