Ajit Kumar Jha
NEW DELHI: It is often said: Brevity is the mother of wit. Brevity is also the father of profundity. The new British Prime Minister combines profundity with wit. In a brief victory speech Rishi Sunak told the staff at Tory headquarters: “The UK is a great country but there is no doubt we face a profound economic challenge.”
Later Sunak told Tory MPs the country was “in a fix” and the Conservative Party faced an “existential moment.” He added he would work to “bring our party and our country together.”
Sunak’s cryptic speeches lay out the major challenges facing his Tory Government. Unity of the Conservative Party, unity of the United Kingdom and the serious crisis grappling the economy are Sunak’s three main problems. As the former Chancellor of the Exchequer, people would have over-expectations from Sunak, especially with regard to fixing the economy. The UK economy in a funk is hurtling towards a severe recession. On top of a negative growth problem, a spiralling cost of living and an extraordinary energy crisis, even as the winter sets in, constitute the major gauntlet Sunak faces.
Sunak is being urged by Chancellor of the Exchequer Jeremy Hunt (whom Sunak retained) to press ahead with debt-cutting plan next week, before a crucial interest rate setting bank of England meeting on November 3.
Tories hope that the joint economic team of Rishi Sunak and Jeremy Hunt – both fiscal conservatives – will reassure extremely volatile markets and assist in holding down borrowing costs, feeding though into lower mortgage bills for home buyers.
“If Sunak can knock down 10 billion pounds of Government borrowing costs and just 1 per cent of people’s mortgage bills, he will have done some good today” said former cabinet minister Gavin Williamson according to Financial Times, London news report.
Financial markets fortunately responded positively to Sunak’s ‘coronation’. However, in the long run Sunak faces a daunting in-tray, which includes a public finance crisis, severe inflation, soaring energy bills given a long winter of discontent and overstretched public services. The doomsdayers even predict labour unrest and perhaps blackouts in 2023 given a serious energy deficit. Other than daunting challenges at home, Sunak faces a gauntlet abroad. Given his Indian origin, the biggest challenge for Sunak would be with his trade links to India.
With UK and India engaged in the final phase of troubled negotiations for a free trade agreement (FTA), both sides will watch with considerable interest whether Sunak, as Prime Minister, will be able to finalise a free trade deal with New Delhi speedily.
The negotiations ran into rough weather after former home secretary Suella Braverman – also of Indianorigin – expressed reservations that the trade deal with India would increase immigration to the UK and go against the goals of Britain leaving the European Union (EU), i.e., the very purpose of Brexit. The fact that Sunak as Prime Minister has retained Suella Braverman in the important portfolio of Home Secretary, doesn’t make matters any easier.
Braverman’s comments, which reflected the deep divisions within the Tory ranks in striking a balance between its promise to counter immigration following Brexit and the need to facilitate the mobility of overseas professionals and students, did not go down well with the Indian side. Though the UK and India had earlier set Diwali as the deadline for concluding the trade deal, it now appears increasingly likely that the FTA will be signed only sometime in 2023.
Besides dealing with domestic problems, Sunak will have to work to repair the key links with India and stick to the implementation of Roadmap 2030, which envisages the ramping up of relations in key areas. The fact that he is of Indian origin and is married to Akshata Murty, daughter of Indian parents, will raise expectations both at home and abroad.
