The financial chaos Sunak foresaw

Rishi Sunak’s “coronation” as UK Conservative Party leader less than two months after losing out to Liz Truss is the most rapid political comeback in modern history.

Sunak sets records as he will become the United Kingdom’s first Hindu prime minister and, at 42, the youngest prime minister for more than 200 years.

Vindicated in his warnings of catastrophe over the tax-cutting agenda of Truss, it was the former chancellor’s economic experience that precipitated his resurgence.

But his record-breaking biography is also bound to create political challenges at a time when he will have to make potentially punishing decisions during a cost-of-living crisis.

He will arguably be the richest prime minister, sitting on a family fortune of about PS730 million ($A1.3 billion), meaning the occupants of Number 10 Downing Street will be far richer than the King.

Sunak won the rapid Conservative leadership contest on Monday by a “coronation” following the withdrawal of rival Penny Mordaunt and after Boris Johnson had pulled out of his own attempt at a comeback.

Sunak secured the public backing of the majority of his colleagues and was spared facing the party membership that comfortably backed Truss over him on September 5.

In that contest, he positioned himself as the candidate prepared to tell hard truths about the state of public finances rather than the “comforting fairy tales” of his rival.

Sunak argued that her unfunded tax cuts at a time of spiralling inflation were dangerous, predicting they would lead to surging mortgage rates.

He was right.

Truss’s disastrous mini-budget triggered turbulence in the financial markets, sending the pound tumbling and forcing the Bank of England’s intervention.

He did not crow “I told you so” and instead kept a low profile during the weeks that followed, staying away from the Conservative conference overshadowed by infighting and a U-turn on the abolition of the top rate of income tax.

The scale of the market shock only strengthened his backers’ pitch to Conservative MPs that his “calm competence” showed he is a “serious person for serious times”.

Born in 1980 in Southampton, the son of parents of Indian Punjabi descent, Sunak’s father was a family doctor and his mother ran a pharmacy, where he helped her with the books.

After private schooling at Winchester College, where he was head boy, and a degree in philosophy, politics and economics at Oxford, he took an MBA at Stanford University in the US where he met his wife, Akshata Murty, the daughter of India’s sixth richest man.

A successful business career, with spells at Goldman Sachs and as a hedge fund manager, meant by the time he decided to enter politics in his early 30s he was already independently wealthy.

In 2014 he was selected as the Conservative candidate for the ultra-safe seat of Richmond in North Yorkshire – then held by William Hague – and was duly elected in the general election the following year.

In the 2016 Brexit referendum he supported Leave, to the reported dismay of then-prime mininster David Cameron who saw him as one of the Conservatives’ brightest prospects among the new intake.

Given his first government post, as a junior local government minister, by Cameron’s successor Theresa May, he was an early backer of Johnson for leader when she was forced out amid the fallout over Brexit.

When Johnson entered Number 10 in July 2019, there was swift reward with a promotion to the cabinet as treasury chief secretary.

An even bigger step up followed in February 2020 when Sajid Javid quit as chancellor and Sunak was put in charge of the country’s finances at the age of just 39.

The rapid spread of COVID-19 meant his mettle was swiftly tested.

Within a fortnight of his first budget he was effectively forced to rip up his financial plans as the country went into lockdown.

The new chancellor – who saw himself as a traditional small-state, low-tax Conservative – began pumping out hundreds of billions in government cash as the economy was put on life support.

But as the UK emerged from the pandemic, some of the gloss began to wear off, amid growing tensions with his neighbour in Number 10 and anger among Conservative MPs over rising taxes as he sought to rebuild the public finances.

To add to his woes, he was caught up in the “partygate” scandal, receiving a fine, along with Johnson, for attending a gathering to mark the prime minister’s 56th birthday, even though he claimed only to have gone into Number 10 to attend a meeting.

There were more questions when it emerged his wife had “non-dom” status for tax purposes, an arrangement which reportedly saved her millions, while he had retained a US “green card,” entitling him to permanent residence in the US.

For a man known for his fondness for expensive gadgets and fashionable accessories, and who still has an apartment in Santa Monica, it all looked dangerously out of touch at a time when spiralling prices were putting a financial squeeze on millions across the country.

His frustrations with Johnson’s chaotic style of government, as well as a deepening rift over policy, finally spilled over when he dramatically resigned, prompting the rush for the door by other ministers which forced the prime minister to admit his time was up.

Sunak was unrepentant over his decision to quit even as he admitted that it was a decision that may have damaged his standing among a grassroots that picked Johnson as prime minister only a few years earlier.

The need to maintain power at the top of a parliamentary party that is on to its third leader in less than two months is now Sunak’s problem.


Sam Blewett, Sophie Wingate and Dominic McGrath, PA Political Staff
(Australian Associated Press)


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