Rishi Sunak faces a mountain of challenges as prime minister

Conservative leader has the intelligence and charisma to lift party hopes, but the problems he faces are immediate and daunting

Britain's new Prime Minister Rishi Sunak delivers a speech outside Number 10 Downing Street. Reuters

King Charles III invites Mr Sunak to become prime minister and form a new government in an audience at Buckingham Palace. PA

Mr Sunak promised to bring stability amid what he called a “profound economic crisis”. PA

The new prime minister is applauded as he enters Number 10. Photo: Simon Walker/ No 10 Downing Street

Mr Sunak is greeted by Cabinet Secretary and Head of the Civil Service Simon Case as he enters 10 Downing Street. AFP

A worker loads a removal van with boxes outside 10 Downing Street. Reuters

Members of the public wait for the arrival of Mr Sunak near Downing Street. AP

Staff in the Foreign and Commonwealth Office watch from the windows as Mr Sunak arrives in Downing Street. PA

An Indian artist in Mumbai creates a painting to congratulate Mr Sunak on becoming prime minister. EPA

Mr Sunak arrives at Buckingham Palace. PA

Incoming prime minister Rishi Sunak arrives at the Conservative Party's headquarters with a wave. AFP

Rishi Sunak is greeted by colleagues upon his arrival. AFP

Conservative MPs applaud as Rishi Sunak arrives. Reuters

Rishi Sunak departs after making a statement inside the Conservative Party's headquarters. PA

Mr Sunak meets the 1922 Committee in Parliament after he was announced as the new leader of the Conservative Party when Penny Mordaunt dropped out. PA

Sir Graham Brady, chairman of the 1922 Committee, announces Mr Sunak as the new leader of the Conservatives and therefore the prime minister. PA

Members of the media work outside No 10 Downing Street, the official residence of Britain's prime minister, in central London, as they await announcements. AFP

Mr Sunak leaves his campaign office in London. AP

A billboard of Liz Truss, the departing prime minister, in London. Bloomberg

Members of the public look through the gates into Downing Street. Reuters

Mr Sunak leaves his home in London on Monday morning. AFP

Leader of the House of Commons and Conservative leadership candidate Penny Mordaunt speaks to the media on Sunday. Ms Mordaunt pulled out of the race moments before the deadline for nominations. PA

Rishi Sunak appeared to force a weak smile as he walked past the assembled press without replying to The National’s question of “what are your feelings, Mr Sunak?”

While at 42 years old he becomes the Britain’s youngest prime minister for two centuries, there was a nervousness about the man who has also become the leader of a political party deeply ill at ease with itself and with a country facing serious challenges.

Mr Sunak’s first test was to persuade a room packed with more than 100 MPs that he had the ability and charisma to unite a Conservative Party that is in danger of electoral oblivion.

“We face an existential threat,” he told MPs who included former prime minister Theresa May and Penny Mordaunt, who until 30 minutes earlier was his remaining leadership rival.

The room was filled with MPs of a broad spectrum of opinion from hardline Brexiteers to moderate One Nation Tories and backers of Boris Johnson.

All tribes in the party must now sense that given the ructions of the last four months, they are on a precipice and it is now a matter of “unite or die” behind their leader like they refused to do for Liz Truss or Mr Johnson.

Calm, mature and intelligent, Mr Sunak does have the skills to keep the party together and steer Britain through turbulent economic waters.

“It’s a return to grown-ups at the table,” Alicia Kearns, MP, told The National after the meeting.

“A return to fiscal responsibility and a return to compassionate conservatism, which are all good things.”

While the early moments of his tenure suggest a genuine united reset — that was not evident on Ms Truss’s accession — his resolve and resilience will be tested very quickly.

While Mr Sunak is the most inexperienced prime minister yet having served seven years as an MP, he brings indispensable experience to the role having successfully eased British businesses through the coronavirus lockdown.

He has also faced some of the most turbulent external threats Britain has suffered with the pandemic and the Ukraine war, but has proven his mettle.

Mr Sunak’s skills at people management will now be challenged when he announces his next Cabinet, knowing that Ms Truss made the elementary mistake of putting loyalists in posts while leaving experienced but disgruntled colleagues on the backbenches.

He will need to appoint a Cabinet that includes his loyalists as well as Truss and Johnson supporters alongside centrists.

One moderate likely to remain in post is Chancellor of the Exchequer Jeremy Hunt. It would be a neat fit for Ben Wallace to remain as Defence Secretary — he was an ally of Ms Truss and Mr Johnson — if he can stomach a less generous budget increase.

The recently-installed Grant Shapps might remain in the Home Office but others will be at risk, with Penny Mordaunt a possible replacement for James Cleverly in the Foreign Office.

It is a mark of his ability that Mr Sunak is the person the opposition Labour Party fears the most when it comes to fighting the next election.

Under Ms Truss’s chaotic tenure, with her catastrophic tax-cutting announcement, the Labour polling lead soared to 36 per cent and her personal rating plummeted to minus 70 per cent.

Central to ensuring party unity will be how Mr Sunak’s policies perform in the polls.

Labour wants a General Election which, under law, is not required for another two years, and Mr Sunak is also unlikely to announce one while his party remains so far behind.

To restore confidence in the Conservatives, he will need to show results in the polls.

Rishi Sunak through the years — in pictures

His economic competence was quickly acknowledged by the markets, whose judgment of Ms Truss’ fiscal abilities was damning.

The FTSE-100 shares index rose on news of Mr Sunak’s victory, and gilt yields that set the interest on government borrowing, dropped by 5 per cent to 3.73 per cent.

That figure, which judges the government’s ability to repay its loans, once stood at 0.97 per cent in January and then 4.5 per cent shortly after Ms Truss’ fiscal policy became public in September.

Mr Sunak knows he has to impose strict fiscal rules to bring it down farther, and the first test of that is likely to come next Monday, when the chancellor gives his financial statement.

While Mr Hunt rapidly stabilised the markets with his immediate reversal of Ms Truss’s tax cuts, other cuts to public spending will have to be made to make up a £40 billion shortfall in the government’s budget.

That will mean cuts in services, possible including the National Health Service, defence and pensions.

While they will prove unpopular, Mr Sunak knows he has little choice but to restore financial responsibility with tax increases while generating growth in Britain’s sluggish economy.

That brings him to Brexit, the albatross around Conservative necks since the 2016 referendum.

Mr Sunak may well unite the Conservatives, provide sensible financial judgment and lead government with a dash of charisma, but he must also contend with the poison chalice of Brexit.

Despite Mr Johnson’s promise to get Brexit done, there remains much that is unresolved concerning the Northern Ireland Protocol, which threatens further division.

After a meeting with the Brexiteer European Reform Group on Monday morning, Mr Sunak did not give any commitment that he would enthusiastically pursue Ms Truss and Mr Johnson’s bill through Parliament to renege on a deal with the European Union on cross-border trade.

To his advantage Mr Sunak voted for Brexit, but as a multimillionaire businessman and financier, he will know that there has been a drop in trade between Britain and the EU since Mr Johnson’s deal took effect in 2021, potentially cost the country 4 per cent in GDP.

Without a vote from MPs and Conservative members, Mr Sunak will also be given a torrid time by Labour for not having a mandate to govern.

They will also be unrelenting in highlighting his Partygate lockdown fine and the former non-domicile status of his wife that led to accusations of tax avoidance.

The challenges will be relentless but, in Mr Sunak the Conservatives will now understand that they have one remaining realistic chance of reversing their own and the country’s fortunes.