Calm in the markets and peace in the party: the challenges of the new prime minister | International

In Rishi Sunak’s first message to the nation, as soon as he was anointed as the new leader of the Conservative Party by his fellow MPs, he spoke of the “profound economic challenge” facing the UK, and the “stability and unity” that they needed both the country and their own training. It will be this Tuesday when Carlos III entrusts Sunak with the formation of a Government in his name, despite the fact that it has not gone through the polls. That was the concern that, before speaking to the British, the future tenant of Downing Street had transmitted to his colleagues Tories, without the cameras in front: the need to avoid at all costs an early election – the one demanded by the Labor opposition – which, according to all the polls, would sweep the Conservatives. The latest express poll published by YouGov indicates that 56% of British people want the polls to be called now, compared to 29% who prefer that the Conservatives continue to govern.

A herculean task for which Sunak will have very little time, and whose main judges will be the markets and the members of his parliamentary group. Although he has conquered power with the endorsement of 193 parliamentarians, the group is made up of 357 deputies, and any attempt at rebellion, even by a few dozen of them, makes it ungovernable.

The economic mission

The will of Jeremy Hunt, whom it is very possible that Sunak will confirm as Minister of the Economy, to present a fiscal responsibility plan next Monday, which will attract the attention of the markets and investors, is still standing. Hunt has already achieved some calm by knocking down all the tax cuts previously announced by Liz Truss, as well as cutting back over time the direct aid plan for households and businesses to meet gas and electricity bills. Sunak must confirm these decisions, as well as support foreseeable additional cuts in public spending that will irritate citizens and the deputies themselves Toriesalready very focused on ensuring their re-election ―the next general election is scheduled for January 2025 at the latest―.

Sunak was able to spell out his economic plans during last summer’s primary, which he lost to Truss, but has remained silent ever since, and no one knows if he backs an increase in pensions in line with inflation, which is already 10 percent. .1%, or prefer a more moderate increase, adjusted to the average growth of wages. Or if he is in favor of also applying the rate of rise of the CPI to benefits and social assistance, a very important part of the budget. In his day, many ministers of Truss announced that they would rebel if this increase did not take place.

The conservatives have clung to Sunak like a straw, but as he announces some measures, the rebellion is sung. Some taxes will even have to go up, and that will be a sure source of irritation among the most liberal and Thatcherite fraction of the party.

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a divided house

It was US President Abraham Lincoln who said that “no one can rule over a divided house.” Sunak has managed to achieve power thanks to the majority support of the parliamentary group (193 endorsements out of a total of 357 deputies), but he does not have the compact, complete and unconditional support that Boris Johnson enjoyed after winning the general elections in 2019. Each legislative initiative will be an uphill race to prevent the vote from being interpreted as a confidence vote on a weak government. The European Research Group (ERG), the internal current that groups the Eurosceptics, has already made it clear to Sunak that he will not tolerate any deviation in the declared battle in Brussels over the Ireland Protocol of the North. The processing of the law that Truss herself promoted – with the approval of Johnson – to unilaterally annul the fundamental part of a treaty that was the most delicate in all the Brexit negotiations is already in its final phase.

If the new prime minister were to consider some kind of flexibility, to avoid a trade war with the EU that is not convenient at the current moment of economic weakness and uncertainty, he would have to face a part of the parliamentary group with sufficient capacity to do damage. Just as if he promoted the idea, caressed by Truss herself, of being more generous with the entry criteria for immigrant labor, to help key sectors of the United Kingdom.

Rishi Sunak has conquered Downing Street because his peers have seen him as the last chance to cling to power and not be swept away by the polls. His situation is one of extreme weakness. There is no current Sunakists in the match that tucks him in; his election has not been welcomed by the majority of citizens, who would prefer to vote; and the markets, despite his economic credentials, seem unwilling to treat him like one of their own. Treasuries have risen in value on the news of Sunak’s election, and that’s a good sign, as investors see a return to the path of fiscal responsibility. But they continue to keep under intensive surveillance a country that, today, has become the sick of Europe.

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