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Boris Johnson withdrew from the leadership race and Britain could have its first Indian-born PM

Posted by on 2022/10/24. Filed under Breaking News,Headline News,International. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

Former British Chancellor of the Exchequer James Sunak has won the support of more than 40 percent of Conservative MPS and is expected to become the new party leader and prime minister on Tuesday. His inflation warnings and fiscal conservatism over the summer are now prescient, but the current crisis is deeper than before.

Over the past six weeks, investors have been put off by Prime Minister Liz Truss’s aggressive tax cuts and borrowing, which have triggered a collapse in sterling, soaring government borrowing costs and chaos in the mortgage market, forcing the Bank of England to step in, the New York Times said. Truss finally resigned last week after only 44 days in office amid a collapse in economic policy.

Rishi Sunak, who ran against Truss for the conservative leadership in the summer. At the time, his stance on inflation and fiscal conservatism was less palatable than Mr Truss’s call for tax cuts. Now, against the backdrop of Mr Truss’s indiscipline, he is looking forward to becoming Britain’s first non-white prime minister.

Despite his Indian heritage, Sunak was raised and nurtured as a Conservative. He attended the aristocratic Winchester School and read philosophy, politics and economics at Oxford; Before becoming a congressman, he worked at Goldman Sachs, the investment bank, and two hedge funds.

If he succeeds as prime minister, Sunak is likely to cut already stretched government spending. As chancellor of the exchequer under former Prime Minister Boris Johnson over the past two years, Mr. Sunak has pushed taxes to a 70-year high as a share of national income. Despite the brief Truss administration, several of Sunak’s original policies remain in place, including plans to raise corporate tax from 19% to 25% and keep the basic income tax rate at 20%.

Sunak has said he also wants to cut taxes, but only if inflation cools first. The New York Times pointed out that while he has steered the British economy through more than two years of crisis during the pandemic, the next British prime minister will still face huge economic challenges.

Britain is likely to fall into recession, with lingering problems including low production growth, weak manufacturing and disruption to trade and labor markets as a result of Brexit. Moreover, Sunak’s resignation in July, when Johnson stepped down, was a turning point and meant that there would be plenty of opposition to him within the Conservative Party.

The New York Times said whoever took over as British prime minister would face a dilemma. On the one hand, there is a fickle and fractious Conservative Party, and on the other, the financial markets are demanding strict discipline on the public finances.

Jill Rutter, a senior research fellow at the Institute for Government, a London think tank, said that while the foil to Truss’s downfall was a plus for Sunak, “what Britain needs right now is a very skilled politician to get through this, and the big problem is, Is Sunak’s wrist high enough?”

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