As Rishi Sunak passes the 100-day mark of his time in office, it is perhaps time to examine how he has fared thus far. Has Sunak managed to distance himself from the mayhem that defined the waning days of Johnson’s government and the chaos that characterized (some argue the entirety of) the Truss era? Will Sunak’s tried and tested economics be sufficient to lead the UK economy out of the record lows that 2022 brought about? Already, naysayers have predicted even darker storms ahead, hinting that a prolonged period of British economic decline had just begun. Try as Sunak might, the herculean task of restoring market confidence may be too much even for a seasoned economist. Or is it?
Can the former Chancellor of the Exchequer successfully lead the UK in avoiding a predicted economic decline?
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Critics have summed up Sunak’s response to the ongoing cost of living crisis (rising inflation rates have raised prices to such extreme levels that citizens are unable to afford daily necessities) in a scathing metaphor: penny wise, pound foolish. Even before Sunak stepped in to mop up the mess that Truss left behind, British workers were already dissatisfied. Underpaid and overworked due to the rising inflation crisis and disruption of supply chains,, blue-collar workers across a variety of sectors voted for industrial action after requests for pay rises were repeatedly ignored while months of protracted negotiations bore no fruit. It first started with a major union of transport workers, the National Union of Rail, Maritime and Transport Workers (RMT) in June 2022. Emboldened, scores of other smaller unions joined in holding one-day strikes across the country, bringing public transport to a grinding halt. Freight, port and even refuse workers took the cue and initiated their own strike actions. More worryingly, the state-funded National Health Service (NHS) will see the largest single instance of industrial action in its 75-year history, as healthcare workers plan to walk out on different days beginning February 2023. Despite critical sectors of the economy facing disruption after disruption, Sunak seems unfazed by the pressure for the time being and instead flatly refuses NHS demands for pay rises (funded in turn with tax increases). His stance on increasing income taxes comes increasingly at odds with his party’s agenda, as many party members are concerned that raising taxes would continue to raise already high costs of living. This is the big debate in UK society: low taxes to alleviate costs of living woes, or high taxes to fund government spending? With public opinion overwhelmingly supporting the beleaguered workers, Sunak is at an impasse. One side has to blink first. Who will it be?
Even though Sunak is most famously known for being the latest contender in the disastrous UK political scene, his foray into politics and impact on the country stretches long before the events that catapulted him into office. For example, the measures he was responsible for drafting out and implementing in order to combat the current United Kingdom cost of living crisis. Since 2021, the UK has seen the prices of essential goods increasing at a greater rate than household incomes. Those who study economics can probably see the issue with this. While inflation is to be expected, especially as the quality of life in a country hopefully grows, there must be an equal or higher increase in income in order for consumers to be able to afford essential goods. This is not the case, partly because of the continuing rise in inflation in the UK, but also the economic ripples from global crises. While the UK is not the sole country to be negatively affected by the increasingly disastrous years we have been living through, it is however reported to be one of the countries to be hit the hardest. This is somewhat influenced by the unique nature of the Brexit crisis that the UK has been dealing with for quite some time, which we will elaborate upon later. As for the response to this cost of living crisis, the UK government and Sunak attempted to offset the monetary losses with a windfall tax on energy companies in order to fund support packages for the general public, allowing them to temporarily have access to energy at a discounted price, along with extra assistance for low income households and those with disabilities. Sunak has also continued to intensify efforts to address this crisis with plans to reduce income tax in 2024 – after confidence among businesses and the public have been adequately rebuilt through curbing inflation and reducing the national debt. Only then will his government be able to stimulate growth in the economy by raising investments by wealthy individuals, thus incentivising their spending. Whether it is cutting taxes to allow for economic growth or raising taxes to fund government spending, what is clear is that both plans will benefit the UK populace in the long term.
Brexit, as most understand it, was the withdrawal of the UK from the European Union in 2020 as a result of growing tension over the EU’s decision making and a strong belief that the UK should be responsible for governing itself. While originally holding the support of the majority, the turbulent nature of the world today along with economic and political issues in the UK has resulted in an increasing decline in the number of people who continue to support Brexit, and to no one’s surprise, a sharp rise in those who believe that Brexit was a mistake. Sunak remains a firm believer in Brexit and its benefits for the UK, but has to deal with quite a number of challenges because of it, with the Northern Ireland Protocol being at the top of this list. As both Ireland and the UK followed EU rules pre-Brexit, it was far easier to transport goods across their borders, something that had to be redefined to formulate special trading agreements now that the UK is no longer a part of the EU, and thus must adhere to the standards that all other non-EU countries must comply with. Even from the days of Boris Johnson, there has been a long-standing dispute between the UK and EU over the border between Northern Ireland and the Republic of Ireland, which Sunak is currently attempting to finally broker a deal over. The main issue he is facing in this process is attempting to balance negotiations in order to come to an agreement that is acceptable for both the EU and the UK, while also having to appear supportive of Brexit in order to not demonstrate weakness in the eyes of pro-UK politicians hellbent on ensuring the best for the country.
The onus is on Sunak to present an economically viable solution that also justifies his pro-Brexit stance in the past.
Image Credits: The New European
Another conundrum Sunak faces involves plans to scrap most of the EU laws by the end of 2023. Rationale? To demonstrate the UK’s firm stance on following through with Brexit promises, and standing on their own. This abrupt abolishment of thousands of laws might cause more harm than good, especially with the government having to supply new and improved regulations in order to not plunge the country into anarchy. While Sunak remains a strong advocate for Brexit, he must take into account the fact that the country is not anywhere near stable enough to rip up legislation that has kept the public relatively safe since forever, while also fulfilling promises that have been set in motion for years. Needless to say, it certainly is a fine tightrope he must walk.
An even finer tightrope that the elephant in the room must conquer is the problem of immigration. For decades, the UK has welcomed (willingly or unwillingly) thousands of immigrants and refugees escaping the conflict in the Middle East. With the promises of Brexit come the promises of the crackdown on immigration. But 6 years later, nothing much has been done at all. Sunak now seeks to execute the wishes of the people. In early December 2022, Sunak set out a five-step strategy in Parliament to clamp down on illegal immigration. Hundreds of additional staff will be deployed to a new unit to monitor small boats crossing the English Channel. This unit, called the Small Boats Operational Command, will coordinate intelligence and interception efforts. His other efforts include the freeing up of resources to dedicate towards administrative issues of asylum seekers, adding efficiency to the fractured system.
Now, Rishi Sunak is a conservative, there’s no doubt about that. What’s in doubt is his position as their leader. The PM has started 2023 in a fight for his job, with several different groups of Tory factions pulling him in different directions. Party discipline is at an all time low, with many Boris Johnson and Liz Truss loyalists seemingly unwilling to put their faith in Sunak. This year’s economic conditions will largely determine the success, or failure, of his next 10 months. While the UK is already in a recession, analysts expect the next 3 quarters to yield even more negative economic growth. With growing unemployment and unrelenting levels of inflation, Sunak will likely come under even more pressure as the public loses trust in the Tories. His first major test? The local elections occurred on 4th May. Results will be particularly scrutinized in the North, where the Red Wall of traditional Labour voting turned blue Conservative in 2019, as well as in the Home Counties which swung towards Labour more recently. Whatever happens, Sunak is likely to retain his position for the rest of the year, with the party hoping to avoid any more Liz Truss-esque fiascos. The question is for how long
References
British PM Rishi Sunak unveils 5-step illegal immigration clampdown. The Hindu. (2022, December 14). Retrieved from https://www.thehindu.com/news/international/british-pm-rishi-sunak-unveils-5-step-illegal-immigration-clampdown/article66261644.ece
Donaldson, K. (2023, February 2). Rishi Sunak's 100 Days: Brexit, UK economy, strikes, taxes - and Boris Johnson. Bloomberg.com. Retrieved from https://www.bloomberg.com/news/features/2023-02-02/rishi-sunak-s-100-days-brexit-uk-economy-strikes-taxes-and-boris-johnson
McGee, L. (2023, February 4). Rishi Sunak has had a torrid first 100 days as Britain's leader. but the Conservatives might not be doomed. CNN. Retrieved from https://edition.cnn.com/2023/02/04/uk/uk-sunak-first-100-days-intl-gbr/index.html
Parker, G. (2023, February 4). Rishi Sunak's first 100 Days. Financial Times. Retrieved from https://www.ft.com/content/57aef484-2927-4127-b3ba-eec6a505a1fc
Partington, R. (2023, January 29). Sunak's sitting on the sidelines is penny wise and pound foolish in uncertain times | Richard Partington. The Guardian. Retrieved from https://www.theguardian.com/business/2023/jan/29/sunak-sidelines--penny-wise-pound-foolish-uk-economic-investment
Ravikumar, S., & Thomas, N. (2023, February 6). Workers stage largest strike in history of Britain's Health Service. Reuters. Retrieved from https://www.reuters.com/world/uk/britain-faces-largest-ever-healthcare-strikes-pay-disputes-drag-2023-02-05/
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