Britain’s New Prime Minister: More of the Same Old?

In his first speech as head of government, Rishi Sunak, a former Goldman Sachs banker, and the richest man in Parliament, promised to make the “difficult decisions” needed to deal with the “profound economic crisis”, due to the “aftermath of Covid” and “the war in Ukraine” that has destabilised markets the world over.

He did not detail the “difficult decisions” to be taken, but prior to Sunak’s confirmation, the Guardian’s senior op-ed writer Simon Jenkins wrote that the top priority must be to restore “stability”, and push a brutal austerity policy. And “stability depends on a brutal new round of spending cuts due on 31 October”, he added.

Jenkins also poured cold water on holding early elections, as “instability is the last thing the economy needs”. (After all, we would interpolate, who needs “democracy’ when the City of London is about to sink?) In his first meeting with Tory MPs as Prime Minister, Sunak took Jenkins’ advice, and announced that he would not call for early elections.

Sunak’s immediate challenge involves Britain’s role in the unfolding global financial crisis, and the international bond crisis, which exploded when former Prime Minister Liz Truss announced her “mini budget” and tax cuts (cf. SAS 41, 42/22). The Bank of England then stepped in with a £65 billion of Quantitative Easing in order to prevent a collapse of pension funds, insurance companies and a “death loop” for British gilts.

Then, on Oct. 21, His Majesty’s Treasury announced it had earmarked £11 billion to be transferred to the Bank of England, to compensate for QE losses. The first tranche of several hundred millions has already taken place. This will lead to the “difficult decision” to raise more debt to be bought by the Bank of England, fueling inflation, or raising new taxes and fueling “political instability”.

Throughout the political circus of the last two months, there has been next to no mention of the real challenge, i.e., the war in Ukraine, let alone the danger of nuclear war. Sunak is considered just as anti-Russian as the previous governments, and is highly unlikely to change the Ukraine policy of the most bellicose of Western capitals. While the new PM sacked nearly half of the cabinet ministers, he reappointed Ben Wallace as Defence Minister, who is the war party’s favorite. And Jeremy Hunt, the City of London’s choice, will remain as Chancellor of the Exchequer.