Will Rishi Sunak, as Prime Minister, Get Blamed for Britain's Economic Downturn

October 24, 2022

The selection of Rishi Sunak as the next Prime Minister of Great Britain is big news for Indians around the globe. He “will be the first Indian-origin Prime Minister of the United Kingdom,” The Hindustan Times reported. Sunak is a “proud Hindu…his victory could not have come on a better day than Diwali,” the Hindu festival of light which is being celebrated today, noted The Times of India. This year mark’s 75 years of India’s independence from British rule. 

Sunak, 42, leading a Conservative Party government, will be Britain's youngest prime minister in more than 200 years. "I grew up in the 80s and 90s, and I could not even imagine a non-white prime minister in my lifetime... So to see a British Indian leader is phenomenal,” Ravi Kumar, 38, a Conservative Party member working at a finance company in the central English city of Nottingham, told Reuters.

Sunak’s path to the Prime Minister’s office was cleared yesterday after Boris Johnson decided against contesting for the post, without offering any explanation. In July, Sunak, who was the Chancellor of the Exchequer – finance minister - under Prime Minister Johnson, led a rebellion of Conservative members of parliament forcing Johnson to resign.

In September, Liz Truss became Prime Minister after beating Sunak in a vote held among 160,000 Conservative Party members – she got 57% of the votes. This time around, facing no opponent, Sunak only needed to win the support of more than 100 Conservative Members of Parliament.

Truss resigned last week after her policies for tax cuts and subsidies for home heating led to a collapse of the British pound and a sharp spike in interest rates for government bonds: Last month, the US dollar pound exchange rate fell to a low of $1.03, down from around $1.35 in January; the yield on the 10-year UK government bonds rose to 4.5%, up from around 1% in January.

Sunak’s parents, who are of Punjabi Hindu Indian origin, emigrated to the UK from east Africa in the 1960’s; his mother Usha from Tanzania and his father Yashvir from Kenya. Sunak was born in Southampton, Southern England, where his father was a doctor in the National Health Service and his “mum ran her own local” pharmacy store.” Growing up, he wanted to be a Jedi Knight; his favorite Star Wars film is The Empire Strikes Back.

As a teenager, Sunak, the eldest of three children, managed the accounts for his mother’s store. In his political speeches, Sunak points to lessons he learned at his mother’s store as being similar to those gained by Margaret Thatcher, former British Prime Minister, at her family’s grocery store.

From 1993 to 1998, Sunak attended Winchester College, a private residential school in Hampshire, England, where annual fees and costs total over $50,000. Founded in 1382, the school started admitting women as day schoolers only this year. Including Sunak, it has six chancellors among its alum. He was the head boy and the editor of the school’s newspaper. He earned a degree in philosophy, politics, and economics - the degree obtained by many future UK prime ministers - at Lincoln College, Oxford. He was president of the Oxford Trading & Investment Society, a group learning about financial markets and global trading. While at Oxford, he interned at the headquarters of the Conservative Party.

In 2001, after graduating from Oxford, Sunak worked as an analyst for Goldman Sachs, the investment bank, where he stayed until 2004. He then earned an MBA from Stanford University, as a Fulbright Scholar. At Stanford, he met his future wife, Akshata Murty, a fellow MBA student. She is the daughter of N.R. Narayana Murthy, the billionaire co-founder of Infosys, the Bangalore, India based information technology company, with a market value of $77 billion.

In 2006, Sunak started working for The Children’s Investment Fund Management, a London based hedge fund. Three years later, he joined another hedge fund, Theleme Partners.

 In 2015, Sunak was first elected as a member of parliament from Richmond, north Yorkshire. In 2020, Johnson named him as the chancellor. As chancellor, Sunak formulated and implemented the financial aid policies during the COVID-19 lockdowns, including payments to laid-off employees.

Sunak and Murty, 42-years-old, have two daughters Krishna and Anushka. Sunak’s business success, including co-founding a fund, has made him wealthy. Murty’s ownership of Infosys stock is estimated to be worth $1.2 billion, according to Bloomberg. Sunak and Murty are wealthier than King Charles and his wife Camilla, as has been widely reported in the media. Sunak and Murty own four homes worth more than $18 million, The Guardian reported. While spending their weekdays at a home in Kensington, London, worth more than $8 million, they spend their weekends in Kirby Sigston, just outside Northallerton, England, in a home worth over $2.2 million, with a $450,000 swimming pool.

In April this year, the British media widely reported that Murty, who is an Indian citizen and non-domiciled U.K. resident, had avoided paying about $24 million in British taxes on her overseas income, over a roughly seven-and-a-half-year period. Sunak defended his wife saying, "to smear my wife to get at me is awful," the BBC reported. While Murty’s UK tax maneuver was legal, she quickly revised her status and now pays taxes in Britain.

It was also revealed that Sunak held on to a green card, a U.S. permanent residency visa, until late October 2021, while serving as chancellor. This implied, his critics said, a desire to keep his options open about moving to the U.S.

Having won the Prime Minister’s post, unopposed on his second try, what does Sunak do now? He has about two years to revive the UK economy before the next parliamentary election in 2025. The country’s problems include: the possibility of a steep recession, if not already being in one; rising unemployment; inflation running around 10%; a weak pound raising the cost of food, energy, and other imports; home heating bills for consumers are expected to rise sharply this winter and next due to the jump in natural gas prices; and the National Health Service is not providing many citizens with adequate free healthcare, in keeping with its mandate.  

In addition to dealing with these challenges, Sunak has to govern as head of a fractured Conservative Party. Sunak "couldn't beat Liz Truss last month; he's not turned into an election winner less than two months later," one senior Conservative member of parliament and a supporter of Johnson told Reuters this week.

Recent opinion polls indicate strong support for the opposition Labour Party - a lead of 36% over the Conservative Party. Labor leaders have already painted Sunak as a member of the ultra-rich elite. Ed Davey, leader of the opposition Liberal Party told Reuters, "Rishi Sunak's words will do nothing to reassure struggling people worried sick about the winter ahead," calling Sunak "out-of touch."

Given what Sunak has to deal with as UK’s leader, the question arises: did Boris Johnson decide not to contest Sunak, to try to become Prime Minister again, because he realizes there are no easy, short-term solutions and to avoid being blamed if the economy did not improve or got worse. 

Sunak though is apparently unfazed. “From working in my mum’s tiny chemist shop to my experience building large businesses, I have seen first-hand how politicians should support free enterprise and innovation to ensure our future prosperity.” Sunak states on his website. “My parents sacrificed a great deal so I could attend good schools…That experience changed my life and as a result I am passionate about ensuring everybody has access to a great education.”

Another of Sunak’s favorite economic ideas is “Free ports": areas near ports or airports where goods can be imported and exported without paying taxes, to encourage foreign trade while boosting employment. He voted in favor of Brexit, UK’s decision to sever ties with the European Union.

Last week, while announcing his decision to stand for election as Prime Minister, Sunak tweeted to his 755,000 followers, “The United Kingdom is a great country. but we face a profound economic crisis. That’s why I am standing to be Leader of the Conservative Party and your next Prime Minister. I want to fix our economy, unite our Party and deliver for our country.”

 Story updated October 25, 2022

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