UK: What does Rishi Sunak spell for ‘Global Britain’?

Patrick Smith
By Patrick Smith
Editor-in-Chief of The Africa Report.

Posted on Tuesday, 25 October 2022 13:35

Rishi Sunak in London
New leader of Britain's Conservative Party Rishi Sunak stands outside the party's headquarters in London, Britain, October 24, 2022. REUTERS/Henry Nicholls

The emergence of Rishi Sunak as leader of Britain’s ruling Conservative party signals a ceasefire but not an end to the civil war that has divided its ranks since the Brexit referendum in 2016 which took the country out of the European Union.

With his father from Kenya, his mother from Tanzania and his grandparents from India’s Punjab, Sunak speaks with pride of his multi-national heritage and will be the first person of colour to head a British government.

Sunak’s immediate preoccupations as leader will be the parlous state of Britain’s economy and the civil war in his own party, rather than foreign policy.

But he will have a crash course in diplomacy and geopolitics.

On 15 November Sunak is set to attend his first summit as British leader – the G20 meeting in Bali, Indonesia, where the invited leaders include US President Joe Biden, China’s Xi Jinping, and Russia’s Vladimir Putin.

On the agenda in Bali will be demands – from the IMF, the African Development Bank, and the World Bank – for the 20 biggest economies to produce a comprehensive plan for debt relief in developing economies as the world edges nearer recession.

The Indonesia summit will also hear calls from African leaders and China for the African Union to be admitted to the G20 as a permanent member, with the same status as the European Union.

How Sunak responds to such calls will give a clearer idea of his stance on international security, trade and development policy.

‘Sunak will lead the biggest party’

Sunak will succeed Liz Truss who was forced to resign on Thursday after just 44 days as Conservative leader and Prime Minister, having junked all her unfunded tax cuts amid a market meltdown.

Under Britain’s political rules, the country has no written constitution. Sunak will lead the biggest party in parliament and become the next prime minister after an audience with King Charles III on Tuesday.

Those rules have not stopped the opposition Labour party from demanding a general election, a sentiment that could win many more supporters should the economy tip into full-scale recession.

The Labour party’s deputy leader Angela Rayner fired the first shot: “The Tories have crowned Rishi Sunak as Prime Minister without him saying a single word about how he would run the country and without anyone having the chance to vote.”

‘The sick man of Europe’

Now on its fifth prime minister since the Brexit referendum in 2016, together with the spiralling yields on its government bonds and the crash in the value of sterling, Britain is being denigrated by some bankers as the sick man of Europe, having long been one of the most boringly stable countries in the region.

Sunak’s victory was greeted with relief by many in the Conservative party as well as the financial markets where he once worked with US investment bank, Goldman Sachs.

The Tories have crowned Rishi Sunak as Prime Minister without him saying a single word about how he would run the country.”

For the more spiritual, Sunak’s accession to the prime ministership on 24 October coincides with the main day of Diwali, the Hindu festival of lights marking the darkest night of the lunar month.

A commentator in Delhi remarked that Sunak’s accession to the prime minister’s office was a “Diwali gift”. The Delhi daily, The Times of India, has been backing Sunak for Britain’s premiership since July.

At 42, Sunak will be the youngest prime minister since Pitt the Younger in the 18th century, and more contentiously for opposition politicians, he will also be one of the richest.

He is married to Akshata Murty, daughter of Narayana Murthy, founder of the tech giant Infosys. Their personal fortune is estimated by the London Sunday Times Rich List at £730m ($825m).

In times of mass economic hardship, such vast wealth for a political leader who is cutting public spending on health and education could quickly prove a liability.

‘Small state, low tax economy’

A right-wing Conservative who backed Brexit, Sunak has argued for a small state and low tax economy and freeports exempt from national revenue and labour laws.

His most determined foes are also on the right, allies of Boris Johnson, under whose premiership Sunak served as Chancellor of the Exchequer or finance minister. As frustration mounted with Johnson’s serial lies and obfuscations over the rule-breaking parties he attended during the pandemic, Sunak resigned along with health minister Sajid Javid in July.

That triggered over 50 ministerial resignations, eventually forcing out Johnson but prompting the enmity of his circle who branded Sunak as a disloyal plotter.

The Johnsonites are unlikely to cut Sunak much slack amid the country’s febrile politics.

A man of many firsts

Sunak is also the first British prime minister with an MBA; some of his friends were surprised by his switch from high finance to politics, a decade ago. As finance minister for just two years and without substantive experience in other departments, Sunak’s political creativity will be tested from the start.

With inflation at around 10% and the government having to find over £60bn in spending cuts, Sunak’s government also faces widespread energy shortages and perhaps power cuts in the new year as well as threats of industrial action by trades unions whose members’ wages have lagged far behind inflation.

‘Diplomatic scepticism’

And that is before Sunak starts to address some of the diplomatic scepticism that the populist nationalism of Boris Johnson and Liz Truss had built up.

Johnson’s confrontational tactics with the EU over trade protocols with Ireland angered both Dublin and Brussels.

But Truss’s posturing went still further: when asked whether France was a friend or foe, she responded that “the jury was out”.

The usual rule in diplomacy is not to intrude on private grief. But confronted with the political and market panics around Britain, European and American politicians gradually weighed in.

US President Joe Biden said he thought Truss’s economic plans were a bad idea. Even the sober IMF voiced concerns at the direction of British policy, unfunded tax cuts and mounting debt.

In public, European politicians have sounded a more sympathetic tone; in private, sentiments of post-Brexit schadenfreude predominate.

‘Rediscover political stability very quickly’

After Truss’s resignation last Thursday, France’s President Emmanuel Macron said it was important that Britain rediscovered “political stability very quickly” given the geopolitical stakes such as Russia’s war in Ukraine.

Many such as Ireland’s taoiseach Micheál Martin linked the rumbling political chaos in Britain to its decision to leave the European Union.

“Issues have flowed from that decision,” said Martin, adding that many have not been thought through in respect of what is essentially a political decision, with huge economic and market implications.

Last week London’s Economist ran a cover depicting Liz Truss as a doughty Britannia holding a shield made of pizza and a spear fashioned out of a fork and wilting spaghetti with the headline “Welcome to Britaly”. The cover strapline – “a country of political instability, low growth and subordination to the bond markets” – prompted a complaint from Italy’s ambassador to London for a cover that was “inspired by the oldest of stereotypes”.

“Although spaghetti and pizza are the most sought food in the world, as the second largest manufacturer in Europe, for the next cover we would suggest … you pick from our aerospace, biotech, automotive or pharmaceutical sectors,” wrote Ambassador Inigo Lambertini.

Fixing the economy

Behind the Ambassador’s point are wider concerns in Europe about the health of Britain’s economy. Despite Brexit, Britain still does almost half its trade with the EU; and Britain is the EU’s third biggest trading partner after the US and China.

Sunak is yet to expound on his economic strategy, other than to criticise the unfunded tax cuts introduced by Truss and her finance minister Kwasi Kwarteng.

That suggests that he won’t doggedly pursue the warmed-over Reagan-Thatcher era trickle-down economics favoured by his predecessors.

Although the Truss-Kwarteng plan for Britain – dubbed “Singapore-on-Thames” – didn’t survive contact with market reality, Sunak has sympathy with the “Asian high-growth and low regulation model” much favoured by the Conservative right – as an antidote to “flabby European social democracy”.

Livia Godaert of the Atlantic Council’s Europe Center says that based on Sunak’s record we can expect “a pretty hard line on immigration and refugee policies” along with a “push for greater economic and trade diplomacy”.

Hardline against…

During the Conservative Party’s leadership campaign, “Sunak took a hard line against China … but this geopolitical stance may conflict with a greater push for foreign investment and trade,” says Godaert.

Sunak, who backed Brexit, will face pressure from the hard right of the Conservative Party for a further decoupling from Europe and the Single Market. The first test of that will come this week when the British parliament is due to debate a bill to reverse 2,400 EU regulations covering everything from workers’ rights to televising the Olympics.

After the financial meltdown of the past month, Sunak will have to be circumspect. Styling himself as a fiscal conservative, he will search for ways to pay down the extraordinary debts of the past five years by making deep cuts in public spending.

This is unlikely to be good news for the post-Brexit Global Britain project, with further cutbacks looming for the diplomatic service and the international development budget.

Those hardline believers in market economics and the culture wars in the Conservative Party might cast a wistful look towards another Asian high-growth model: India’s economic surge under Narendra Modi’s Hindu nationalist government.

Last month as the financial markets battered the British pound, the IMF reported that India’s economy had overtaken Britain’s to be the world’s fifth biggest.

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