Rishi Sunak set to become UK Prime Minister; markets rally

Rishi Sunak has scripted history by becoming Britain’s first Indian-origin Prime Minister after winning the Conservative Party leadership contest, said media reports.

Nearly 200 Conservative MPs publicly backed the former chancellor ahead of the nomination deadline on Monday, reported BBC.

Commons Leader Penny Mordaunt dropped out after failing to secure enough support among MPs.

Sunak – a 42-year-old practising Hindu – is expected to take office in the coming days now the result of the Tory leadership contest is known.

His premiership was guaranteed after both the leading contenders – Boris Johnson and Commons leader Penny Mordaunt -considered his rivals in the race to replace Liz Truss pulled out before a single vote was cast among members of the Conservative party.

Conservative Party Chairman Jake Berry said it was time for the party to “unite four-square behind Rishi” after a period of intense political turmoil under Ms Truss’s premiership.

As soon as news trickled in of Sunak’s premiership, UK’s main equity indexes hit session highs on Monday offering investors some relief after a tumultuous few weeks in UK politics, reported Reuters.

The blue-chip FTSE 100 (.FTSE) rose 0.6%, while the domestically focussed FTSE 250 index (.FTMC) jumped 1.3%. Both the indexes were muted in morning trade on worries about political uncertainty and growing recession risks in Europe.

Sunak will be the first British Asian and also the first nonwhite to take the top job. He’ll also be the youngest prime minister in more than 200 years.

A British Indian – his parents, both pharmacists, had migrated from East Africa to the UK in the 1960s. Sunak’s father, Yashvir Sunak, was a National Health Service general practitioner and mother, Usha Sunak, ran a chemist shop.

Sunak is married to Infosys chief Narayan Murthy’s daughter Akshata Murthy. They have two daughters – Krishna and Anoushka.

Congratulating Sunak, Prime Minister Narendra Modi said: “I look forward to working closely together on global issues, and implementing Roadmap 2030. Special Diwali wishes to the ‘living bridge’ of UK Indians, as we transform our historic ties into a modern partnership.”.

Considered a centrist and pragmatic politician, he emerged in the latest leadership contest as a safe pair of hands to guide the UK, after Liz Truss’ policy proposals around tax cuts and spending shook the government’s credibility and spooked markets.

Sunak’s rise in British politics has been nothing short of meteoric. After entering Parliament in 2015 after a career in banking, Boris Johnson appointed him just five years later as finance minister — a role formally known as chancellor of the Exchequer, the UK’s Treasury.

Immediately after being selected by Tory MPs, Sunak took to Twitter to announce: “I want to fix our economy, unite our Party and deliver for our country,” after Truss’ resigned as Prime Minister on Thursday as the opposition reiterated its demand for a general election.”

The ex-chancellor who oversaw the nation’s finances during the Covid pandemic was the only contender to gain enough support from MPs and he even got endorsement from the finnacial market experts.

“The markets are confident that they know the kind of Prime Minister Rishi Sunak is likely going to be because they know the kind of chancellor that he was and clearly he understood how damaging those unfunded tax cuts were likely to be,” said Danni Hewson, financial analyst at AJ Bell.

Sunak takes charges after Liz Truss, the outgoing leader who only lasted 44 days in the job, unveiled unfunded tax cut plans that battered investment confidence and put the government at loggerheads with the Bank of England.
“The yields have come down, which just demonstrates that the markets feel that once again the UK is getting back to the kind of economy that they would expect from an established economy rather than an emerging economy,” stated Hewson.