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Historic moment as Rishi Sunak named Prime Minister

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
24/10/2022

Former Chancellor, Rishi Sunak has been named leader of the Conservative Party and the new Prime Minister after his opponent bowed out of the race for the top job.

Chair of the 1922 Committee, Graham Brady, confirmed Rishi Sunak is the new Prime Minister, just six weeks after Liz Truss was sworn in. Sunak is one of the youngest, and first British Asian to take the top spot.

Brady said: “I can confirm that we have received one valid nomination. Rishi Sunak is therefore elected as leader of the Conservative Party.”

Brady added that Sunak will make an address at 2:30pm this afternoon.

‘Diversity and talent of our party’

It came as rival Penny Mordaunt, leader of the House of Commons, tweeted a statement confirming she had pulled out of the leadership race.

Her statement read: “Our party is our membership. Whether we are elected representatives, activists, fundraisers or supporters. We all have a stake in who our leader is.

“These are unprecedented times. Despite the compressed timetable for the leadership contest, it is clear that colleagues feel we need certainty today. They have taken this decision in good faith for the good of the country.

“As a result, we have now chosen our next Prime Minister. This decision is an historic one and shows, once again, the diversity and talent of our party. Rishi has my full support.

“I am proud of the campaign we ran and grateful to all those, across all sides of our party, who gave me their backing.

“We all owe it to the country, to each other and to Rishi to unite and work together for the good of the nation. There is much work to be done.”

‘I want to fix our economy’

In a tweet yesterday, Rishi said the UK is a great country “but we face a profound economic crisis”.

“That’s why I am standing to be your next Prime Minister and leader of the Conservative Party.

“I want to fix our economy, unite our party and deliver for our country,” his statement read.

It went on: “I served as your Chancellor, helping to steer our economy through the toughest of times.

“The challenges we face now are even greater. But the opportunities – if we make the right choice – are phenomenal.

“I have the track record of delivery, a clear plan to fix the biggest problems we face and I will deliver on the promise of the 2019 manifesto.

“There will be integrity, professionalism and accountability at every level of the government I lead and I will work day in and day out to get the job done.

“I am asking you for the opportunity to help fix our problems. To lead our Party and country forwards towards the next General Election, confident in our record, firm in our convictions and ready to lead again.”

Recession looms but bank rate set to be lower

This morning, the pound was up and gilt yields retreated as it became apparent that Sunak was heading towards the top job.

Ruth Gregory, senior UK economist at Capital Economics, said that while gilt yields have fallen back, Sunak “will still have to work hard to restore stability in the eyes of the financial markets”.

Gregory said: “The news that Penny Mordaunt has pulled out of the race for Prime Minister and that Rishi Sunak will become the next Prime Minister appears to have gone down reasonably well in the markets.

“At the time of writing, the 20-year gilt yield was 4.07%, 18 basis points lower than at 08:00 BST (4.25%). So markets appear to be further pricing out the risk premium built into gilt yields. What’s more, investors are now pricing in a peak in Bank Rate of 5.16%, down from 5.45% on Friday and the 6.32% peak on 27 September.”

But she added that a new set of fiscal rules will need to fill the hole in public finances, estimated at £30bn after former Prime Minister Liz Truss and her former Chancellor, Kwasi Kwarteng’s disastrous mini Budget. The unfunded tax cuts were all but reversed by new Chancellor, Jeremy Hunt, who is expected to remain in post under Sunak’s leadership.

“Overall, the news that Rishi Sunak will be the next PM means that the big downside risks to the economy posed by a prolonged period of political instability and a significant fiscal tightening have receded. But with a fiscal tightening still on its way, the risk is that the recession will ultimately be deeper or longer than we currently expect,” Gregory said.