For the third time in two months, and for the fifth time in six years, the United Kingdom has a new prime minister. Rishi Sunak has replaced Liz Truss as the British prime minister sending waves through global politics. Sunak made history as the first prime minister of Indian heritage. 

He takes on what he has spoken about as a “profound economic challenge.” This economic challenge comes on the heels of a crippling economic policy enacted by former prime minister Liz Truss which aimed to heal the economic collapse in Great Britain following the COVID-19 pandemic. Within the first 48 hours of Ms Truss’s election, she made extremely bold and ultimately reckless economic policy decisions that continue to plague the country’s economy. First came the economic energy support package which aimed to cap the energy unit price for two entire years. Coined the “economic big bang” by Ms Truss herself she aimed to resurrect the UK economy by slashing taxes on the wealthy and funding her budget almost completely by borrowing. This was met with heavy criticism and opposition stating that this borrowing could lead to even higher marks of inflation in an already hyper-inflated economy. However, Ms Truss did not heed these warnings and ultimately imploded the UK economy. Due to uncertainty on the basis of these funds for Ms Truss’s economic “big bang,” the policy crumbled. This sent financial markets into a massive downturn and the British pound plummeted. Additionally, it forced the Bank of England to bail out pension funds. This economic failure is ultimately what caused Ms Truss to resign leaving the reigns to fellow conservative Rishi Sunak.

Called upon for his economic prowess, Rishi Sunak has previous work experience for Goldman Sachs and as a partner of multiple hedge funds. He inherits a large parliamentary majority which has been sustained following Boris Johnson’s turning of the seats in the 2019 general election. Sunak stated in an address in front of No. 10 Downing Street after formally accepting his new role from King Charles that “Right now our country is facing a profound economic crisis. The aftermath of COVID still lingers.” 

Following the economic disaster that was Liz Truss’s prime ministership, Rishi Sunak will have two full years to restore the confidence that caused the conservative party to gain control of parliament for 12 straight years. Browen Maddox, CEO of Chatham House, stated that Sunak “now has to try to set out an economic plan and a plan for the country that gives the country some reassurance and may even bring his party to a kind of unity, but that remains the big question.” 

The financial markets reacted very positively to Sunak’s selection as prime minister. Sunak also retained the country’s new finance minister Jeremy Hunt who completely canceled the tax cuts that had been put in place by former minister Liz Truss. These positive reactions from the financial markets indicate that government borrowing costs have fallen to where they had previously been before Truss implemented her economic “big bang” policies. This will reduce government spending immediately allowing Rishi to balance the books in order to truly finance long-term spending necessary to revitalize the economy. However, he still faces significant challenges in the form of higher-than-ever inflation levels, soaring energy prices, and a rapidly rising cost of living that affect every level of the country.