Rishi Sunak has won the race to become the new Prime Minister. Only seven weeks after he lost the previous leadership election, he is set to take charge of the country. He enters office in the midst of a crisis in the economy, a crisis like this not seen in generations. The Prime Minister faces a bursting inbox of issues to deal with. Issues and challenges that need addressing immediately. Here we look at some of the key challenges facing Sunak.
Key Challenges Facing Rishi Sunak
1) Tax Policy
Rishi Sunak criticised Liz Truss’s tax-cutting plans and warned of troubles with her policy on taxes. Looking back in hindsight to what we now know, he was right. In his failed leadership election almost two months ago, he promised to ‘deliver tax cuts that drive growth’. He vowed to do this in a way that was ‘responsible. Sunak set out to do this ensuring any tax cuts were offset by growth, not continued borrowing.
Previously he pledged to cut Corporation Tax from 19% to 25%. He was the Chancellor who set out the 1.25% increase in National Insurance and pledged to reduce the lower rate of Income Tax to 16%. His plans on taxes are sure to be a priority.
2) Economy and the Cost of Living Crisis
As Chancellor, he expressed concern about the risk of rising prices. He forecast correctly.
The Financial Markets place trust in Sunak, as can be seen in the strengthening of the Pound and markets rallying since his announcement as PM. Government borrowing costs have been reduced which could minimise further interest rate increases. This will have a positive impact on mortgage rates, impacting millions of households.
He will immediately look at the Energy Price Guarantee impacting Energy Bills from next April. These could rise to £4,000 and have a detrimental impact on inflation. Other areas he needs to look at are tax credits, benefits, and pensions … to name but a few.
3) Ukraine and Defence Policy
In his leadership campaign, he pledged to continue Britain’s support to Ukraine. In fact, when he visited Kyiv he promised to redouble efforts and guaranteed total support to the war-stricken country. Sunak has put it on the record that defence spending needs to increase.
4) Northern Ireland Protocol
The legislative assembly and government in Belfast are unable to function properly. Without a Northern Ireland Executive, there is much uncertainty in Northern Ireland. Sunak has previously promised a bill to overcome the situation. This is an area Liz Truss was supposed to address but failed in her brief spell as PM.
5) Ongoing Worker’s Strikes
The consistent factor with most of the strikes we are seeing across the country is linked to pay. With the cost of living increasing on a daily basis, wages remain the same. We have seen a number of strikes across the country which has had a negative impact on the economy. These include Royal Mail, Criminal Barristers, Train Drivers, Dock Workers, and Telecommunications Staff. These strikes also impact the day-to-day lives of millions of people.
Summary
The Prime Minister’s to-do list is huge. As with any to-do list, it’s important to focus on the key priorities first. Sunak has a challenging job ahead of him and we wish him the best of luck. Tax cuts are a key priority for the new Prime Minister. If you would like advice on your tax affairs please contact us on 0800 471 4546.
