The race for Britain’s next Prime Minister will see the finish line today with two candidates in the fray — former Foreign Secretary Liz Truss and former Chancellor of the Exchequer Rishi Sunak. Ahead of the final results, Sunak declared said that he would support the next government.
With the Tory leadership race coming to an end today, the new Prime Minister of the United Kingdom will inherit a staggering economy which would need immediate attention. Here are some of the challenges that Boris Johnson’s successor will have to take action upon.
Economy
The new British Prime Minister will be inheriting a flagging economy with stagnating growth as the economy faces multiple challenges. The country has already slipped from its mark as the fifth largest economy in the world with India gaining that position last week. The new UK PM will have the challenge to regain the country’s position.
The Gross Domestic Product shrank by 0.1 per cent quarter on quarter in the second three months of the fiscal year.
The upcoming PM will have to also tackle the dwindling growth forecast for the next three years with next year, 2023 being the most crucial one. For the year 2022, a growth forecast of 3.3 per cent has been projected which is computed to fall at 0.23 per cent in the year 2023 and then rise to 1 per cent in the year 2024.
Inflation
The UK’s price rise recorded in July this year is at an all-time high for the last 40 years with Consumer Price Inflation and 10.1 per cent while the inflation rate in June was 9.4 per cent.
The inflation forecast for next month, October is 13.3 per cent.
With the increase in inflation, the cost of living has also gone up putting a squeeze on people’s finances as wages fail to keep up.
As the new PM takes office, they will have the task to formulate people-centric policies to put check on soaring inflation.
Fuel Poverty
Rising prices probably imply an increase in absolute poverty and material deprivation. A study by the University of York predicts that around two-thirds of households in the United Kingdom will be trapped in poverty by January next year.
The research also shows that 18 million (1.8 crore) families, the equivalent of 45 million (4.5 crore) people will be left trying to make ends meet after further predicted rises in the energy price cap in October 2022 and January 2023.
As per the Resolution Foundation Think Tank soaring energy prices will cut household incomes by 10% and push an extra 3 million (30 lakh) people into poverty.
Observing the situation at hand and the predictions, the new UK PM will face the challenge to negotiate its energy policies with other countries to bring down the high price of energy after the Russia-Ukraine war.
Drop In Living Standard
Households in Britain will see their spending power cut by an average £3,000 by the end of next year, as per the Resolution Foundation think tank. The new government acts to counter the biggest drop in living standards in at least a century. The next PM will have to make tax cuts to ease pressure on common people
Unemployment
The United Kingdom is also facing a problem of unemployment at present which rose to 3.8 per cent in July this year. A young population of 4,29,000 in the age bracket of 16 to 24 years were jobless in the first quarter of this year.
During the same first three months of the fiscal year, the unemployment rate for 16-24-year-olds was at 10.4 per cent.
With an economy spiralling downwards, the new Prime Minister will have to face the challenge of finding new job avenues for the country’s young population.
Key Foreign Policy Challenges
As foreign policy generally remains under the domain of the Prime Minister in the UK it will be interesting to see how and where the new PM will steer the country with their foreign policy.
The new UK PM will have to make choices in dealing with China and also look at the longer-term issue to avoid “Ukraine fatigue.”
In regards to relations with India, the new UK PM’s biggest challenge will be maintaining the same level of intensity in the relations as was established by Boris Johnson who had put India and the UK on the path to a “Comprehensive Strategic Partnership.”