Britain’s business leaders urged Rishi Sunak to put an end to the government’s “flip-flopping” and chaos of recent months and get a grip on the pressing issues facing the economy.
As a one-time City high-flyer and former chancellor who guided the Treasury through the Covid crisis, the incoming prime minister — who won the Tory party’s leadership contest on Monday — commands widespread respect in the business world.
“He is someone who is confident enough to surround himself with high quality, competent people who are capable of challenging him and we haven’t seen that for the last two or three prime ministers,” said Simon Emeny, chief executive of pub group Fuller, Smith & Turner, who worked with Sunak over support for the sector during the pandemic.
The gilts market rallied sharply on the news that Sunak would succeed prime minister Liz Truss, with investors betting that he would maintain the economic policies unveiled by chancellor Jeremy Hunt last week.
But Sunak takes office as the country confronts an economic crisis — with increasing inflation, rising energy bills and an estimated £40bn hole in the public finances — after weeks of market turmoil following Truss’s “mini” budget.
Ahead of Monday’s result Guy Hands, founder of private equity firm Terra Firma, warned that the British economy was “frankly doomed” and called for a renegotiation of the Brexit agreement. He added that the Conservative party needs to “move on from fighting its own internal wars” and sort out the economy, otherwise Britain could need an IMF bailout.
Shevaun Haviland, director-general of the British Chambers of Commerce, urged Sunak to be a “steady hand on the tiller” after a “hugely damaging” period for British business.
“This means setting out fully costed plans to deal with the big issues facing businesses; soaring energy bills, labour shortages, spiralling inflation and climbing interest rates,” she said. She called on him to provide more certainty on the energy support package for business, which currently runs out in April.
The prospect of another prime minister just seven weeks after Boris Johnson was replaced by Truss has raised fresh uncertainty over government policy. Sunak will oversee a fiscal event on October 31 — dubbed the “Halloween Budget” — but it is not yet clear which of his predecessor’s supply-side policies he will maintain.
Kate Nicholls, chief executive of industry body UK Hospitality, said she hoped Sunak would “end the period of turbulence” over the past few weeks. “I do have confidence that he will restore credibility with the markets,” said Nicholls. She added this would help “bear down on interest rates and inflation”, the two key factors affecting “jobs and business viability” in the hospitality industry.
Melanie Leech, chief executive of the British Property Federation, praised Sunak’s Treasury experience, but said: “I think the key for him (or anyone) will be whether he can hold and maintain party discipline to build and deliver a policy agenda that business can get behind.”
Some of Sunak’s campaign promises during the summer leadership race have caused jitters, particularly in the renewable energy sector, which has just been hit by a de facto windfall tax. In August he vowed to maintain a ban on onshore wind farms and he has also said he is opposed to solar panels on some farmland.
However, Chris Hewett, chief executive of trade association Solar Energy UK, said the incoming prime minister’s comments were carefully phrased. “Whilst Liz Truss appeared to dislike the very sight of solar farms on fields, Rishi Sunak has been careful to say he wouldn’t want solar on the ‘best’ farmland. This is in line with existing policy,” he said.
Dan McGrail, chief executive of RenewableUK, urged Sunak not to reinstate the moratorium on onshore wind. “We’re keen to work with the new prime minister to take this forward,” he said. “Onshore wind is one of the UK’s cheapest forms of new power.”
Property developers were also unsettled in the summer when Sunak made comments about preventing councils from changing the boundaries of greenbelt land to enable new housebuilding.
But David O’Leary, policy director at the Home Builders Federation, said: “We’re dealing with a known entity who we have confidence in. Not to say everything that was pitched in the summer leadership campaign was particularly pro-development but we have experience working with this PM from his time in the Treasury.”
Additional reporting: David Sheppard