What Is Next for the United Kingdom?

British Prime Minister Rishi Sunak makes a statement after taking office, outside 10 Downing Street, in London, on Oct. 25, 2022. Dan Kitwood/Getty Images

Commentary 

I wrote an article recently which stated that Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng might have cut their careers short. I did not expect both of them to be gone so soon.

Now there is a new prime minister and a new chancellor. In the rush to replace Liz Truss, former prime minister Boris Johnson was even considered, and for a moment he looked to have a sure shot. A poll published by The Times on Oct. 21 showed Rishi Sunak and Johnson tied at 46 percent. In the end it was Sunak who became prime minister on Oct. 25.

The party in control, the Conservatives, chose the leader after an internal runoff among three candidates. While this particular process is not open to the general public, when compared to the United States, the voting process is very, very fast and it is free from third-party intervention (or voter fraud).

Outfits like the liberal New York Times detest that parliamentary process because the general public is not involved in selecting the replacement prime minister. So on Oct. 23, New York Times journalist Danile Victor reported: “The country’s next leader will not be selected by a vote of the general population. Instead, the 357 Conservative members of Parliament and, perhaps, about 170,000 dues-paying members of the Conservative Party will choose the party’s next leader, who will then become the prime minister. Members of the party are far more likely than the rest of the country’s 67 million residents to be male, older, middle-class, and white.”

Despite Danile Victor’s negative attitude toward older middle-class whites voting for the next prime minister in a country predominantly consisting of white males and females, one must admire the United Kingdom and the privileges that allow elected officials to toss out leaders when they fail (or upset the party). It’s much better than the situation we have in the United States where ethically compromised politicians remain in office without term limits or without the threat of removal (except by losing an election).

UK Looks to Shore Up Global Reputation

I have not seen this much economic turmoil in the United Kingdom since the global financial crisis of 2008–09. At the very least, the United Kingdom must reassure the world that the British economy is strong and capable, and that the new fiscal plans and new prime minister will serve as a stable backstop. They must reassure the world that responsible leadership with sound economic policy is leading the country.

The quandary of financial events over the past couple of months, however, has been profoundly unsettling. The pound briefly dropped to record lows, and there was a run on bonds. Meanwhile, the mortgage markets are in chaos, as many Brits have short-term mortgages with variable mortgage rates, and they will certainly feel the pain of rising rates. In reality, it feels like a domino effect is in place.

Recently, the new Chancellor of Exchequer, Jeremey Hunt, literally scrapped the old plans, including tax cuts, and embarked on a reversal of fortunes, leading up to the scheduled Oct. 31st release of the new fiscal plan and economic forecast—which officially comes from the UK’s Office for Budget Responsibility.

However, on Oct. 26, the fiscal plan and economic forecast release was pushed back by two weeks. The prime minister and incoming officials need more time to review the finances and important developments since the resignation of Truss. As Reuters reported: “The British government delayed the announcement of its plan to repair the country’s public finances by more than two weeks, to Nov. 17, saying it wanted to ensure the program reflected the latest and most accurate economic forecasts.”

What about the UK’s economics? Will there be another monster rate hike by the Bank of England? British inflation is above 10 percent; rates are set to rise by 75 basis points, and this all follows intense political and economic upheaval. Paul Dales, chief UK economist at Capital Economics, stated: “There are a lot of moving parts, but our existing forecasts—that interest rates will rise from 2.25 percent now to 5.00 percent and that GDP will fall by 2 percent during a recession—don’t seem that wide of the mark”

The obvious whipsaw dynamics of the British political and economic system are hard to deny, but the United States and the United Kingdom have long enjoyed a special relationship. While President Joe Biden waffles on his devotion to the United Kingdom, presumably because of his allegiance to his Irish heritage and his reluctance to embrace another free market country with conservative leadership, make no mistake: the United Kingdom is hugely important to Western markets and to the free world. It is the world’s sixth largest economy, and one of the world’s foremost examples of sound private property laws, individual liberty, and free markets.