ANALYSIS - Rishi Sunak: Balancing UK's economic challenges with pro-Brexit concerns

By Jonathan Fenton-Harvey

- The writer is a researcher and journalist focusing on conflict and geopolitics in the Middle East and North Africa, primarily related to the Gulf Region.

ISTANBUL (AA) - Britain’s new Prime Minister Rishi Sunak has a major challenge to salvage country’s economic difficulties, compounded by Brexit, the coronavirus pandemic, and Russia’s invasion of Ukraine. Given the new Prime Minister’s background in finance and that he was formerly Boris Johnson’s Chancellor of the Exchequer, Sunak may hope to pursue a commercial-oriented foreign policy.

While the UK formally withdrew from the EU in January 2020, the coronavirus pandemic and Russia’s war in Ukraine have both damaged Britain’s post-Brexit trade and economic visions, which were already a mammoth task, given the damage to supply chains and further economic consequences from both events.

While Liz Truss was elected by the Conservative Party members in August following Johnson’s resignation, the party’s MPs nominated Sunak as a consensus candidate in October following Truss’ short-lived and shaky tenure. Sunak will therefore have to win over the party’s members and the wider public, particularly as the party’s popularity had plummeted [1] in opinion polls under Truss.

In terms of foreign policy, a key objective is securing post-Brexit trade deals. A leading promise of the 2016 Brexit referendum was that Britain could pursue lucrative trade agreements with emerging economies around the world that were previously restricted within the membership of the EU. And given the UK’s economic vulnerability following Brexit, securing new free trade deals is now even more urgent for boosting Britain’s economy.

- Sunak's priorities for economic ties with India

As a leading economy outside Europe, India has been a key focus for London, and the UK has engaged in pursuing a free-trade agreement (FTA) with the country. Yet this faced setback after Britain had set a deadline to secure an FTA to coincide with the Hindu festival of Diwali that was celebrated in October.

Elements in Narendra Modi’s government have suggested [2] that UK and India trade ties would revive following the appointment of Sunak and lead to “a much better relationship” between the two countries. Sunak, originally from Southampton in the UK, has South Asian roots and is the first British Asian and Hindu prime minister of a European country.

Yet in early October, London said that there was “no rush” to secure trade talks, indicating that hopes to finalize them by the Diwali deadline had not materialized. Since the festival is already over, Britain and India will have to revise a deal that seems increasingly fragile.

Moreover, Home Secretary Suella Braverman, also of Indian origin, has opposed [3] an FTA with India, stoking fears that it could lead to increased migration. She said an FTA agreement would lead to “open borders” between the UK and India, and that Indians were the biggest overstayers of visas in Britain. She added: “I have concerns about having an open borders migration policy with India because I don’t think that’s what people voted for with Brexit.”

Officials in New Delhi said [4] that they were reportedly “shocked and disappointed” by Braverman’s “disrespectful” remarks, and such tensions could indeed further stall an FTA. Indeed, Britain has argued that cutting back on the freedom of movement of skilled workers from India should be part of the deal, seeking to appease the Conservative Party and the wider public concerns about high immigration levels. But New Delhi could see this as a disadvantage in the agreement.

Moreover, since Sunak lost out to Liz Truss in the initial vote held by Conservative Party members, he looks set to appease concerns among voters by taking a tougher stance on immigration while moving the UK from its economic crisis and ensuring Brexit succeeds. This alone could create further challenges for Sunak’s vision of securing an FTA with India.

- Seeking compromises in the Gulf

Britain has been able to compromise elsewhere, particularly in the Gulf. In prioritizing a free-trade agreement with the Gulf Cooperation Council (GCC), Sunak has recently abandoned [5] his previous suggestions that it would recognize Jerusalem as Israel’s capital and move its embassy there from Tel Aviv. After all, Kuwait threatened [6] in October to veto an FTA should the UK go ahead with the plan of embassy move.

With the talks aimed to be finalized later this year, and that the GCC is already one of Britain’s largest bilateral trading partners, Sunak had to abandon moves initiated by Liz Truss to relocate Britain’s embassy in Israel to Jerusalem.

Meanwhile, Britain is also gripped by the Ukraine crisis. Under Boris Johnson’s auspices, Britain became the most crucial European supporter of Kyiv against Russia’s invasion. Even Johnson’s short-lived predecessor Liz Truss, who served as his Foreign Secretary, supported an antagonistic stance towards Moscow.

While Sunak said he will continue UK’s opposition towards Russia, thus seeking to continue to enhance Britain’s leadership role, he also pledged to cut defense spending [7] despite protests from some ministers including long-standing Defense Minister Ben Wallace, and even allies in Eastern Europe like Estonia. [8] Thus, Ukraine may be less of a priority for Sunak than it was for Johnson, as he seeks to focus on economic issues.

Sunak will have to balance Britain’s economic woes -- which has created a consumer crisis across the entire country, with ideological concerns from pro-Brexit Conservative ministers and members, not to mention the crisis in Ukraine. Thus, he may be forced to compromise on his visions. Should Britain struggle to secure enough trade deals and boost Britain's economy, it could hurt Sunak’s premiership. This in turn could be a further boost for the opposition Labour Party, which many commentators in the UK have argued is a government-in-waiting.

Under Keir Starmer, Labour is far ahead in public opinion polls and therefore looks set to win a large electoral victory at the next general election, which is due to be held by the end of 2024. Should the public’s sentiment remain the same and Sunak fails to deal with both of these major challenges, it could push the Conservative Party out of power for a long period.

[1] https://www.theguardian.com/politics/2022/oct/08/liz-truss-approval-ratings-reach-new-lows-after-tory-conference

[2] https://www.independent.co.uk/news/uk/rishi-sunak-india-uk-trade-deal-b2210813.html

[3] https://www.theguardian.com/politics/2022/oct/06/suella-braverman-speaks-out-against-likely-uk-trade-deal-with-india

[4] https://sg.news.yahoo.com/indian-official-dismisses-report-trade-071609410.html

[5] https://www.middleeasteye.net/news/uk-scraps-plan-move-israel-embassy-jerusalem-tel-aviv

[6] https://www.middleeasteye.net/news/uk-israel-jerusalem-embassy-move-jeopardising-gcc-trade-deal

[7] https://www.reuters.com/world/uk/uk-defence-minister-non-committal-whether-pm-sunak-will-keep-spending-pledge-2022-11-01/

[8] https://www.bbc.com/news/uk-politics-63397598

*Opinions expressed in this article are the author's own and do not necessarily reflect the editorial policy of Anadolu Agency.