+ Sunak faces obstacles in pushing UK’s economy
+ Sunak’s popular job retention scheme faces cracks
+ Sunak finds himself in ideal surroundings for the future
Why is Sunak’s level hot?
Answer: His emergency policies are being carried out sans resistance.
Rishi Sunak, UK Chancellor of the Exchequer since February 2020, has been pushing his emergency economic policies in response to COVID-19 through rather effectively, with up until recently, little pushback. When the COVID-19 crisis hit the UK, Sunak acted quickly and unexpectedly, stating that “for the first time in our history the government is going to … pay people’s wages”, setting up massive job retention, i.e., furlough scheme. The purpose of this is to prevent the UK from facing even more extreme levels of unemployment than the ones the nation already faces in direct response to the pandemic, in effect limiting redundancies. His additional policies for the self-employed in the form of tax grants, the bolstering of the welfare system by an additional thousand pounds a year, and most recently, support for strategically important companies, are highly recognized as generous by both the population and the government.
As for criticisms of his work, few people in government have pitched in to give their two cents, many very reluctant to put themselves in Sunak’s tough position. In fact, his policies have been so successful, more people are on his retention scheme than expected. This comes with a significant cost, with Sunak telling ITV News in recognition “We are potentially spending as much on the furlough scheme as we do on the NHS, for example. Now clearly that is not a sustainable situation.” The implications of such high employment- and income dependency on the government is, of course, costly; the question is how to wind down schemes to self-sufficiency for industries, companies and individuals. His success in bringing about his generous policies have proven him to be at a steady blazing hot heat level. In the past two weeks, however, various factors have brought his heat level down to a little less hot.
What is changing Sunak’s temperature?
Answer: Spending more than one’s country has is an expensive decision.
Sunak’s facing little pressure outwards – nobody will stand in his way. Anybody who could effectively do so has no wish to, respectful of the burden Sunak has on his shoulders given the severity of the pandemic. Secondly, there is no higher position than the politically-inactive Queen and Prime Minister Boris Johnson, given the political structure of the UK government. The Chancellor of the Exchequer is a senior member of the British Cabinet and Head of Her Majesty’s Treasury. Sunak, therefore, works alongside the PM as opposed to for him and has unchecked power over his economic policies.
The factors bringing down Sunak’s heat level are subtle forces in the immediate context, yet may carry significant weight over time. Firstly, public opinion has significantly taken a turn for the worse, with a Savanta poll showing a decrease of 15% in his approval ratings from 35% to 20% in just four days. This can be tied to his vocal support of Dominic Cummings, chief adviser to the PM and often credited as the mastermind behind Brexit, who broke lockdown regulations to drive cross-country with his family. In a tweet, Sunak wrote, “I understand people had serious questions about his actions – indeed many of you have made huge sacrifices – but I do believe today he explained himself.” Public outrage was immense, with the government as a whole taking a hard hit in faith. Despite Sunak’s efforts to protect workers in the economy, many feel disappointed, with many responses on Twitter following a theme of disappointment.
Additionally, the days leading up to the poll and shortly after included high speculation over how Sunak would be updating the furlough scheme to wind-down dependency, upon which an estimated 8MIL employees are currently dependent. The decision to wind it down starting in August is accompanied with concern by many, fearing it is too much, too soon, accompanied by redundancies that were simply put off instead of prevented. The speculative buzz on what taxes too will look like in the coming months and years is filled with nervosity: will Sunak raise them, or will he take mercy and allow for consumer spending to grow? Displays of distress and the emotional outrage in response to Sunak’s support of Cummings are the first significant cracks in the wall for the Chancellor’s otherwise strong start in his current position. Fears of being left behind by a Tory focussed on protecting his herd threaten to create bigger problems in the future for Sunak, in a ‘maybe forgive but surely never forget’ style.
What is driving Sunak?
Answer: His context combined with ambition spell ‘force to be reckoned with’.
In his first 6 months as Chancellor of Exchequer in such a critical time in UK history, anybody would be aware of the importance of their reaction and effect. Sunak’s highly-visible position in a time of crisis means that his future both in politics and otherwise is dependent on his successes as Chancellor of the Exchequer. Sunak rose through the ranks quickly, only having been an MP for five years before reaching his current position as Chancellor of the Exchequer. Despite his clear political identity as a conservative, Sunak’s empathetic nature has repeatedly shone through in the generosity of his pro-interventionist, supportive Keynesian economic policies. Complimentarily, his recognition for how things simply bear the fruit of successful economic policies that don’t lose touch with reality.
Perhaps, Sunak’s position in almost unchecked power as a senior member of the cabinet, as well as the current situation of the ongoing COVID-19 pandemic, work together to contrasting effects. On one hand, the cost for the nation is great: Sunak better get this right in his sole responsibility or else millions more will pay. On the other, Sunak cannot be credited with single-handedly ruining the economy given the severity of the effects of the pandemic itself, giving him a little bit room to wiggle à la Johnson style, spinning a negative story well into success.
Meanwhile, characterized by his clear, calm and collected communication with the public, Sunak appears to be the rock in the UK Prime Minister’s government. Many have speculated that Sunak is on his way to PM, well-liked by sitting PM Johnson himself and across the spectrum in parliament. As such, his current position as Chancellor could be the moment to prove himself worthy of the position when the time comes, should he successfully weather the storm.
In addition, the political nature of the UK has proven to be centred around helping one another out, particularly within the Tory vs. Labour context. In regards to Sunak’s outspokenness in support of Cummings, this further demonstrates a strategic eye on the future. Cummings key role in Johnson’s government and as the ‘mastermind’ behind Brexit denotes his importance. Sunak’s support on Twitter not only wins him a few points with Cummings but also with Johnson in his clear reluctance to abandon or denounce Johnson’s loyal ‘partner in crime’.
Lastly, the basics: Sunak’s background. Sunak was raised by a general practitioner and pharmacist. Holding the professions that are now so highly recognized as frontline workers in the ongoing pandemic is likely to touch a personal nerve, perhaps pushing for even greater empathy than otherwise in his work. This might further be emphasised by his other job as a father of two daughters. Additionally, Sunak is of Indian-descent, the son of 1st generation Brits, a considerable part of the voting force in the UK. Sunak is also aware of the brownie points he has to win in pleasing the portion of the population with a similar background, and many more people who fall under the sizable category of people with an immigrant background in the UK.
What does it mean for you?
Answer: Get ready to start paying your bills once more.
If you’re on the furlough scheme in the UK, this means your business will have to start paying a percentage of your wages once more, but it seems like you won’t be returning to work any time soon if you are still on the scheme come September. If you are benefitting from the furlough scheme as an employer or business, then it means you are going to have to start spending significant money for your employees once more.
Additionally, with the UK piling up on its debt in its emergency response to the outstanding economic crisis, it’s likely that you will be seeing the typical rainy days equally reflected in the economy. However, rest assured – Sunak appears to have a solid grasp on getting his economic policies into effect with a conscious eye on the long-term effect: sunny days ahead!