The UK economy was left reeling on Tuesday night after Rishi Sunak’s sharp resigned from his position as Minister of Finance.
This leaves the Treasury with a leadership vacuum at the worst possible time the economy is headed for recession and Boris Johnson’s premiership descended into chaos.
The prime minister was left trying to appoint a successor to Mr Sunak on Tuesday night, but several names are in the running for the job, with other cabinet members reportedly reconsidering their positions after a series of highly damaging scandals.
Meanwhile, Chief Secretary to the Treasury Simon Clarke is next in the line of command. However, the minister reportedly pulled out of a round of media briefings on Wednesday, suggesting he too may have lost faith in Mr Johnson.
Mr Sunak’s predecessor as chancellor, Sajid Javid, also resigned as health secretary on Tuesday.
Whoever takes the top job at the Treasury will inherit one of the worst economic situations Britain has faced in living memory.
The economy shrank in April and living standards fell in each of the past four quarters, official data showed.
This is the longest streak of falling real incomes on record, and is expected to get much worse later this year as prices continue to rise.
The new chancellor will have to contend with inflation at a four-decade high as well as rising interest rates that are squeezing household finances and pushing up the cost of government borrowing.
The Bank of England warned on Tuesday that the outlook for both Britain and the global economy had “deteriorated significantly” thanks to a sharp rise in prices caused by Russia’s invasion of Ukraine.
In the Tory Party, which has seen divisions increasingly evident, there will be major doubts about how the new appointment seeks to approach the management of the economy.
Traditional conservatives with small, low-tax states face off against those more focused on increasing spending and “flattening” the country.
While Mr Sunak has sought to portray himself firmly as a low-tax Tory, he has been pushed to announce an unprecedented wave of public spending during the pandemic and then through the cost of living crisis.
Mr Sunak’s last time in charge of the Treasury was marked by clashes with the Prime Minister over government spending.
Announcing his resignation, Sunak said, “I firmly believe that the public is ready to hear this truth. Our people know that if something is too good to be true, it is not.
“They should know that although there is a path to a better future, it is not easy. In preparation for our proposed joint speech on the economy next week, it has become clear to me that our approaches are fundamentally too different.”
The letter of condemnation came minutes after Mr Sunak’s cabinet colleague Sajd Javid resigned as health secretary, targeting the prime minister’s behaviour.
“The tone you set as a leader, the values you represent, reflects on your colleagues, your party and ultimately the country,” the former health minister wrote.
“Last month’s vote of confidence showed that a large number of our colleagues agree. It was a moment of humility, grip and new direction. But I have to say, unfortunately, that it is clear to me that this situation will not change under your leadership.”
Labor leader Keir Starmer said: “If they had an iota of integrity they would have left months ago. You cannot fool the British public. The Tory party is broken and changing one man won’t fix it. Only a real change of government can give Britain the fresh start it needs.”
Another former ally of Mr Johnson, Oliver Dowden, resigned as party chairman after the Tiverton, Honiton and Wakefield by-elections, which the Tories lost by wide margins.
“Rishi Sunak Goes Out: Who Now Runs a Collapsing Economy?”
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