Five problems PM Rishi Sunak faces on his uphill battle to lead the Tories

Published

2 years ago

November 10, 2022

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Rishi Sunak may yet find himself asking what Sir Gavin Williamson would have done between now and Christmas, as he faces an unenviable uphill struggle to manage his party.

While the prime minister presented himself as a fresh start when he entered Number 10 two weeks ago, the fissures, fury and fire inside the Conservative party have only partially calmed. This may yet change given the scale of the challenge ahead.

Here are five of them…

The Autumn Statement

The storm clouds are gathering. A revolt is brewing on tax. The Conservative membership refused to put Mr Sunak in Downing Street over the summer – in part – because as chancellor he took Britain to a 70-year high. Mr Sunak has subsequently been installed without consulting them.

Everything has changed in the interim, with Trussonomics causing a spike in debt costs and a run on the pound, but at the same time, nothing has changed. And the Tory right is already agitating.

On Thursday evening, Iain Duncan Smith told Sky News that “it will be of deep concern if we go over the top on tax rises because it’s absolutely a fact of life that tax rises will make the recession deeper”.

He thinks the size of the black hole, which he stresses is based on forecasts (which can be wrong), may be smaller than expected particularly if energy costs drop. Newspapers have speculated on tax rises on every front, from income to inheritance tax. When the latter was floated at the weekend, one Tory MP told me: “You do have to ask what is the point of a Tory government anymore.”

A quickie Brexit deal on Northern Ireland

This is a sleeper cell issue that could cause untold pain to Mr Sunak’s premiership if he gets it wrong. Some MPs believe there is a chance of a deal within weeks to overhaul the Northern Ireland Protocol – the agreement between the UK and EU preserves both the integrity of the EU single market as well as the lack of a hard border on the island of Ireland.

US President Joe Biden has suggested a deadline for a deal is the 25th anniversary of the Good Friday Agreement next April, and he is personally keen to resolve what he regards as a long-running sore. In his opening fortnight, Mr Sunak has made a huge effort to repair relations with the French and US presidents.

He was not an instinctive hardliner in EU Brexit discussions in Boris Johnson’s government. You can see the political attraction of a deal for Mr Sunak. But again, beware the hard Brexiteers. They – and some in the Unionist community in Northern Ireland – fear what will emerge is an expedient deal to reduce checks which still leaves this part of the UK subject to the jurisdiction of the European Court of Justice.

But if this happens, what happens to Suella Braverman, the home secretary, Chris Heaton Harris, the Northern Ireland secretary and Steve Baker, a Northern Ireland minister, and the chance of a revolt on his right flank?

Mr Duncan Smith told Sky News that the EU was not in a position to do a decent deal with the UK, and Mr Sunak should wait until after controversial legislation giving the UK the unilateral ability to disapply the protocol is in place. Theresa May, Boris Johnson and Liz Truss never successfully took on the ERG wing of the Tory party: will Mr Sunak be different?

The trial of Boris Johnson

Forget “I’m A Celebrity”, the reality TV drama of late autumn could be the Privileges Committee inquiry into Mr Johnson over whether statements by the ex-PM during partygate “appear to amount to misleading the House”.

Although not formally confirmed, the plan has been to televise parts of the hearings – in effect to allow viewers to watch the evidence themselves in the hope that they reach the same conclusion as the panel of MPs chaired by Harriet Harman.

This has been plenty of potential to upend Mr Sunak’s administration. The PM’s spokesman said this week that this government “takes our responsibilities to assist the committee seriously” – a far cry from the approach taken when Ms Truss was in power.

Expect diaries, WhatsApp messages that have survived, and testimony all to be shared. Will Boris Johnson-supporting MPs be relaxed about the active decision by the Mr Sunak government to be complicit in the investigation?

Or will those who transferred their allegiance from Mr Johnson to Ms Truss – and now find themselves in the wilderness – allow themselves to become riled up at events?

By-elections and opinion polls

As this parliament enters the twilight years, Mr Sunak cannot avoid multiple potentially bruising electoral tests. The first couple were in seats that elected Labour MPs last time around: on 1 December the City of Chester goes to the polls in a by-election to find a successor to Christian Matheson, who resigned after sexual misconduct allegations which he denied.

There will also be a by-election in Stretford and Urmston to find a replacement for Kate Green, the Labour MP who is stepping down to become deputy mayor of Manchester. But this will be little sweat for Mr Sunak since Labour will be expected to win. But then the party could be facing the self-inflicted wound generated by peerages for two Mr Johnson allies in his resignation honours list could cause by-elections.

Nadine Dorries, the mid-Bedfordshire MP with a 24,664 majority and Nigel Adams, the Selby and Ainsty MP which has a 20,137 majority could both trigger much more problematic elections. The margin of Tory victory in 2019 in both was considerable: but that means losses in these two very different parts of the county will be cataclysmic.

Rishi Sunak, Paul Dacre and The Blob

This is niche – but high impact. Ex-Daily Mail editor Paul Dacre is tipped to feature on Mr Johnson’s resignation honours list for a peerage. This would come despite the recommendation of House of Lords appointments committee, which reportedly rejected his nomination earlier in the year.

However, it would be for Mr Sunak to ultimately push through Mr Johnson’s recommendation against what Mr Dacre himself might term “the blob”. Would he risk the likely criticism for handing a peerage in the face of the rejection by the official committee, or would he risk the wrath of the Daily Mail by refusing?

World

Court confirms sacking of South Korean president who declared martial law

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3 hours ago

April 4, 2025

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Court confirms sacking of South Korean president who declared martial law

South Korea’s constitutional court has confirmed the dismissal of President Yoon Suk Yeol, who was impeached in December after declaring martial law.

His decision to send troops onto the streets led to the country’s worst political crisis in decades.

The court ruled to uphold the impeachment saying the conservative leader “violated his duty as commander-in-chief by mobilising troops” when he declared martial law.

The president was also said to have taken actions “beyond the powers provided in the constitution”.

Supporters and opponents of the president gathered in their thousands in central Seoul as they awaited the ruling.

The 64-year-old shocked MPs, the public and international allies in early December when he declared martial law, meaning all existing laws regarding civilians were suspended in place of military law.

After suddenly declaring martial law, Mr Yoon sent hundreds of soldiers and police officers to the National Assembly.

He has argued that he sought to maintain order, but some senior military and police officers sent there have told hearings and investigators that Mr Yoon ordered them to drag out politicians to prevent an assembly vote on his decree.

His presidential powers were suspended when the opposition-dominated assembly voted to impeach him on 14 December, accusing him of rebellion.

The unanimous verdict to uphold parliament’s impeachment and remove Mr Yoon from office required the support of at least six of the court’s eight justices.

South Korea must hold a national election within two months to find a new leader.

Lee Jae-myung, leader of the main liberal opposition Democratic Party, is the early favourite to become the country’s next president, according to surveys.

World

Stock markets suffer sharp drops after Donald Trump announces sweeping tariffs

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5 hours ago

April 4, 2025

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Stock markets suffer sharp drops after Donald Trump announces sweeping tariffs

Stock markets around the world fell on Thursday after Donald Trump announced sweeping tariffs – with some economists now fearing a recession.

The US president announced tariffs for almost every country – including 10% rates on imports from the UK – on Wednesday evening, sending financial markets reeling.

While the UK’s FTSE 100 closed down 1.55% and the continent’s STOXX Europe 600 index was down 2.67% as of 5.30pm, it was American traders who were hit the most.

Trump tariffs latest: US stock markets tumble

All three of the US’s major markets opened to sharp losses on Thursday morning.

By 8.30pm UK time (3.30pm EST), The Dow Jones Industrial Average was down 3.7%, the S&P 500 opened with a drop of 4.4%, and the Nasdaq composite was down 5.6%.

Compared to their values when Donald Trump was inaugurated, the three markets were down around 5.6%, 8.7% and 14.4%, respectively, according to LSEG.

Worst one-day losses since COVID

As Wall Street trading ended at 9pm in the UK, two indexes had suffered their worst one-day losses since the COVID-19 pandemic.

The S&P 500 fell 4.85%, the Nasdaq dropped 6%, and the Dow Jones fell 4%.

It marks Nasdaq’s biggest daily percentage drop since March 2020 at the start of COVID, and the largest drop for the Dow Jones since June 2020.

‘Trust in President Trump’

White House press secretary Karoline Leavitt told CNN earlier in the day that Mr Trump was “doubling down on his proven economic formula from his first term”.

“To anyone on Wall Street this morning, I would say trust in President Trump,” she told the broadcaster, adding: “This is indeed a national emergency… and it’s about time we have a president who actually does something about it.”

Later, the US president told reporters as he left the White House that “I think it’s going very well,” adding: “The markets are going to boom, the stock is going to boom, the country is going to boom.”

He later said on Air Force One that the UK is “happy” with its tariff – the lowest possible levy of 10% – and added he would be open to negotiations if other countries “offer something phenomenal”.

Economist warns of ‘spiral of doom’

The turbulence in the markets from Mr Trump’s tariffs “just left everybody in shock”, Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions in Boston, told Reuters.

He added that the economy could go into recession as a result, saying that “a lot of the pain, will probably most acutely be felt in the US and that certainly would weigh on broader global growth as well”.

Meanwhile, chief investment officer at St James’s Place Justin Onuekwusi said that international retaliation is likely, even as “it’s clear countries will think about how to retaliate in a politically astute way”.

He warned: “Significant retaliation could lead to a tariff ‘spiral of doom’ that could be the growth shock that drags us into recession.”

It comes as the UK government published a long list of US products that could be subject to reciprocal tariffs – including golf clubs and golf balls.

Running to more than 400 pages, the list is part of a four-week-long consultation with British businesses and suggests whiskey, jeans, livestock, and chemical components.

Meanwhile, Prime Minister Sir Keir Starmer said on Thursday that the US president had launched a “new era” for global trade and that the UK will respond with “cool and calm heads”.

It also comes as Canadian Prime Minister Mark Carney announced a 25% tariff on all American-imported vehicles that are not compliant with the US-Mexico-Canada trade deal.

He added: “The 80-year period when the United States embraced the mantle of global economic leadership, when it forged alliances rooted in trust and mutual respect and championed the free and open exchange of goods and services, is over. This is a tragedy.”

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Donald Trump announces sweeping global trade tariffs – including 10% on UK imports

Published

1 day ago

April 3, 2025

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Donald Trump announces sweeping global trade tariffs - including 10% on UK imports

Donald Trump has announced a 10% trade tariff on all imports from the UK – as he unleashed sweeping tariffs across the globe.

Speaking at a White House event entitled “Make America Wealthy Again”, the president held up a chart detailing the worst offenders – which also showed the new tariffs the US would be imposing.

“This is Liberation Day,” he told a cheering audience of supporters, while hitting out at foreign “cheaters”.

Follow live: Trump tariffs latest

He claimed “trillions” of dollars from the “reciprocal” levies he was imposing on others’ trade barriers would provide relief for the US taxpayer and restore US jobs and factories.

Mr Trump said the US has been “looted, pillaged, raped, plundered” by other nations.

His first tariff announcement was a 25% duty on all car imports from midnight – 5am on Thursday, UK time.

Mr Trump confirmed the European Union would face a 20% reciprocal tariff on all other imports. China’s rate was set at 34%.

The UK’s rate of 10% was perhaps a shot across the bows over the country’s 20% VAT rate, though the president’s board suggested a 10% tariff imbalance between the two nations.

It was also confirmed that further US tariffs were planned on some individual sectors including semiconductors, pharmaceuticals and critical mineral imports.

The ramping up of duties promises to be painful for the global economy. Tariffs on steel and aluminium are already in effect.

The UK government signalled there would be no immediate retaliation.

Business and Trade Secretary Jonathan Reynolds said: “We will always act in the best interests of UK businesses and consumers. That’s why, throughout the last few weeks, the government has been fully focused on negotiating an economic deal with the United States that strengthens our existing fair and balanced trading relationship.

“The US is our closest ally, so our approach is to remain calm and committed to doing this deal, which we hope will mitigate the impact of what has been announced today.

“We have a range of tools at our disposal and we will not hesitate to act. We will continue to engage with UK businesses including on their assessment of the impact of any further steps we take.

“Nobody wants a trade war and our intention remains to secure a deal. But nothing is off the table and the government will do everything necessary to defend the UK’s national interest.”

The EU has pledged to retaliate, which is a problem for Northern Ireland.

Should that scenario play out, the region faces the prospect of rising prices because all its imports are tied to EU rules under post-Brexit trading arrangements.

It means US goods shipped to Northern Ireland would be subject to the EU’s reprisals.

The impact of a trade war would be expected to be widely negative, with tit-for-tat tariffs risking job losses, a ramping up of prices and cooling of global trade.

Research for the Institute for Public Policy Research has suggested more than 25,000 direct jobs in the UK car manufacturing industry alone could be at risk from the tariffs on car exports to the US.

The Society of Motor Manufacturers and Traders (SMMT) had said the tariff costs could not be absorbed by manufacturers and may lead to a review of output.

The tariffs now on UK exports pose a big risk to growth and the so-called headroom Chancellor Rachel Reeves was forced to restore to the public finances at the spring statement, risking further spending cuts or tax rises ahead to meet her fiscal rules.

A member of the Office for Budget Responsibility (OBR), David Miles, told MPs on Tuesday that US tariffs at 20% or 25% maintained on the UK for five years would “knock out all the headroom the government currently has”.

But he added that a “very limited tariff war” that the UK stays out of could be “mildly positive”.

He said: “There’s a bit of trade that will get diverted to the UK, and some of the exports from China, for example, that would have gone to the US, they’ll be looking for a home for them in the rest of the world.

“And stuff would be available in the UK a bit cheaper than otherwise would have been. So there is one, not central scenario at all, which is very, very mildly potentially positive to the UK. All the other ones which involve the UK facing tariffs are negative, and they’re negative to very different extents.”