Rishi Sunak takes the reins

This is an audio transcript of the FT News Briefing podcast episode: ‘Rishi Sunak takes the reins’

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, October 25th, and this is your FT News Briefing.

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10 Downing Street has a new resident. Today, Rishi Sunak will become the UK’s youngest prime minister in modern times. Tory lawmakers voted him in after months of political turmoil.

Henry Mance
There’s certainly a part of the Conservative party, which is crying out for some sobriety, a guy who, you know, unlike Boris Johnson, does not take lots of holidays.

Marc Filippino
The FT’s Henry Mance will tell us more about Sunak and his challenges. Plus, we’ll tell you why Chinese tech stocks nosedived on Monday. I’m Marc Filippino, and here’s the news you need to start your day.

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The UK’s former chancellor, Rishi Sunak, will become the country’s prime minister today. Tory lawmakers crowned him after two challengers, including former Prime Minister Boris Johnson, dropped out. Here’s Sunak in a speech yesterday.

Rishi Sunak
We face a profound economic challenge. We now need stability and unity, and I will make it my utmost priority to bring our party and our country together.

Marc Filippino
Markets loved the news. UK government bonds or gilts rallied. So did pound sterling. And the 42 year old may just be what the Conservative party needs right now. To find out more, I’m joined by our chief features writer, Henry Mance. Hi, Henry.

Henry Mance
Hi, Marc.

Marc Filippino
OK. So what did Conservative party lawmakers find so appealing about Sunak that they overwhelmingly voted him to be their leader?

Henry Mance
I mean, he’s squeaky clean. He’s like even within politics, where British politics, where everything’s at like close quarters, where everybody has gossip about everything else, people don’t really have a bad word to say about Rishi Sunak. Until recently, until he really got caught up in the thick of leadership campaigns. But he was, you know, right from school days to Goldman Sachs to now, has been like diligent, ambitious. He looks the part. He looks sort of suave. He can speak well, but he can also be a bit geeky. And his acceptance speech yesterday, he sounded robotic. He did not inspire many people watching that. And I think there will be a difficulty in transitioning from being a competent finance minister effectively to communicating on a wider range of issues to really emoting for the nation.

Marc Filippino
OK. So he has his communication challenges set out in front of him. Be a little bit more emotive to the people. Let’s talk about his background a little bit. As I mentioned, Sunak isn’t just the UK’s youngest prime minister. He’s also the first UK prime minister of colour. His family is of Punjabi origins. They immigrated to the UK in the 1960s. What does this all say about the Conservative party, the direction they’re headed in and the UK more broadly?

Henry Mance
There’s nuance here because traditionally people have thought, people on the left certainly, have thought of people of colour as aligned to the Labour party, as aligned to the left. And I think there’s a realisation now over the last couple of years that actually the picture is much more complex. So I think it says if you look at senior ministers now, indeed under Liz Truss, that there are several very senior ministers — the foreign secretary, the chancellor — who are people of colour, and that that is a real change from, say, the 1980s when Margaret Thatcher was in power, when the Conservative party was sometimes openly hostile but certainly implicitly hostile to people of colour. And so I think it’s a real moment of change and certainly to have a Hindu as prime minister for a country where we still have a Church of England, an official, a religion which is a Christian one, that’s a real change. And that’s a real sign of the diversity of Britain. And I think a lot of people across the spectrum will be welcoming of that.

Marc Filippino
What can we expect out of Rishi Sunak economic policy wise and otherwise?

Henry Mance
So Rishi Sunak is, I think, a pretty conventional rightwing economic thinker. He’s from the rightwing of the Tory party. He backed Brexit, so he backed leaving the EU. But he wasn’t really prominent in that debate, and he wasn’t really on the hardline edge of the Brexit camp. So I think you can expect him to prioritise fiscal conservatism that’s, you know, not seeing debt rise significantly as a proportion of GDP. He’ll want to trim spending where possible. He may put up some taxes to close the gap. That’s something that, you know, some on the right of the Conservative party, his own wing, were unhappy with. He’ll look to have lots of incentives for business. And then eventually, as the election comes around in 2024, maybe the beginning of 2025, he’ll look to have some cuts on income tax, he can say rewards those who work hard.

Marc Filippino
Henry Mance is the FT’s chief features writer. Thanks, Henry.

Henry Mance
Thank you.

Marc Filippino
If you want to know more about Rishi Sunak and his new government, I’ll be hosting a Twitter space today along with FT political analysts. That’s at 5pm London, noon New York. I’ll tweet out a link to it. My handle is @mfilippino.

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Shares in leading Chinese tech companies tanked on Monday. This was after China’s Communist party wrapped up its once every five years congress. That’s when President Xi Jinping secured an unprecedented third term as president. If that wasn’t enough to make some investors uneasy, the country’s third-quarter GDP numbers came up short of the government’s growth target. Here’s the FT’s Hudson Lockett.

Hudson Lockett
That was a classic double whammy. No one was really happy about Monday’s GDP rating, but nor were they happy about the trajectory for policymaking coming out of the 20th party congress. And so the hardest hit sectors, which sort of led markets lower were tech. And generally speaking, they are the stocks that have been hardest hit by the past, probably 12 to 14 months of regulatory crackdown under Xi Jinping, who has been sort of making Alibaba, Tencent et al feel the pain as Chinese policymakers have reprioritised sort of national security over economic growth. And we saw markets reacting to the prospect of more of the same.

Marc Filippino
All right, Hudson, so what does this mean for big global investors like SoftBank, which have placed pretty big bets on Chinese tech stocks?

Hudson Lockett
Well, it’s gonna put more pressure on anybody who hasn’t already cashed out to cash out more quickly for SoftBank, but equally for anybody who was kind of hoping for Chinese tech to come out of the last week of the 20th party congress looking more attractive and sort of under less pressure from Beijing. That certainly has not proven to be the case. And so I think we can look forward to more selling pressure in the weeks and months ahead.

Marc Filippino
So is there anything that the party can do to calm markets?

Hudson Lockett
Well, yeah. The thing is, it’s not really clear that they really care terribly much about what markets think. If you look at the line-up of the current Chinese Communist party politburo, it’s a team that you would not look to calm markets, for example, as you did in, I think March it was, when Liu He, one of the top Communist party leaders, came out and said, everything is fine, we’re here to support markets. And suddenly foreign investors became quite enthusiastic once again about Chinese equities. There is no indication that we’re going to get somebody who has that sort of background or mediating experience that can calm international investors and sort of tell them everything’s OK. It’s fine.

Marc Filippino
Hudson Lockett is the FT’s Asia capital markets correspondent.

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Before we go, we wanna remind you of our FT Edit app. Every day our editors choose eight of their favourite stories on a wide range of topics and put them on the app. It’s like a curated round up of some of our top stories. Download FT Edit for free for the first month and then it’s just $0.99 a month for another six months. We’ll put a link to that in the show notes so you can download it. For now, FT Edit is only on iPhones.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.