Prime Minister Sunak: The markets have their man

The markets have their man. In the end, after the utter shambles of the last weeks and months, Conservative MPs accepted that they were stood on the precipice of electoral oblivion and decided to step back from inflicting even more self-harm.

Eschewing the attempted #BorisOrBust comeback, influential players from all sides of the party swung in behind Rishi Sunak to try and lance the boil, calm the markets and move forward with some semblance of unity.

Aside from criticism over the reappointment of Suella Braverman as Home Secretary just days after she resigned for improperly disclosing government information, the start has gone relatively well. The Cabinet is more representative of the factions across the parliamentary party. The reshuffle went smoothly.

Rishi Sunak’s first Prime Minister’s Questions was a success, reinforcing an already palpable change in mood on the backbenches with a solid, effective, performance against Keir Starmer and other opposition leaders and MPs.

Can this show of unity last? Can Rishi Sunak claw the party back towards contention? To tackle the accusation that he has no mandate, his touchstone is the 2019 Conservative manifesto, on which the party won its large majority, and which he pointedly said belonged to no individual (i.e. Boris).

With every Conservative MP having been elected on that platform, and with the House of Lords having to respect that mandate, a focus on delivering on its promises will be important to maintaining party discipline and rebuilding credibility.

As the Chancellor Jeremy Hunt has said, though, eye-wateringly-difficult decisions will be needed. The Liz and Kwasi Mini Budget compounded the economic headwinds that we face and added to the growing black hole in the public finances. The OBR is likely to conclude that 10s of billions in spending cuts or tax increases will be needed, just to keep our debt pile stable.

Finding the sums needed through savings alone is unlikely. Cutting back on health spending in the context of huge backlogs is politically toxic. Dropping the pensions triple lock would be another breach of the 2019 manifesto.

Paring back defence spending when we are effectively fighting a proxy war against Russia is also difficult. The big money raisers – income tax and VAT – were also guaranteed not to be touched back in 2019.

The new Prime Minister has said he will protect the vulnerable. Moving to cut benefits in real terms is therefore also hugely problematic. What does that leave? Planned infrastructure investment, budgets of lower profile departments, businesses, the middle classes and the wealthy.

Whatever is judged to be needed to fix the public finances, as we head towards Austerity 2.0, Conservative backbenchers will need nerves of steel to stay united and loyal. Having wielded the big public spending bazooka during the pandemic, he will now need to oversee the clawback.

The new Prime Minister’s leadership skills will be tested to their limits. Recent history, though, suggests the party’s discipline is rather fragile under pressure. Boris is probably happy to be sitting this one out.