‘A breath of fresh air’ vs ‘more to do’: What City grandees have to say about Sunak
As Labour leader Sir Keir Starmer doesn’t tire of reminding voters: expertise beyond politics can be invaluable. For the current resident behind that most famous front door, it’s so far proved an advantage.
Liz Truss’ accountancy background may not have aided her short-lived leadership bout, but – for the City’s boardrooms at least – her successor could hardly be better suited for the clean up.
Financial analyst, hedge fund manager, MBA-holder: Rishi Sunak’s Californian-esque CEO charm has proved a tonic for the Square Mile.
“I think the consensus is that Sunak is a breath of fresh air,” Shard Capital’s Bill Blain told Morning Wire
“[He’s a] highly competent ‘details man’ who has gone into the job with an approach we’d haven’t seen from a UK premier for too long.”
Top fund manager Martin Gilbert said: “What I would say is there’s an air of competence about them. They’ve steadied the ship – to use that dreadful term.
“I think the electorate… I think there’s a desire to have someone competent running the country and the economy.”
Back to work budget
Chancellor Jeremy Hunt’s measured, ‘back to work’ budget prompted broadly positive noises across the financial sector.
To stick with the grown-ups back in the room framing, it showed not only has a new term begun for the UK’s workforce, but the supply teachers have firmly exited the classroom.
“The City will be grateful to the Prime Minister and Chancellor for restoring stability after a chaotic few years – and for finally bringing forward sensible and much-needed reforms to financial services regulation”, Centre for Policy Studies’ research director Tom Clougherty reckons.
Of course, the government is not without its critics. Taxes remain historically high, and there is little sign of immediate relief on the horizon.
Gilbert added: “It would be nice to see more of a pro-growth agenda but I would say ‘so far, so good’.”
And despite facing down “economic headwinds”, optimism that the worst could be over is growing.
Banking crisis averted?
Turbulence at Credit Suisse and the collapse of SVB UK has proved a timely reminder of the benefits of having a money man at the helm of UK plc.
Sunak – and Hunt’s – “swift action” and all-night phone calls were praised by Innovate Finance chief executive Janine Hirt for displaying their “commitment to the tech sector”.
“The government’s rapid response, and its willingness to engage with industry throughout, showed that it is serious about supporting the UK’s tech and startup economy,” she said.
Unlocking the potential of these firms for “future growth and economic prosperity”, as Hirt highlighted, appears to be a key plank of the duo’s approach to power.
From the freshly-launched Department of Science, Innovation and Technology (DSIT) to hot-off-the-3D-printer plans to transform Britain into a nation of technological superpowers, the fingerprints of Sunakism – calm, corporate, uncontroversial – can be seen throughout.
Bank of England plans for the UK’s own ‘Britcoin’ may be on pause, but “forward-looking regulation” on crypto, AI and the digital pound are all welcome steps, Hirt said, adding: “We are keen to see this momentum continue.”
Those Stanford Business School HR modules are coming in handy as well. February’s reshuffle was night and day from his predecessor’s style, as Sunak prioritised a managerial rejigging of Whitehall structures over promotions for loyalists and rows with backbenchers.
That’s not to say he doesn’t face challenges.
‘Losing wicket?’
While OBR ‘gloomsters’ may have walked back warnings of a teeter into recession, as Blain puts it, “the list of stuff that’s broken” is, well, only getting longer.
“It’s everything from taxes, monetary policy, fiscal policy, right the way down to potholes in the road,” he said.
“Sunak is going to pay the cost for basically 13 years of a lack of a coherent spending policy and austerity politics at a time when we should have been going for growth, when interest rates were as low as they were.
“No matter how good, dedicated, and surprisingly competent he is, he’s on a losing wicket.”
Clougherty agrees: “We all know there are still big challenges to confront – like the rising tax burden, Britain’s declining competitiveness, and the depressing outlook for growth.”
Naturally, there are, of course, criticisms to handle. Long-awaited Solvency II reforms, a much-touted Brexit benefit, are yet to materialise, and the stickier domestic policy problems, including the classic Conservative fare of an immigration crackdown, may yet wound his image as a capable fixer.
“The PM should be under no illusion that there is more to do,” Sam Robinson, a research fellow at Tory think tank Bright Blue, stressed.
Hunt v Reeves
He highlighted the importance of making full capital expensing, a scheme allowing firms to claim 100 per cent tax relief on plant and equipment investment, a permanent measure.
And he also urged Sunak and Hunt to cut staffing costs by slashing Employers’ National Insurance contributions, often firms’ “biggest overhead”.
Blain’s biggest bugbear, though, is next door, in No11, where former small-business owner Jeremy Hunt is up against Labour’s Rachel Reeves, an ex-Bank of England economist.
“I know who comes off sounding much more competent,” he said. “All I hear are the usual series of Tory sound bites and platitudes – I actually heard some ideas from Rachel Reeves.”
Local elections may be just around the corner – always a key test for any government – but the true verdict on Sunak-Hunt Inc. will come next year, as MPs gear up for an expected May 2024 general election.
And London’s oldest borough won’t be shy about making its feelings known before then.
As Clougherty said: “This government has made a good start under the circumstances, but the City – and the rest of us – will want more.”