London Daily

Focus on the big picture.
Tuesday, Aug 05, 2025

‘It’s not morally right to keep borrowing at these levels’: Rishi Sunak’s plan to fix the UK economy

‘It’s not morally right to keep borrowing at these levels’: Rishi Sunak’s plan to fix the UK economy

After ten months as Chancellor of the Exchequer, Rishi Sunak has finally decided that it’s safe to settle into 11 Downing Street. When we meet, there’s a modern work of art depicting currency signs - €, $, £, Y - being hung in the sitting room, and a portrait of Disraeli being moved to another room.
He never had much time to get comfortable, thrust into his job after the surprise resignation of Sajid Javid in February and expected to deliver a Budget the following month. ‘I thought my most difficult professional thing would be to put a Budget together in three and a half weeks,’ Sunak says now. ‘But it turned out actually that that was probably the easiest thing we’ve had to do.’

The Chancellor has certainly been busy. The furlough scheme, the business loans, the suspension of tax collection — all a large part of the reason public debt now exceeds 100 per cent of GDP for the first time since 1961. At one point, a third of UK employees were having their salaries paid by his scheme. Over his ten months in the job, he has borrowed more than Gordon Brown did in nine years.

When we mention this to him, he appears taken aback. ‘It’s the first time someone has put it to me that way,’ he says, but adds that there are very different types of borrowers. And chancellors. He is unusually interested in finance, and worked in a hedge fund during the 2008 crash. ‘I kind of sat there, watching things evaporate in front of my screen on a daily basis with very large sums of money just disappearing,’ he says.

The Covid crisis involved an element of déjà-vu. ‘It was like being back where I came from. Everyone was working night and day, around the clock. But I have never felt better supported.’

This year, his job — mainly — has been to borrow eye-watering sums of money and then give it away, hoping to stave off economic Armageddon. His largesse has gone down well: one poll put him as the most popular chancellor for 40 years. But this may change if, as many expect, unemployment doubles and tax rises — perhaps even wealth taxes — begin. So will the Chancellor plot a path to fiscal credibility, or does he, like so many Tories, now regard the austerity agenda as old hat?

‘It is clearly not sustainable to borrow at these levels. I don’t think morally, economically or politically it would be right,’ he says. ‘Running a structural deficit years into the future, with debt rising? That’s not building up the resilience you need to deal with the future shock that will come along, and someone else will be sitting in my chair. We now have had two of these things in a decade: who knows what the next shock will look like?’

This is Sunakism: a belief that it’s suicidal for any government to depend on high borrowing and low interest rates, because those rates could surge at any time. It’s a minority view in an era where many — even Javid, his Thatcherite predecessor — say that times have changed and we’re in a new age in which interest rates will be ‘low for long’. At present, government pays 0.3 per cent on the staggering sums it borrows. This, to Sunak, is the risk: interest rates could easily treble, and knock the government finances for six.

‘Are you or anyone else going to guarantee me that, for the duration of this parliament, rates might not go back to 1 per cent?’ he asks, pointing out that this almost happened in March, before the Bank of England started printing money to bring rates back down. ‘There is this very large QE thing that’s going on.

No one has done that before. There are plenty of smart investors who are also thinking about the risks of inflation over the next 12 months. Because we are now so levered, small changes have huge cash implications. If I have to come up with £10-£20 billion a year in a few years’ time because things have changed — well, that’s a lot of money.’

To Sunak, it’s not just an economic problem but a political one. ‘If we [Tories] think borrowing is the answer to everything, that debt rising is fine, then there’s not much difference between us and the Labour party,’ he says. ‘I worry about what that means for us politically down the line. William Hague always tells me you can’t fatten a pig on market day. You can’t pop up in 2024 and say: oh gosh, yes, the other side are promising to do all these things, de-de-de-de. And that’s all a problem!’

But given that the Prime Minister has ruled out both austerity and tax rises, how do the Tories balance the budget? Sunak thinks public finances are only ‘sustainable’ with a deficit below 3 per cent of GDP, which seems a tall order unless the economy experiences an almighty surge.

A quick bounceback is in fact his great hope, but he says the best-case scenario – as laid out by the OBR – rests on the speed with which the vaccine can be rolled out to those most at risk. ‘It’s essentially how quickly can we reduce all the restrictions on the economy and allow it to function normally again and it is largely a function of the vaccine at this point — and then the second bit of that is, is there enough support that we’re providing, the kind of bridge to get from here to there,’ he says. ‘In the upside scenario everything happens very quickly, we’ve got all our support in place, we don’t lose much, you don’t get much of that scarring from the dislocation in between.’

So, how many people need to be vaccinated before restrictions can go? Sunak says deputy chief medical officer Jonathan Van-Tam made a good point this month when he said that it might not be long before we can vaccinate the people whose demographic group accounts for 99 per cent of deaths. ‘Once you’ve done that, that gives you flexibility and options because at that point you’re dealing with something that doesn’t have the same impact on people’s health or the same impact on the healthcare system,’ he explains. ‘

There’s a priority order that we’re going through and clearly well before you get to the entire population being vaccinated, you will have, touch wood, achieved the goals that you want which is to stop the NHS being overwhelmed.’ He cites the pending approval of the Oxford-AstraZeneca vaccine as ‘a significant swing factor in the timeline of this thing’.

unak is a fairly recent arrival into Westminster. He was selected for William Hague’s old seat of Richmond in Yorkshire for the 2015 election and his CV is classic Tory: Winchester College head boy, PPE at Oxford, then three years at Goldman Sachs.

His time in the City was a rather tame affair. Asked how it compared with the new BBC banking drama Industry — which depicts the hedonistic lives of twenty-something investment banking graduate trainees — Sunak says he is yet to get around to watching the series (‘I keep seeing lots of stories about it on my Daily Mail app, about how graphic it is’) but is pretty sure his experience was ‘nothing like that, as far as I can tell’.

After Goldmans, he headed to California to do an MBA at Stanford, where he met his wife. He then joined a hedge fund and settled down to a life in finance. It was his father-in-law, Narayana Murthy, who helped steer him towards politics.

Murthy is one of the richest men in India, co-founder of Infosys, a global business services group. ‘He created an enormous company that employs over 100,000 people,’ says Sunak. ‘He’s helped India to be perceived differently by the world. But in spite of that, he is of the view that politics is the best way to have really significant impact. I was amazed to hear him say that. He has, quite clearly, made an enormous positive impact himself. But he still saw government as a way to be able to do that on a really significant scale.’

Then there’s the influence of his own family. ‘This is a country that welcomed my grandparents here many years ago. A big part of what motivated me to get into politics is a sense of gratitude. In some small way, I’m trying to repay the country that’s done so much for my family.’ His parents, he says, also embodied a public service ethos. ‘My mum is a pharmacist, my dad was a GP. They did the same thing in the same place for 30 years and I worked for both of them in different ways. Their patients always talked to me about them. I thought it amazing that they were able to have that impact on a community. As an MP, I thought I could try to do the same in North Yorkshire.’

His constituents have also shaped his politics. ‘They’re thrifty, they care about how I’m spending their money — and they keep me on my toes whenever I’m out and about,’ he says. ‘Being an MP in North Yorkshire has broadened me as a person and as a politician, because obviously it’s an incredibly rural constituency. Hill farming is something that I’m now passionate about.’ This conjures an odd mental image: the millionaire ex-banker who likes his coffee served in a temperature-controlled electric flask, surrounded by sheep. But Sunak claims to be a dab hand. ‘I’ve done some stock-judging in my time, actually.’

We move on to the holidays. What’s Sunak’s idea of fun? He’s a Hindu who loves Christmas, it turns out, and mourns the loss of the local pantomime, carols and fun run this year. ‘I do pancakes and champagne on Christmas morning,’ he says. ‘That can still carry on. We haven’t stopped people doing that — yet!’ A Tory chancellor openly confessing to laying on champagne breakfasts (he himself is teetotal) would have been frowned on in the Cameron days (a ‘champagne ban’ was briefly set up in a bid to dispel the idea of privilege) but Sunak seems at ease with his background.

He attends SoulCycle exercise classes in London studios – 'I go with my wife' – beloved of the likes of Beyoncé and Jay-Z (the Covid mask rule means that he’s only been spotted 'a few' times). They dine at Robin Birley’s club at 5 Hertford Street and their constituency home in Yorkshire is a Georgian manor house with 12 acres of grounds.

Does he worry that, given his family wealth, he may struggle to relate to ordinary voters? ‘My values are shaped by my parents, my background and my experience. I carry that through to whatever I do,’ he says. ‘My belief is that politics — at its best — can be a unifying enterprise. So I think you can make a more endurable and lasting change if you can bring as many people as possible with you on that journey.’ He points to the furlough scheme as an example of ‘far-reaching and empathetic’ policies which he says characterise this government. In other words, he says he’s happy to be judged by his actions.

And what about a far-reaching and empathetic one-off wealth tax, as has been recently proposed? Surely this doesn’t sound like something a Tory party would do? ‘I think that’s right, in the sense that we’re a party that believes in aspiration. Actually, we should be celebrating aspiration,’ he says — before warning that he hasn’t yet had the time to read that particular report.

His own aspirations for Brexit involve free ports — he hopes to name the first ones next year ‘when we get to the spring and Budget’ — and lots of trade deals. But when we meet, Brexit talks are on the brink of collapse. If they fail, how can he support the economy? ‘Let’s see how the next few days and weeks evolve,’ he says, ‘but I think there’s a lot that’s in place.’

He suggests that schemes created to provide coronavirus support could be used to help businesses through any short-term turbulence from a no-deal Brexit: ‘For businesses that need liquidity to get through a temporary time, we’ve got very generous government guarantee loan programmes for anyone who is having trouble with costs and employment, you can furlough your staff all the way to the spring so those are pretty significant things.’

Deal or no deal, a clue to Sunak’s plans can be found on the newly adorned walls of his office. He has chosen three former chancellors, each a lodestar in different ways. The first is Hugh Gaitskell. ‘He was at the same school as me, so we have that in common,’ he says. ‘As a Labour chancellor he was sceptical about European integration, he was pro the nuclear deterrent and he wanted to abolish Clause IV. So what’s not to like?’ Gladstone, he says, was ‘a great free-trader and super fiscally conservative.

He watched all the pennies quite rigorously and was a strong advocate for free trade: both things that I want to emulate’. And then there’s Nigel Lawson. ‘He intellectually dominated his time as a tax-reforming chancellor. The memo that he wrote about the tax reform that he wanted to achieve is in his biography.’ Sunak goes back and re-reads it from time to time.

A theme, he says, connects all three chancellors. ‘They were people who treated seriously the intellectual side of the job. They were thoughtful about what they were doing, were all incredibly hardworking and very focused on the detail. Those are all things that I strive to be too.’
Newsletter

Related Articles

0:00
0:00
Close
Elon Musk Receives $23.7 Billion Tesla Stock Award
Texas House Paralyzed After Democrats Walk Out Over Redistricting
Mexican Cartels Complicate Sheinbaum’s U.S. Security Talks
Mark Zuckerberg Declares War on the iPhone
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
OpenAI’s Bold Bet: Teaching AI to Think, Not Just Chat
Tesla Seeks Shareholder Approval for $29 Billion Compensation Package for Elon Musk
Nvidia is cutting prices on its RTX 50-series graphics cards after sales slowed and inventories piled up
Ghislaine Maxwell Transferred to Minimum-Security Prison Amid Ongoing DOJ Discussions
U.S. Tariffs Surge to Highest Levels in Nearly a Century Under Second Trump Term
Matt Taibbi Slams Media for Role in Russiagate Narrative
Pilots Call for Mental Health Support Without Stigma
All Five Trapped Miners Found Dead After El Teniente Mine Collapse
Ong Beng Seng Pleads Guilty in Corruption Case Linked to Former Singapore Transport Minister
BP’s Largest Oil and Gas Find in 25 Years Uncovered Offshore Brazil
Italy Fines Shein One Million Euros for Misleading Sustainability Claims
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
Declassified Annex Links Soros‑Affiliated Officials and Clinton Campaign to ‘Russiagate’ Narrative
UK's Online Safety Law: A Front for Censorship
Nationwide Protests Erupt in Brazil Demanding Presidential Resignation
Parents Abandon Child at Barcelona Airport Over Passport Issue
Mystery Surrounds Death of Brazilian Woman with iPhones Glued to Her Body
Bus Driver Discovers Toddler Hidden in Suitcase in New Zealand
Switzerland Celebrates 734 Years of Independence Amid Global Changes
U.S. Opens Official Investigation into Former Trump Prosecutor Jack Smith
Leaked audio of Canada's new PM Mark Carney admitting the truth about the Net Zero agenda: "We're gonna make a lot of money off of this."
China Enforces Comprehensive Ban on Cryptocurrency Activities
Absolutely 100% Realistic EVO Series Doll by EXDOLL (Chinese Company) used mainly for carnal purposes
World Economic Forum founder Klaus Schwab: "In this new world, we must accept... total transparency. You have to get used to it. You have to behave accordingly. But if you have nothing to hide, you shouldn't be afraid."
Meet Mufti Hamid Patel, head of Office for Standards in Education in Pakistan
George Soros tells the World Economic Forum: "President Trump is a con man and the ultimate narcissist, who wants the world to revolve around him."
Hamas are STARVING the hostages.
Decline in Tourism in Majorca Amidst Ongoing Anti-Tourism Protests
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
Poland Begins Excavation at Dziemiany After New Clue to World War II‑Era Nazi Treasure
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Threatens Canada with Tariffs Over Palestinian State Recognition
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Trump Sues Murdoch in “Heavyweight Bout”: Lawsuit Over Alleged Epstein Letter Sets Stage for Courtroom Showdown
Germany Enters Fiscal Crisis as Cabinet Approves €174 Billion in New Debt
Trump Administration Finalizes Broad Tariff Increases on Global Trade Partners
J.K. Rowling Limits Public Engagements Citing Safety Fears
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
×