London Daily

Focus on the big picture.
Saturday, Feb 22, 2025

Rishi Sunak faces fiscal dilemma after rare political misstep

Rishi Sunak faces fiscal dilemma after rare political misstep

Analysis: Ill-timed US trip and reluctance to turn bailout taps back on could tarnish chancellor’s carefully polished image
Hobnobbing with tech bosses in California as the hospitality sector howled in pain at the catastrophic impact of the Omicron variant was a rare political misstep for a chancellor whose public image is so carefully polished.

Until midweek, the Treasury had stuck carefully to the line that ample financial support was already available to hard-hit hospitality firms – the VAT cut for the sector extends into next spring, for example.

And Downing Street officials maintained that since they weren’t ordering businesses to close, additional help would not be necessary.

Sunak himself was said to be deeply sceptical about turning the bailout taps back on, after the furlough scheme was finally wound down in the autumn, and as he tries to rebuild his reputation for fiscal prudence – something he believes is a key dividing line with Labour.

Yet even before Chris Whitty advised the public “don’t mix with people you don’t have to”, restaurants and pubs were sounding the alarm about plunging takings in the crucial Christmas season – one they hoped would mark a return to something like normal after last year’s festive shutdown.

And added to the public’s growing caution as they batten down the hatches is the impact of mass absences as Omicron rips through the population – particularly in London, though other areas are unlikely to be far behind.

By Wednesday, when Whitty and the prime minister were peppered with questions about what precautions the public should take, it was clear the line wouldn’t hold – and on Thursday morning a string of Conservative MPs vented their frustration at the lack of support (as well as at Whitty, the chief medical officer for England).

Sunak prepared to fly back to London, first delivering the soothing message that he was listening to hospitality businesses, and would continue to work with them “over the coming days”.

With venues closing and a slew of events and performances being cancelled, the consensus at Westminster is that the chancellor may have to move faster than that, and announce a package of support before the weekend.

He now faces the dilemma of whether to draw up a relatively small-scale, targeted rescue scheme just for hospitality – or address the crisis many more businesses are likely to face over the next month or so, as staff fall ill.

Sunak is widely seen as a potential successor to Boris Johnson, whose authority has taken a hammering in recent weeks over a series of missteps and scandals.

Being caught on the hop in his spiritual home of sunny California underlined how different his style is to that of Johnson.

Sunak is an enthusiast for the entrepreneurial west coast startup culture, devoting part of his Tory party conference speech this year to the potential for artificial intelligence (as well as promising to make the UK “the most exciting place on the planet”).

He met his wealthy wife, Akshata Murty, when the pair were studying at Stanford, and the couple have a property in California. One Labour strategist dismissively calls him a “wannabe tech bro”, with his branded hoodies and Palm Angel sliders.

Sunak and the prime minister have distinct ideological differences too. While Johnson’s instinct is to spend his way out of a political hole, Sunak wants to build up enough headroom now to cut taxes in the run-up to the next general election. There has sometimes been frustration in the Treasury about Johnson’s boosterish tendency to overpromise.

But for now, Sunak will be reluctantly forced back into spending mode, to prop up an economy battered yet again by Covid. And he will be hoping voters – as well as furious backbenchers – will forget that he was caught on the wrong side of the Atlantic when the crisis hit.
Newsletter

Related Articles

0:00
0:00
Close
UK Prison Officer Sentenced for Inappropriate Conduct with Inmate
Good News: Senate Confirms Kash Patel as FBI Director
Officials from the U.S. and Hungary Engage in Talks on Economic Collaboration and Sanctions Strategy
James Bond Franchise Transitions to Amazon MGM Studios
Technology Giants Ramp Up Lobbying Initiatives Against Strict EU Regulations
Alibaba Exceeds Quarterly Projections Fueled by Growth in Cloud and AI
Tequila Sector Faces Surplus Crisis as Agave Prices Dive Sharply
Residents of Flintshire Mobile Home Park Grapple with Maintenance Issues and Uncertain Future
Ronan Keating Criticizes Irish Justice System Following Fatal Crash Involving His Brother
Gordon Ramsay's Lucky Cat Restaurant Faces Unprecedented Theft
Israeli Family Mourns Loss of Peace Advocate Oded Lifschitz as Body Returned from Gaza
Former UK Defense Chief Calls for Enhanced European Support for Ukraine
Pope Francis Admitted to Hospital in Rome Amid Rising Succession Speculation
Senate Republican Leader Mitch McConnell, at the age of 83, Declares His Retirement.
Whistleblower Reveals Whitehall’s Focus on Kabul Animal Airlift Amid Crisis
Politicians Who Deliberately Lie Could Face Removal from Office in Wales
Scottish Labour Faces Challenges Ahead of 2026 Holyrood Elections
Leftwing Activists Less Likely to Work with Political Rivals, Study Finds
Boris Johnson to Host 'An Evening with Boris Johnson' at Edinburgh's Usher Hall
Planned Change in British Citizenship Rules Faces First Legal Challenge
Northumberland Postal Worker Sentenced for Sexual Assaults During Deliveries
British Journalist Missing in Brazil for 11 Days
Tesco Fixes Website Glitch That Disrupted Online Grocery Orders
Amnesty International Critiques UK's Predictive Policing Practices
Burglar Jailed After Falling into Home-Made Trap in Blyth
Sellafield Nuclear Site Exits Special Measures for Physical Security Amid Ongoing Cybersecurity Concerns
Avian Influenza Impact on Seals in Norfolk: Four Deaths Confirmed
First Arrest Under Scotland's Abortion Clinic Buffer Zone Law Amidst International Controversy
Meghan Markle Rebrands Lifestyle Venture as 'As Ever' Ahead of Netflix Series Launch
Inter-Island Ferry Services Between Guernsey and Jersey Set to Expand
Significant Proportion of Cancer Patients in England and Wales Not Receiving Recommended Treatments
Final Consultation Launched for Vyrnwy Frankton Power Line Project
Drug Misuse Deaths in Scotland Rise by 12% in 2023
Failed £100 Million Cocaine Smuggling Operation in the Scottish Highlands
Central Cee Equals MOBO Awards Record; Bashy and Ayra Starr Among Top Honorees
EastEnders: Four Decades of Challenging Social Norms
Jonathan Bailey Channels 'Succession' in Bold Richard II Performance
Northern Ireland's First Astronaut Engages in Rigorous Spacewalk Training
Former Postman Sentenced for Series of Sexual Offences in Northumberland
Record Surge in Anti-Muslim Hate Crimes Across the UK in 2024
Omagh Bombing Inquiry Concludes Commemorative Hearings with Survivor Testimonies
UK Government Introduces 'Ronan's Law' to Combat Online Knife Sales to Minors
Metal Detectorists Unearth 15th-Century Coin Hoard in Scottish Borders
Woman Charged in 1978 Death of Five-Year-Old Girl in South London
Expanding Sinkhole in Godstone, Surrey, Forces Evacuations and Road Closures
Bangor University Announces Plans to Cut 200 Jobs Amid £15 Million Savings Target
British Journalist Charlotte Peet Reported Missing in Brazil
UK Inflation Rises to 3% in January Amid Higher Food Prices and School Fees
Starmer Defends Zelensky Amidst Trump's 'Dictator' Allegation
Zelensky Calls on World Leaders to Back Peace Efforts in Light of Strains with Trump
×