Monday Morning Meeting on "Change in Leadership in the UK: Implications for the India-UK Strategic Partnership”

Ms. Anandita Bhada, Research Analyst, Europe and Eurasia Centre, MP-IDSA spoke on the topic "Change in Leadership in the UK: An Evaluation” at the Monday Morning Meeting held on 14 November 2022. The webinar was moderated by Dr. Swasti Rao, Associate Fellow, Europe and Eurasia Centre, MP-IDSA.  

Ambassador Sujan R. Chinoy, Director General, MP-IDSA, Maj. Gen. (Dr.) Bipin Bakshi (Retd.), Deputy Director General, MP-IDSA, the panellists, scholars and members of the institute participated in the meeting.

Executive Summary

Rishi Sunak became the Prime Minister of the United Kingdom on 25 October 2022. He took over responsibility after Elizabeth Truss’ mini-budget led to her resignation. He took over the country marred with economic and energy crises. Discussions have emerged around his ethnic origins, political life and policy towards India, particularly the Free Trade Agreement (FTA). International actors will be observing his policies towards Brexit, Ukraine, the Indo-Pacific and especially his stance on immigration.

Detailed Report

The Monday Morning Meeting began with Dr. Swasti Rao highlighting the recent growth in the India-UK relationship. One of the key factors is the Free Trade Agreement (FTA) which is due to be signed. She talked about the events that led to Rishi Sunak becoming the Prime Minister, including the role played by the ‘mini-budget’. She stated the various expectations from the newly formed Sunak Government when it comes to issues such as the FTA with India, China, and the Indo-Pacific.

Ms. Anandita Bhada at the onset presented a timeline of the Conservative leadership in the United Kingdom from 2010-2022. She then highlighted the reasons for Elizabeth Truss’s resignation which included the creation of a friend vs enemy narrative, lack of positive optics, including mechanical engagements with the public, and taking important decisions without adequate scrutiny, including the mini-budget. 

The speaker explained what the mini-budget meant, its shortcomings, scrutinisation and the economic impact it had. It had a bearing on the rise of inflation, decline in GDP growth, rise in interest rates, devaluation of the pound, fall of the stock market and a surge in the cost of borrowing. The mini-budget had international ramifications, for the stock markets, especially the London Stock Market. The Conservative Party also suffers from a loss of domestic popularity, which is a point of worry for the party. Rishi Sunak is seen as the best alternative to avoid early general elections. 

The speaker reflected on the various reasons responsible for Rishi Sunak becoming the leader of the UK.  She highlighted that his coming into power is a reflection of the scale of crisis affecting the country. Other factors include the competitors backing out, efforts to prevent a General Election prior to January 2024 and Sunak’s schemes as the Chancellor of the Exchequer during the lockdown. 

International reactions to his victory including reactions of Prime Minister Narendra Modi, Ukraine’s  President Volodymyr Zelensky, President of the United States, Joe Biden, French President Emmanuel Macron and European Commission President Ursula von der Leyen were discussed. 

The challenges Rishi Sunak will be facing are the economic crisis including low wage growth, strong demand and low supply in the post pandemic market leading to inflation and avoiding a stock market crash. The second challenge is the Ukraine Crisis. The crisis has provided two sub-challenges. One is the distortion in the supply chains and the other is the energy crisis. The third challenge is Brexit which has not lived up to its heightened expectations. Post-Brexit the economy, employment and job market has gone down. Voices within the United Kingdom stress that if a vote on the reversal of Brexit was possible, it might win the majority support in current times.   

The fourth challenge is low legitimacy. 2019 was the last General Election and Boris Johnson was the last leader elected by the electorate. Rishi Sunak has been selected by his fellow Tories and therefore has low legitimacy. The fifth challenge is the internal division among the Tories. There is a strong difference of opinion on various matters including the ‘fracking issue’. Rishi Sunak was one of the first leaders of the party to admit being part of the party gate scandal and apologised for his involvement. Hence, he has to look out for the Johnson loyalists and it might be a difficult task to garner their support on critical issues.  

 The sixth issue is about Scotland and Ireland. The Scottish stress the need for a new referendum to leave the United Kingdom. The Irish are dealing with the Northern Ireland Protocol between United Kingdom and European Union and awaiting a solution to this issue. 

 The speaker then focused on Rishi Sunak’s stand on various issues including the British economic crisis, the energy crisis, immigration, China and India. On the energy crisis, she stressed on the various steps taken by Sunak including the removal of VAT from electricity bills and temporary targeted tax cuts to help households. On immigration, Rishi Sunak has a ten-point plan including a cap on the refugees coming into the United Kingdom. He is supportive of a deal with the French Government towards resolving the issue of the influx of refugees entering the UK on small boats. 

Regarding China, PM Sunak has focused on the need to close down the Confucius Institutes within the country as they are seen as outlets of China’s soft power. He also suggests the improvement of British intelligence to tackle Chinese industrial espionage. 

Rishi Sunak has a positive view of India; the United Kingdom continues to view India as the pivot of its foreign policy to Asia. What India can expect from the new leadership is a continuity of the strong relationship. The FTA would be an important aspect to further improve the partnership. Sunak favours the development of a two-way relationship between the two countries, where the diaspora acts as a living bridge. The speaker emphasised that the modern relationship is rooted in the 21st Century and not the past.  In recent times, the economic facet of the relationship is taking centre stage.

The speaker highlighted the major problems and the advantages of the FTA. The four major issues for negotiations include sectors such as automobiles, liquor, intellectual property and mobility of students and professionals. The sectors that will benefit include India-UK trade in services, textiles, pharmaceuticals, healthcare, digital services and food and drinks. 

Ms. Bhada also focused on important visits in recent times including that of the United Kingdom Trade Secretary, Anne Marie Trevelyan in January 2022. The visit of then Prime Minister Boris Johnson in April 2022, and James Cleverly, the United Kingdom Foreign Secretary, for the United Nations Security Council Counter-Terrorism Committee Meeting on 25 October 2022. India’s Prime Minister is also set to meet Rishi Sunak at the G-20 Meet at Bali in November 2022. 

 While concluding, the speaker focused on the United Kingdom and European Union negotiations over economic issues and how PM Sunak seeks to tackle them. Rishi Sunak’s relationship with the European Union and the rest of the world and how he handles them will be important going forward.  According to the speaker, the most important date for the current Sunak Government would be 17 November 2022. On this date, the economic statement will be released and will clarify how the government plans to tackle the economic crisis plaguing the United Kingdom.

Questions and Comments

Ambassador Sujan R. Chinoy, Director General, MP-IDSA enquired about any clause to permit Britain to rethink the Brexit policy. The Director General drew inferences from the cases in the Commonwealth.

On the topic of Ukraine, the Director General emphasised the similar stances taken by both the European Union and the United Kingdom. This could work towards an advantage for a smoother economic relationship between the UK and EU. He questioned whether there is a possibility of a return of the UK to EU.

Earlier, the UK was seen as a gateway to the EU for major companies, particularly in the economic sphere. China, which was one of the ‘blue-eyed boys’ of the United Kingdom, including for the Conservatives has suddenly been seen differently. The Director General questioned as to what this meant for business in general between the European and Asian countries? Does the United Kingdom still act as the vantage point for business and finance?

The Director General also focused on maritime cooperation. He asked if Rishi Sunak will follow the already established line of the government. He also highlighted the area of concern with regard to the security and safety of the Indian High Commission from various misdemeanours and what could PM Rishi Sunak do in such situations.

Maj. Gen. (Dr.) Bipin Bakshi (Retd.), Deputy Director General, MP-IDSA highlighted how the economic crisis has predated the Ukraine Crisis, and how PM Sunak was known to be a Brexit supporter. He asked if there could be a solution to the economic crisis, without reintegration with the European Union.

He also emphasised that while defence and security cooperation is going well but various contours of the relationship could be improved to yield better outcomes. The question posed by the Deputy Director General was how defence and security cooperation could improve.

The speaker, Ms Anandita Bhada gave detailed and insightful replies in response to comments and questions from the panellists and participants.

Report prepared by Dr. Jason Wahlang, Research Analyst, Europe and Eurasia Centre, MP-IDSA.