What does Nadhim Zahawi’s appointment as chancellor mean for the cost-of-living crisis?
The UK’s new chancellor faces rising inflation, a cost-of-living crisis, and demands for public-sector pay rises
Nadhim Zahawi has been appointed chancellor after Rishi Sunak’s dramatic resignation from government last night.
Rishi Sunak published a letter of resignation on Twitter yesterday evening, in which he said that “standards are worth fighting for” just minutes after then Health Secretary Sajid Javid also resigned from his post. Both said they had lost confidence in the prime minister’s leadership. The resignations come amid a row over Johnson’s handling of the Chris Pincher scandal, which has engulfed the government in recent days.
Johnson hands Zahawi keys to No. 11
With two of his top ministers gone – followed by a wave of resignations from junior ministers and aides – Johnson set about shoring up his top team by quickly appointing Zahawi as his new chancellor, while one-time Downing Street chief of staff Steve Barclay was appointed to the role of health secretary.
Speaking to Sky News after his appointment last night, Zahawi denied he had threatened to quit the government unless he was given the keys to No. 11, telling Kay Burley he “didn't threaten to resign at all”. He said: “This is a team game, and you play for the team, and you deliver for the team.”
And in a pointed reference to his predecessor, he said that it was “easy to walk away” from government, but “much tougher to deliver for the country”.
What does Zahawi face as chancellor?
Zahawi has taken on the Treasury’s top job as Britain faces “its worst cost-of-living crisis in a generation” and the former vaccines minister is now set to contend with an “increasingly fragile economy, with the OECD already predicting growth will stagnate next year and lag behind every member of the Group of 20 aside from Russia”, said Bloomberg.
There are fears that the mounting cost-of-living crisis could soon tip the UK into a recession, as rising inflation knocks consumer confidence and reins in household spending. Inflation has already reached a 40-year-high of 9.1% and is set to rise past 11% in the autumn.
In an interview with Sky News soon after his appointment, Zahawi said he was “determined to do more” to cut taxes in order to boost the UK’s struggling economy. When asked if he intends to reverse an imminent increase in corporation tax, he said that “nothing is off the table”.
“I want to make sure we are as competitive as we can be whilst maintaining fiscal discipline,” he said.
Speaking to BBC Radio 4, he said he intended to be an “evidence-led chancellor” whose priority was to “bear down on inflation”.
His “first order of business” could be a long-awaited joint speech with Johnson, “setting out how the government plans to deliver on its pledge to fix low productivity and create a high-wage, low-tax economy six years after Brexit”, said Bloomberg.
And he will face pressure to keep promises he made as education secretary to increase public sector pay, after last week recommending a 9% pay rise for new teachers in order to stave off strikes, a promise he has said he will honour as chancellor. Speaking to BBC News he said: “We will deliver on that pledge. “That is a promise I make teachers.”
“Zahawi's rise is at the same time epically slow and amazingly fast,” tweeted The Times’s associate political editor, Henry Zeffman, last night, who noted that Zahawi had entered the Commons in 2010 but did not secure any ministerial post until eight years later, when he was appointed to a junior ministerial role in the Department for Education in 2018.
Now, less than ten months after being appointed to his first cabinet role as education secretary, he holds one of the great offices of state in his new role as Chancellor of the Exchequer.
The Guardian wrote that the “key” to his rise is his “stint” from 2020 to 2021 as undersecretary of state in the health department – otherwise referred to as the minister for vaccines – in which he gained “huge credit” for the UK’s rapid roll-out of Covid-19 jabs, one of the sparse achievements of Johnson’s government so far.
A reshuffle to cabinet was “inevitable” and in his role as education minister Zahawi has “again been a solid minister and good media performer, albeit someone whose reputation was inevitably helped by succeeding the hapless Gavin Williamson”, continued the paper.
Zahawi has “staunchly” defended Johnson throughout the so-called ‘partygate’ scandal, said The Daily Telegraph, making “regular appearances” on the broadcast rounds since the scandal broke.
But he has also frequently been cited as a strong contender for the top job, and his rapid elevation from education minister to chancellor may suggest Johnson may have his mind on that old adage about “keeping your friends close and your enemies closer”, said the Daily Mail.
Baghdad to Downing Street
Born in Baghdad to Kurdish parents, Zahawi came to the UK at the age of nine, after his family fled Saddam Hussein’s Iraqi regime in the 1970s. Unable to speak English when he arrived, Zahawi has spoken of the prejudice and bullying he faced at school.
After training as a chemical engineer at University College London, he worked for a time in the oil industry, and co-founded pollsters YouGov. A self-made millionaire, he is “one of the UK’s richest MPs”, said The Guardian. He entered Parliament in 2010 as the MP for Stratford-on-Avon, which remains his constituency, and backed Brexit during the 2016 referendum.