The new British Finance Minister, Nadhim Zahawi, of Iraqi origin, has inherited a crisis in the cost of living which risks plunging the British economy into recession.
The former education minister was parachuted into the Treasury on Tuesday night following the shock resignation of his predecessor Rishi Sunak due to the culture of scandal plaguing Prime Minister Boris Johnson.
Johnson also lost his health minister, Sajid Javid.
Zahawi supports UK inflation at a 40-year high of 9.1%, a level expected to reach double digits this year due to soaring energy and food prices according to the Bank of England (BoE).
“I have to make sure we get through…(this) inflation, which can be a very painful thing if we let it get out of control,” the 55-year-old told Sky News on Wednesday.
The self-made millionaire co-founded the prominent polling firm YouGov and was active in local Conservative politics in London before becoming an MP in 2010.
The BoE warned on Tuesday that the global economic outlook had deteriorated “significantly” due to runaway prices fueled by Russia’s invasion of Ukraine.
The central bank has raised UK interest rates five times since December in a bid to rein in inflation.
The British government has meanwhile sought to ease the financial difficulties with a series of measures, including a slight reduction in fuel tax.
However, critics said the measures fell far short of what was needed to help cash-strapped households and businesses.
– “Difficult decisions” –
“You don’t come into this job to have an easy life,” Zahawi added on Wednesday.
“You make tough decisions every day. And sometimes it’s easy to walk away, but in reality it’s much harder for the country to stick with.”
Zahawi denied threatening to quit the government if he did not get the top treasury job.
“I want to make sure that not only do we rebuild the economy, but we have to grow the economy,” added the new Chancellor of the Exchequer.
Zahawi declined to comment to reporters as he left a meeting at 10 Downing Street on Tuesday, including whether he would stand by Sunak’s calls for fiscal discipline against Johnson’s free-spending instincts.
At the start of the London session on Wednesday, the benchmark FTSE 100 stock index jumped 1.6% and the pound stabilized against the dollar.
The FTSE fell almost 3% and the pound fell almost 2% against the dollar on Tuesday on growing fears of a global recession.
“Political risks do not appear to have a major impact on UK assets,” noted Markets.com analyst Neil Wilson.
“There are far too many more important things on our minds right now – inflation, the slowing economy, the strikes.”
Britain is in the midst of nationwide strikes – particularly affecting the transport sector – as wages are eroded by soaring inflation.
Teachers and workers in the state-run National Health Service are debating whether they should join aviation, justice, post and railway staff on the way out.
– Role of the Covid vaccine –
Zahawi has received widespread praise for overseeing the rollout of pandemic vaccines in Britain.
But like Sunak, his private wealth has drawn attention, notably when he claimed parliamentary expenses to heat his stables in 2013.
Zahawi was born in Baghdad to a Kurdish family who moved to Britain as a child, speaking no English.
He credited the poems of Philip Larkin with helping to improve his knowledge of the English language before continuing his studies in chemical engineering at University College London.
Zahawi is MP for Stratford-on-Avon, which includes William Shakespeare’s birthplace, Stratford-upon-Avon.