Can Rishi Sunak Help The Stock Market?

Sunak has acknowledged that his country is dealing with “profound economic challenges,” and he is stepping in at a pivotal time as the country needs some stability. Sunak is feeling the pressure of trying to gain investors’ confidence following the financial fallout caused by last month’s controversial tax cuts.

The markets have responded favourably to Sunak already, staying calm and carrying on after months of volatility. Britain’s main equity indexes even closed higher on Monday after the news. There are many reasons why the markets favour Sunak. The main reason is that the markets seek political stability; investors are fed up with a government that flip-flops on policy.

The UK and the US dealt with many similar issues regarding soaring inflation and rate hikes, along with economic policies that have only worsened the situation.

Liz Truss’ policies led to turmoil because the economic plan included tax cuts that many investors felt Britain couldn’t afford. The value of the pound dropped due to the mini-budget, and there was economic pain because the cost of mortgages went up at a time when the country was still feeling the lingering effects of the pandemic.

The new Chancellor, Jeremy Hunt, replaced Kwasi Kwarteng and withdrew all of Truss’s tax cuts to help stabilize the financial markets.

Since the new leadership retained Hunt, he will deliver the government’s new economic plan for taxes and spending on November 17; a delay from the original date of October 31. Hunt has already warned that the government is dealing with “decisions of eye-water difficulty.” That doesn’t seem promising.


Many feel that they know what kind of PM Sunak will be based on his time as a chancellor, another stabilizing influence on the markets as long as the new PM remains consistent. Investors believe he knew how detrimental unfunded tax cuts could be to the economy.
Markets do not know what kind of policies or laws Sunak would want to introduce, but we will know soon enough. For now, Sunak’s history in finance and government are chilling the proverbial beans.

Investor confidence refers to how people feel about the state of the economy, which is impacted by policies regarding spending and taxes. Investors look for political stability and sound economic policies.

In the UK, businesses are struggling with exorbitant energy bills, labuor shortages, soaring inflation, and rising interest rates. When companies struggle to make money, they report lower earnings, which hurts investor confidence and leads to further pain in the stock market.

It is going to be difficult to improve the UK’s financial situation as the citizens continue to deal with soaring inflation that has impacted most of the world. To make matters worse, wages are set to decline by 3.0% in 2023 as the wage squeeze continues; statistics show that real incomes have decreased by almost £20,000 between 2008 and 2021 since salaries haven’t kept pace with inflation.