Rishi Sunak Becomes Prime Minister: The State of the British Economy in 2022

Rishi Sunak was elected as the new Prime Minister (PM) of the United Kingdom after winning the Conservative Party leadership election on Monday, October 24, 2022.

Sunak is the first British Prime Minister of non-white ethnicity. He is the third PM in the last two months, following the resignations of Boris Johnson and Liz Truss amidst a political crisis triggered by the country's worsening economy.

A challenging task awaits Sunak: repairing the British economy, which is on the brink of recession. Soaring energy and food commodity prices have fueled high inflation, reaching its highest level in decades.

According to Trading Economics data, UK inflation in September 2022 reached 10.1% (year-on-year/yoy). This figure is the same as July 2022's inflation rate, also the highest in several decades. The surge in food and rent prices has increased the number of people living in poverty.

The UK economy still recorded growth of 4.4% (yoy) or 0.2% (month-to-month/m-to-m) in Q2 2022.

With soaring inflation, the Bank of England (BoE) has raised its benchmark interest rate throughout the year to 2.25% to curb high inflation.

Government debt stands at 95.9% of Gross Domestic Product (GDP), and government spending accounts for 44.6% of GDP.