Rishi Sunak is worth almost $850 million, making him Britain's richest prime minister. Here's why that could be a big problem.

Rishi Sunak is worth almost $850 million, making him Britain's richest prime minister. Here's why that could be a big problem.
Rishi Sunak waving
Rishi Sunak is the richest person to become British prime minister.Reuters
  • UK Prime Minister Rishi Sunak is worth about $850 million according to the Sunday Times Rich List.

  • With wealth that rivals King Charles III, the former finance minister is the richest UK leader ever.

  • Sunak's fortune has left him open to criticism about being out of touch with working people.

After the most turbulent period in British politics in recent memory, Rishi Sunak became the UK's new prime minister last week.

The 42-year-old former chancellor (finance minister) has a net worth of £730 million ($847 million) according to the Sunday Times Rich List, and was ranked 222nd in May. Sunak is by far the richest person to enter No. 10 Downing Street, Reuters reported.

He and wife Akshata Murthy's net worth even rivals that of royals such as King Charles. Queen Elizabeth II was estimated to be worth about $440 million before her death, according to the Sunday Times.

But Sunak's enormous wealth has left him open to criticism about being out of touch with working people. With a challenging economic outlook for the country, it's a background that could make his job as PM even more difficult.

Tough decisions

Sunak takes office amid the Conservative party's bleakest outlook since coming into power in 2010.

The opposition Labour party has opened up a huge lead in opinion polls after the markets were plunged into turmoil and the pound fell to a record low against the dollar due to former PM Liz Truss' disastrous economic policies.

His win in last week's leadership battle appeared to calm financial markets, but his biggest challenge is ahead as balancing the UK's books may require both tax hikes and spending cuts.

Paul Hollingsworth, chief European economist at BNP Paribas, said that stabilizing the economy was likely to require "significant spending cuts ... which will hurt, both economically and politically."

Sunakonomics

Sunak's time as chancellor was marred by the pandemic. He took the role in February 2020 about a month before England went into lockdown. Sunak spent tens of billions of pounds on the furlough income support scheme as well as help for the self-employed, and a controversial discount scheme for restaurant meals.

Rishi Sunak puts an Eat Out to Help Out sticker in a restaurant window during a visit to Rothesay on the Isle of Bute, Scotland in August 2020.
Rishi Sunak puts an Eat Out to Help Out sticker in a restaurant window during a visit to Rothesay on the Isle of Bute, Scotland in August 2020.Jeff Mitchell/PA/Getty Images

It's difficult to square that spending with Sunak's own economic ethos, which economists say is that of a hawkish balancer of the books.

George Dibb, head of the Centre for Economic Justice at the IPPR, said Sunak was forensic about the details of tax policy. He cited Sunak's Mais lecture in February, where he spoke about the need for funded tax cuts, as an example of the PM's frugal approach to finances.

But Dibb added that Sunak was also prone to delays that cost the economy even more money and left people worse off: "He was forced into acting rather than pre-empting things."

When Sunak set about correcting that multibillion-dollar shortfall from the pandemic, some argue he did it in a way that hurt the worst-off.

He stared down inequality campaigners in September last year by ending a £20-per-week pandemic-era uplift to social security payments, which the Joseph Rowntree Foundation predicted would plunge 500,000 people into poverty.

The IPPR estimated that the Spring Statement, Sunak's last budget as chancellor, offered the poorest households an extra £120 per year, while the richest received a £480 boost.

As British people struggle to keep up with soaring energy prices and inflation that has peaked at a 40-year high of 10.1%, questions of fairness will return to Sunak's administration.

"He doesn't seem to understand that people are working full-time, doing the best they can, and literally still cannot make ends meet," Jeevun Sandher, head of economics at the New Economics Foundation, told Insider.

Sandher argued Sunak's economic decisions echoed the austerity championed 10 years ago by a previous Conservative government, a move which contributed to a notable rise in child poverty, per IFS research.

Now, Dibb said, voters have far less appetite for spending cuts as waiting times to see a doctor rise and crime goes up, and in any case, "there isn't very much fat left to trim" from the public finances. "Some people are doing really badly out of this crisis, but that's not uniform," Dibb said.

Increasing taxes on wealth and energy companies, which have posted huge profits this year after Russia invaded Ukraine, would be the best options to balance the books, according to Dibb. They weren't likely to be options Sunak would take, however, he said.

Too rich?

Low political appetite for public spending cuts that hurt the poor will be seen through the lens of who is administering them: the £730 million PM Sunak.

The ex-finance minister has a 19th century, Grade II-listed mansion in Yorkshire as well as a London home worth millions.

At a time when rising energy costs are forcing more and more families to use food banks, Sunak is likely to feel the pinch in the shape of a £13,000 annual bill to heat his swimming pool, the Mirror reported.

And the PM, who has also faced scrutiny for his wife's non-domiciled status, which allowed her to receive about £11.5 million in dividends without paying UK tax, is likely to be an easy target for opposition MPs and campaigners.

"People have got so much going on with their own lives, it's hard for them to know just how insanely rich their MP is," Gary Stevenson, an inequality campaigner, told the Guardian. "He is arguably the richest person to ever to sit in Parliament, and as chancellor, he oversaw the biggest increase in inequality ever."

Read the original article on Business Insider