Sunak warns of economic challenge as he prepares to become PM

Well, it's been another momentous day in British politics.

Rishi Sunak is poised to become the UK's third prime minister in seven weeks - after winning a short Tory leadership contest.

Let's have a quick recap of where things stand.

• Sunak was crowned the new Conservative Party leader just after 14:00
• He was the only person to be successfully nominated, after Penny Mordaunt withdrew from the leadership contest two minutes before the deadline
• Sunak gave an address to Tory MPs, during which he ruled out calling an early general election - despite calls from opposition parties
• He later made a televised statement at Tory HQ, warning that the country faced a "profound economic challenge"

• The 42-year-old is the UK's first British Asian PM and its youngest leader for more than 200 years
• Tory MPs, ex-leaders and current ministers including Chancellor Jeremy Hunt have congratulated him - as have the leaders of India and Ireland, and the president of the European Council. The White House says President Joe Biden is looking forward to working with Sunak
• Downing Street has confirmed that the Liz Truss premiership will officially end tomorrow
• Sunak should be installed as PM by noon, following an audience with King Charles - and we're expecting speeches from both Sunak and Truss before Sunak formally enters No 10

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Tory MP and former culture secretary Nadine Dorries has given her backing to Rishi Sunak.

Speaking on TalkTV, Dorries - a Boris Johnson loyalist - reminded viewers that Sunak was also fined over the same "Partygate" lockdown breaches as Johnson.

But, asked if she'll support Sunak, Dorries replied: "He's the leader of my party, he's the prime minister of my country, of course".

Less that 24 hours earlier, she'd said in a tweet that Johnson would have won a vote among Tory members and that he "already had a mandate from the people".

She added that Johnson's withdrawal from the contest meant "it will now be impossible to avoid a GE [general election]".

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Some more international reaction arriving now.

US President Joe Biden looks forward to speaking with Rishi Sunak, his press secretary says.

Speaking during a White House press briefing, Karine Jean-Pierre says it's protocol for the president to wait until after an incoming British prime minister has been formally invited to form a new government by the monarch before offering their congratulations.

"But," she adds, "President Biden looks forward to speaking with minister Sunak in the upcoming days and to our continued close cooperation with the United Kingdom."

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A swift thumbs up and a “he’s got to be better than the last one” was our first indication that people in Richmond were welcoming a new PM.

Big boots, waterproofs and walking poles aren't odd sights here, right next to the Yorkshire Dales.

A market square - where you could do a pretty hefty pub crawl without walking more than a few hundred years - was even busier today.

Half-term meant that families, walkers and tourists were mingling with the locals. Perhaps diluting Conservative support a little, in the strongest blue seat in Yorkshire.

The backing of William Hague - the previous MP - went a long way to securing Rishi Sunak his seat here in 2015. The new PM will be hoping to manage more than the four years his mentor did at the helm of the Conservative Party.

Knocking about in the market square, teenagers asked what the news satellite trucks were doing and questioned why Boris Johnson wasn't going to be PM.

If you’re one of the many journalists about to book tickets to come up here, look up the lash goshte - according to one takeaway it’s Richmond’s favourite food. And whoever decided to put kebab and chips inside a calzone - well, they get my vote.

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As we've been reporting today, Rishi Sunak is poised to become the UK's youngest prime minister for more than 200 years.

At 42, he is the same age as Earl of Liverpool Robert Banks Jenkinson, when he came to office in 1812.

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Since then, David Cameron, who was elected at the age of 43 in 2010, has held the record as the youngest PM.

Tony Blair, who served from 1997-2007, was also 43 when he entered office - but he was a few months older than Cameron at the time Cameron entered No 10.

But Sunak is not as young as William Pitt the Younger, who was 24 when he was elected in 1783.

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David Cameron is among the former Tory leaders who've today written to congratulate Rishi Sunak for becoming the UK's next prime minister.

The ex-PM wrote on Twitter:

Quote Message: I predicted a decade ago that Conservatives would select our first Brit Indian PM & proud today that comes to be. I wish Rishi the v best, he has my wholehearted support."

I predicted a decade ago that Conservatives would select our first Brit Indian PM & proud today that comes to be. I wish Rishi the v best, he has my wholehearted support."

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Former Conservative leader Sir Iain Duncan Smith has given his take on why former PM Boris Johnson may have decided not to put his name forward in the leadership race in the end.

Speaking on LBC radio's Tonight with Andrew Marr programme, Sir Iain says Johnson ended up "begging people for votes" after flying back from a holiday in the Caribbean over the weekend.

"He'd made no plans, he got no team," Sir Iain says.

"He kind of expected, I think, when he arrived, that there would be at least 150 people acclaiming him, and this would grow to the majority. That didn't happen."

Sir Iain says Johnson then found himself "struggling and begging people for votes. That was demeaning really."

He adds that when Johnson then asked other candidates to back him, "the others said, 'no, the only deal we'd do with you is if you were serving us, not the other way round.'

"And that of course didn't suit him."

There was no immediate response from Johnson's team to Sir Iain's remarks.

President of the European Council Charles Michel has also offered his congratulations to the UK's incoming leader, calling on Rishi Sunak to collaborate closely with the EU.

"Working together is the only way to face common challenges... and bringing stability is key to overcoming them," Michel tweeted.

The BBC's Europe editor Katya Adler earlier said EU leaders "privately breathed a sigh of relief" at Sunak's win - as they believed him to be a "grown up and a pragmatist" compared to Boris Johnson.

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Irish Taoiseach (Prime Minister) Micheál Martin earlier congratulated Rishi Sunak on being appointed leader of the Conservative party.

In a tweet, Martin said: "I look forward to working with you, as British PM, on the important issues we face on these islands, and globally."

He'd earlier told a meeting of the British-Irish Parliamentary Assembly that better cooperation was needed between the UK and Ireland on the Northern Ireland Protocol.

The protocol - the post-Brexit trade arrangement for Northern Ireland - has been a source of tension since it came into force at the start of 2021.

Talks between the UK and the EU have resumed in an attempt to resolve the issue, but there's no sign of an imminent deal.

More now on how Sunak's victory has been greeted in Scotland.

Conservative MP David Mundell has predicted a more constructive relationship between the PM and Scottish first minister going forward.

Earlier this month, Nicola Sturgeon said it was "absurd" she hadn't even received a phone call from Truss since Truss took over as prime minister.

Mundell - the MP for Dumfriesshire, Clydesdale and Tweeddale - says he's sure Rishi Sunak will phone Sturgeon tomorrow.

The former Scottish secretary told BBC Scotland’s Drivetime radio programme: “I think [Sturgeon] will hear from the prime minister, just as I think that Mark Drakeford in Wales and the leaders of Northern Ireland will.

"It's very, very important that the prime minister works closely with the devolved administrations on areas of common interest."

With an emphasis on "stability and unity," Rishi Sunak appears determined to continue with a policy of blocking a second referendum on Scottish independence.

He has also previously suggested that Westminster should ramp up scrutiny of the devolved Scottish government's record on health, education and other domestic policies.

The First Minister Nicola Sturgeon scoffs at the suggestion - insisting the incoming prime minister has no "democratic legitimacy.”

She intends to place the economic impact of Brexit, and the potential damage from another "wave of austerity" at the heart of her opposition to the Sunak government.

Scottish Conservatives respond by highlighting what they regard as the economic dangers of independence - but they know recent events have weakened their authority in this arena.

The Scottish Tory leader, Douglas Ross, admits that it has been a "difficult and unsettling" period for his party and the nation.

Polls suggest the turmoil has pushed some of his voters into the arms of the Labour Party.

But beyond that, there appears to be little change electorally. The SNP retains a big polling lead and, on independence, Scotland remains more or less evenly divided.

Once a traditional Labour seat, the town of Corby in Northamptonshire has seen Conservative candidates become their MPs in recent years.

Shoppers I spoke to had mixed views about the new prime minister - but they were all agreed that the economy was the first thing the new Conservative party leader Rishi Sunak should be tackling.

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Janice Collins, 75 and retired from the banking and finance industry, believes Sunak will be a "steadying influence" for the UK.

"As long as the party gets together and stays together firmly, I think we’ll do alright," she says.

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Chris Coles, a 27-year-old teacher, says the last few years have been hard for a lot of people and he hopes the new prime minister will be able to help with the rising cost of living.

“I feel like a lot of people have been let down over the last few years," he says. "People have been focused on other things, looking at Brexit [and] Covid.

"The cost of living has been going up - and the life of a lot of people, the quality of it has been getting worse."

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Semi-retired website editor Alex McLean, 66, isn't a Tory but believes Sunak is the right man for the job ahead.

“He needs to get [the economy] right, especially with the markets," he says.

"We’ve seen what’s happening with house prices and people not being able to afford anything, so I think he’s the guy who can do it".

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In a very short statement earlier – his first since being announced as Liz Truss’s replacement – incoming UK PM Rishi Sunak acknowledged the “profound economic challenges” we're facing.

He didn’t say much else on that, so let’s have a quick look at some of the key issues he'll need to address after entering No 10.

Cost-of-living crunch

It was announced last week that inflation in the UK – the rate at which prices are increasing – had surged to 10.1%, a 40-year high.

The rising cost of basic household goods – like fish, fruit and rice – leaves many of us understandably concerned going into a winter already fraught with anxiety over increasing energy bills.

Adding to these pressures is the government's decision to end help with energy bills - which limits the average household energy bill to £2,500 a year - in April 2023, not in two years' time.

Money, money, money

The Bank of England has put up interest rates in an attempt to bring down people's spending - but that means:

• Mortgage repayments have increased for people not on fixed rates
• Lenders might choose to increase fees charged on credit cards, bank loans or car loans

Meanwhile, savers are not seeing interest rates on their accounts rise in line with the Bank of England figures, meaning they are not keeping up with the cost of living.

Mini-budget aftermath

The beginning of the end for Truss was the announcement of her mini-budget, alongside then-Chancellor Kwasi Kwarteng. Its raft of unfunded tax cuts rattled markets, plunging the pound to a record low against the dollar and causing the cost of government borrowing to rise sharply.

New Chancellor Jeremy Hunt - who many expect to remain in his job - has since scrapped almost all the policies in that mini-budget.

As we reported below, his much-anticipated fiscal plan is due on 31 October, and the new PM is expected to drive through new public spending cuts to try to restore financial stability.

But can Sunak do what Truss couldn't - and placate not just the Conservative Party, but also the world's financial markets, with a workable economic plan? We'll have to wait and see.

Chancellor Jeremy Hunt has tweeted to congratulate Rishi Sunak on his victory in the Conservative leadership election - a result which means Sunak will be the UK's next prime minister.

Hunt says it's "a time for honesty about the huge economic challenges we face".

He was made chancellor earlier this month by former PM Liz Truss, and quickly set about undoing the tax cuts promised in her botched September mini-budget.

He's due to present a new fiscal statement on 31 October, although it remains to be seen whether or not he'll remain in the Treasury under Sunak - himself a former chancellor.

Hunt backed Sunak in the contest.

It's been another momentous day in politics - with Rishi Sunak named the UK's next prime minister.

For a little recap of the highlights in less than one minute, have a watch of our video above.

The dizzying speed of developments in British politics has fascinated observers in Europe.

Eyebrows hit record-breaking heights at the possibility of a Boris Johnson comeback. In Brussels, Johnson isn’t a man who carries much trust, and there was some relief that his efforts to return failed.

On Brexit matters, there won’t be many tears shed over the exit of Liz Truss: the woman who drove forward plans to possibly override a treaty governing arrangements for Northern Ireland.

However, the mood music had been improving on that dispute. Diplomats hope Rishi Sunak will continue in that vein. Many believe he may prove the most “pragmatic” and economically literate leader of the three that will have passed through the door of 10 Downing Street this year.

But there’s a wariness too. Will this next No 10 resident – who backed Brexit in 2016 – feel the heat from those in his party who want a “hard line” approach on Europe?

It’s early days but the big picture is that many in Brussels will see Sunak’s arrival as a positive step, compared to what came before. However, some member states - particularly towards the east - are less concerned about Brexit legacies and much more anxious that the UK keeps up its support for Ukraine.

Either way, Britain’s international reputation has been damaged by recent volatility. One diplomat remarked: “Excuse me for reserving my enthusiasm until there’s actually a stable government in place…”

We've just reported that Rishi Sunak will officially become the UK's new prime minister tomorrow.

Straight from No 10, here are the key timings to be aware of:

• 09:00: Liz Truss will chair a cabinet meeting
• 10:15: The outgoing PM will make a statement outside No 10 before travelling to Buckingham Palace for her final audience with King Charles III, where she will formally resign
• Sunak, the new Conservative Party leader, will then travel to Buckingham Palace for his first audience with the monarch and be invited to form a government
• 11:35: Sunak - who will at this point officially be prime minister - will then travel to Downing Street and make his own statement before entering No 10 as the UK's 57th prime minister

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Rishi Sunak will become the UK’s first British Asian prime minister, and the first Hindu to hold the office.

His confirmation to the top job came on the evening of one of the most important days in the Hindu calendar, the festival of Diwali - a national holiday here in India.

The timing wasn’t lost on some of the news channels which had broken into rolling coverage.

“This comes auspiciously on Diwali,” said one news anchor.

“Rishi Sunak has given the entire nation a Diwali gift,” proclaimed another.

Sunak’s parents came to the UK from east Africa; his grandparents were from Punjab. His father-in law Narayana Murthy, is the founder of Infosys and is one of India’s best-known businessmen.

This morning, as speculation mounted over his likely victory in the Conservative leadership race, he shared the front page of one newspaper with Indian Prime Minister Narendra Modi, and cricket superstar Virat Kolhi - two of the biggest names in this country.

Now, expect India’s fascination with Sunak to grow.

“This is a matter of great pride,” was how one journalist described events.

Some 75 years since India gained independence from British rule, Rishi Sunak’s rise to the top is being seen as a landmark moment for this nation.