Markets rally as businesses call for end to uncertainty under new PM

Business leaders have called on Rishi Sunak to end recent “political and economic uncertainty” as markets rallied somewhat on his selection as the next prime minister.

After weeks of chaos following Prime Minister Liz Truss’s mini-budget, and months of uncertainty under her predecessor, businesses need more certainty on energy support and help finding workers and boosting international trade and exports, the British Chambers of Commerce said.

“The political and economic uncertainty of the past few months has been hugely damaging to British business confidence and must now come to an end,” said director general Shevaun Haviland.

“The new prime minister must be a steady hand on the tiller to see the economy through the challenging conditions ahead.”

Markets had largely already expected a Sunak victory before it was officially announced on Monday afternoon.

The markets had a rollercoaster day.

Shares on the FTSE 100 index of London’s biggest companies initially rose by as much as half a per cent, before falling to nearly 0.8% down.

In the afternoon the FTSE recovered again, rising by 1.1% and hitting 7,045 points. The pound initially dropped in value against the dollar following the confirmation, but about an hour later it spiked.

At around 3pm one pound could buy a little over 1.13 dollars, up 0.25% on the day.

The interest rate that the Government pays on its 30-year gilts dropped by 0.2 percentage points on the day to 3.8% and was largely unimpacted by the confirmation of Mr Sunak’s appointment.

In the end Mr Sunak was the only remaining candidate for the position, after Penny Mordaunt dropped out and Boris Johnson never declared his candidacy.

He will now face a whole inbox of requests from businesses and sectors up and down the country.

Kate Nicholls, the boss of the UK Hospitality trade body, said “stable political leadership is absolutely critical” and that the body had worked “very closely” with Mr Sunak when he was chancellor.

She added: “I would encourage him to extend business rates relief, reform the entire business rates system in the longer term and lower the current rate of VAT.”

But environmental campaigners warned the new leader that he must avoid supporting certain types of business if he wants to help slash emissions.

“Rishi Sunak has pledged he’ll deliver on the Government’s climate targets,” said Kierra Box, campaigner at Friends of the Earth.

“Yet his track record as chancellor – which saw new North Sea oil and gas fast-tracked, levies for domestic flights cut and a weak windfall tax on profiting fossil fuel companies imposed – suggests otherwise.

“He also backed fracking with community consent during the summer leadership race, but this proved to be the final nail in the coffin for Liz Truss’s premiership.”