BRITAIN'S youngest prime minister in more than 200 years, and the first with Asian heritage, faces a whole host of political and economic hurdles as he looks to restore some semblance of stability to the country and his fractious Conservative party.
Rishi Sunak - who was sworn in by King Charles on Tuesday (Oct 25) - has issued a firm warning to Tory MPs that they must "unite or die", which many analysts and observers feel is more than reasonable given that the party currently trails the opposition Labour by a record 32 points.
He paid tribute to his predecessor Liz Truss, saying that the mistakes she made during her short time in office were not "born of ill will or bad intentions".
"Quite the opposite, in fact. But mistakes nonetheless. I have been elected as leader of my party and your prime minister, in part to fix them. And that work begins immediately. I will place economic stability and confidence at the heart of this government's agenda. This will mean difficult decisions to come," said Sunak.
The 42-year-old's first course of action will be to appoint a new Cabinet. He is likely to keep Jeremy Hunt as Chancellor of the Exchequer in an attempt to calm the markets and prepare for tax hikes and spending cuts in a Budget to be announced on oct 31.
Hunt, who noted that the UK's public finances, market credibility and international reputation "have taken a serious blow", described Sunak as a leader who "can be trusted to make difficult choices".
"He can explain those choices to members of the public who are worried about jobs, mortgages and public services," said Hunt.
Besides the difficult task of reviving the battered UK economy, Sunak is expected to appoint heavyweight MPs from the party's right and left such as Dominic Raab, a former deputy prime minister, to possibly be the new Home Secretary.
Leader of the House Penny Mordaunt, who withdrew from the leadership race on Monday, has been tipped as a possible Foreign or Defence Secretary. Michael Gove, widely regarded as one of the most competent ministers in Boris Johnson's government, could be the new Health Secretary.
Once the Cabinet is in place, Sunak will hope his administration can help him cope with a monstrous in-tray, given that his actions in the coming months will make or break his chances at achieving an unlikely victory at the next general election, which must be held by January 2025. The very least that the Tories are hoping will be for Sunak to slash the polls deficit and keep the losses of parliamentary seats to a minimum.
All eyes are now on what Hunt will announce at his Budget next Monday, as the government seeks to implement deep spending cuts to plug an estimated £40 billion (S$64.8 billion) "black hole" in public finances due to higher borrowing costs, and subsidies to manage rising energy bills for the people.
So far, the pound has risen 4 per cent from its low during the Truss administration to $1.13 against the US dollar, while 10-year government bond yields have fallen from 4.8 per cent to 3.7 per cent. The markets may have reacted positively to the appointments of both Sunak and Hunt, but the improvements are currently at the expense of the economy, as austerity brings in its wake an economic slowdown.
The big question is whether Truss' pledges to build better infrastructure will be broken. Sunak must also decide whether he will pursue her contentious decisions such as enabling fracking to ease the oil and gas crisis, relaxing planning rules and environmental protections to hasten growth.
Then there were Truss' plans for investment growth zones with tax breaks for company investment. Sunak is expected to be more cautious on several of these issues because of the government borrowing which is almost 100 per cent of gross domestic product.
Among other priorities, Sunak must also mend fences with the European Union (EU) which accounts for 42 per cent of Britain's trade. There needs to be a compromise over the "Northern Ireland Protocol" - a new Brexit border deal with current talks at an extremely delicate stage. Truss indicated to EU leaders previously that she was prepared to give ground to reach a deal and avoid a trade war. Sunak is expected to continue with this approach.
"All I can say is that I am not daunted. I know the high office I have accepted and I hope to live up to its demands," said Sunak on Tuesday. "I stand here before you ready to lead our country into the future. To put your needs above politics, to reach out and build a government that represents the very best traditions of my party. Together we can achieve incredible things."