Nadhim Zahawi becomes Chancellor of the Exchequer amid minister resignations

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Rishi Sunak resigned nine minutes after Sajid Javid stepped down from the role of health secretary, kicking off ministerial upheaval in Parliament.

Image source: Nadhim Zahawi/CC BY-NC-ND 2.0.

At the time of writing, there have been 44 government resignations, including health secretary Sajid Javid and chancellor of the exchequer Rishi Sunak.

That number has no doubt gone up since, and Boris Johnson might even be out of office.

Nadhim Zahawi has taken over the role of chancellor from Sunak, though he too might already be out the door and have served the shortest term in the role of chancellor ever.

During a dramatic evening in Westminster triggered by the two cabinet ministers’ shock resignations, Zahawi, formerly the education secretary, was summoned to Downing Street at 9pm on Tuesday.

After about an hour of conversation behind the door of number 10, he emerged as the country’s new chancellor.

Rumours circulated that he threatened to resign unless he was given the position of chancellor ahead of foreign secretary Liz Truss, though he has since firmly denied this.

Rishi’s legacy

Ater more than two years in the role, Sunak leaves behind a legacy of close work with the fintech community.

While it may seem that each chancellor has become more ‘fintech-friendly’ than the last, in the face of covid, a cost-of-living crisis, Brexit and a war, Sunak arguably delivered on a number of fronts, at least for the finance sector.

Though he was by no means perfect, Sunak brought in a number of initiatives to help with covid, including loans of £80bn for businesses hit by the pandemic, more than 1.5 billion bounce back loans worth £47bn and the Recovery Loan Scheme that was bolstered by emergency support.

In total 1,670,939 loans were made through banks, neo banks and alternative lenders via the Bounce Back Loans Scheme, Coronavirus Business Interruption Loans Scheme and the Coronavirus Large Business Interruption Loans Scheme.

In November 2021, Sunak unveiled a plan for new “once-in-a-generation” post-Brexit financial regulation.

He set out a vision of financial regulation focusing on “an agile and dynamic approach to regulation that supports the growth of the UK economy” and launched a consultation for proposals.

Sunak said in his resignation letter that he felt his approach to the economy was “fundamentally too different” to Johnson’s.

This came ahead of a speech that was due next week from both the PM and the chancellor to anchor a plan to show the government was taking control of the cost of living crisis. 

Who is Nadhim Zahawi?

Member of Parliament for Stratford-upon-Avon since 2010, Zahawi was made education secretary in September 2021 and took over the role as chancellor on 5 July.

He was previously minister for covid-19 vaccine deployment and before that was parliamentary under-secretary of state for industry.

Before entering the world of government, he founded the market research company YouGov in 2000. 

He stood down from the company to run for election five years after he floated the company on the London stock exchange and was name EY’s entrepreneur of the year in 2008.

What can we expect?

The question now stands whether Zahawi will change the direction of the economy.

It is difficult to say exactly where things are headed in these turbulent times, but it is thought that Zahawi might be entering the role with opposing intentions to those Sunak left with.

Making the morning broadcast rounds on Wednesday, Zahawi said that his focus is on “rebuilding the economy and growing the economy and bearing down on inflation”.

While he made no clear indication of what we can expect from him in what might be a very short-lived stint as chancellor, he did say “nothing is off the table”.

He also stressed an importance on “delivery, delivery, delivery” and ironically called for party unity.

Zahawi now has to balance preventing further political implosion of the government with a cost of living crisis and a potentially looming recession.

It is expected he will face a lot of pressure to cut taxes in an effort to revive the economy, and controversially he is entering the role as the second richest MP, second only to Sunak.

Will we see Zahawi continue the trend of increasingly fintech focused chancellors?

After suggestions that he was among a group heading to Downing Street calling for Johnson’s resignation, perhaps the more pressing question is whether Zahawi will hold the role long enough for us to find out.