This August, conservative party members will receive their ballots and will have until Sept. 5 to cast their vote, just in time for the new Conservative party leader to be sworn in as the next U.K. Prime Minister when parliament returns from its summer recess.
In the first broadcast head-to-head debate between the two final contenders earlier this week, current Foreign Secretary Liz Truss and former Chancellor Rishi Sunak traded blows over taxes, China, inflation, the legacy of outgoing Prime Minister Johnson and taxes again.
Even before the final two had emerged from the pack, taxes and tax cuts had become the defining issue of this leadership race. In the last week, Truss has doubled down on attacks against Sunak for overseeing a national insurance rate hike during his tenure as chancellor.
Hitting back at Truss’ strikes, during Monday’s (July 25) TV debate, Sunak repeatedly described his opponent’s plans for the economy as “not conservative,” interrupting her at one point to say: “You promised almost £40 billion of unfunded tax cuts. … That is the country’s credit card. It’s our children and grandchildren … who are going to have to pick up the tab for that.”
The pair also clashed on the issue of corporation tax, which next year is set to increase from 19% to 25% for companies making annual profits in excess of £250,000.
Sunak wants to go ahead with the increase while Truss has proposed to cancel it.
But away from the contentious issue of whether to raise, leave or lower taxes, the candidates also diverge on other issues that affect the U.K.’s tech and financial services sector.
Rishi Sunak the FinTech Champion
Over the years, Sunak has been a vocal proponent of the U.K.’s FinTech sector. As chancellor, he rolled out several initiatives to stimulate innovation in the space and was in the midst of bringing in a range of measures to support the country’s crypto industry before he stepped down last month.
He even asked the royal mint to commission an NFT as part of his ambition to make the U.K. a “global hub for crypto asset technology.”
However, his interest in finance is not limited to the cryptosphere. Prior to entering politics, he had a career in investment banking and fund management that included a stint at the Indian innovation fund, Catamaran Ventures, owned by his father-in-law and tech tycoon Narayana Murthy.
And if there is a single speech that best sums up Sunak’s political philosophy, it’s his 2022 Mais Lecture at London’s Bayes Business School.
In that presentation, he emphasized that low taxes alone won’t stimulate the economy, adding that any tax regime has to be “globally competitive [so that it] properly incentivizes higher business investment in R&D [research and development],” and that economic growth requires a technically skilled workforce.
Trussonomics: Free Trade for the Digital Economy
Truss’ approach to technology and financial services is characterized by an emphasis on global trade. Last year she tweeted that the U.K. is “a global FinTech hub and epicentre of financial innovation. We will work with [the FinTech] sector to seize trade opportunities and open up markets around the world.”
In a 2020 speech at TheCityUK National Conference, she called the U.K. a leader in services and technology, citing industries like gaming and FinTech as key examples of British innovation.
She added that “we can work with like-minded partners, other countries that believe in free enterprise, democracy and the global rules-based system, to actually promote those new areas like digital and data trade.”
The kind of agreements Truss alluded to in her 2020 speech have since taken shape in the form of the recently finalized U.K.-Singapore Digital Economy Agreement, which will see businesses in both countries benefit from open digital markets.
Features of the newly inked deal include the guaranteed tariff-free flow of digital content and trusted data, agreements to align on data protection and intellectual property rights, and mechanisms to facilitate cheaper trade through the adoption of digital solutions.
In post-Brexit Britain, free trade deals like the one with Singapore have been touted by the outgoing government as one of the biggest advantages of breaking ties with Brussels. And with an economy that is heavily invested in digital services, any deal that makes it easier to sell those services abroad will be welcomed by the country.
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