Rishi Sunak is not just our first British Asian Prime Minister, our first Hindu Prime Minister.

He is not simple the youngest prime minister of modern times. He is also the youngest prime minister since the Napoleonic Wars and the first millennial prime minister.

Equally intriguing, and perhaps even more consequential, is that he is the UK’s first hedge fund prime minister.

Before becoming a politician, Mr. Sunak worked in finance at both Goldman Sachs and Chris Hohn’s hedge fund, The Children’s Investment Fund Management. His time in the sector has been relatively short, but he nevertheless produces a CV that is quite unlike almost any other occupant of 10 Downing Street.

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The markets shaped it. And now, at a time when the rise and fall of certain benchmarks is influencing British politics more than at any time since at least the early 1990s, we have a Prime Minister who takes these markets unusually seriously. seriously

The markets helped him through. After all, for Liz Truss, there was an extraordinary backlash to her mini-budget, which contributed to a sharp jump in interest rates on both national debt and mortgages. This in turn caused a crisis in the gilt markets which underpin the UK financial system.

And the markets welcomed him. The news that Boris Johnson is leaving the leadership race was accompanied by a sudden rise in the value of the pound. When government bonds opened for trading this morning, they rose very quickly. The interest rate on these bonds fell sharply.

And since these markets are the backbone of the rest of the financial system, this has an immediate effect on prices elsewhere. After the mini-budget, traders expected Bank of England interest rates to rise well above 6% next year; this morning the expected peak fell below 5% for the first time since this financial event.

At this point, you’re no doubt wondering: why does any of this matter? Why do we pay so much attention to the market? Why (as some might say) does Britain allow the whims of the globalist elite – the “class consensus” – to shape its politics? What happened to democracy?

And frankly, you’re right. The politics of a democratic country should be shaped by politicians elected by the people. It is part of the unwritten social contract that binds us.

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But the reality – as depressing as it may be – is that these politicians’ ability to act is limited by markets. Clearly, they can only borrow to the extent that investors from around the world are willing to lend them money.

Markets are important not because they’re right or wrong (they’re not), but because that’s where the money is. And Britain, a country with huge current account and government account “twin deficits”, depends more than any other advanced economy on borrowing from these markets. It’s just that – ask anyone who worked at Goldman Sachs.

And this logic should be borne in mind when Britain’s first hedge fund prime minister takes office and begins to shape policy. Our ability to do what we want to do as a country depends on convincing the millions of investors around the world, making second-by-second decisions about where to put their money, that we are on the right course. Other prime ministers (certainly the last couple) have tried to ignore it; it is unlikely that the “prime minister of hedge funds” will.

However, the economic problems facing Mr. Sunak go far beyond the gold-plated card. It comes in at number 10 with the UK economy, quite plausibly, in recession. Energy costs remain at an all-time high (even though wholesale gas prices have plummeted).

The same goes for food prices and expenses for all kinds of household items. Further upheavals from the war in Ukraine look very likely. And on top of that, households will have to contend with very steep increases in mortgage costs over the next year or so. Even a small improvement in those interest rates after Mr. Sunak became prime ministerial favorite does little to change that.

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In short, even at the best of markets, the coming months are likely to feel bleak for the UK economy, with households squeezed on every corner – more so than in decades. It’s debatable who is most responsible for this – whether it’s the Tories, the central banks or, yes, the markets. But that’s where we’re going.

Mr Sunak spent most of his time as chancellor handing out money during the pandemic. Usually, during a recession, governments tend to “tighten fiscal policy” – that is, hand out more money.

But that brings us back to markets. Will these investors be comfortable with the UK borrowing more in the coming years? Will they be confident enough about the Prime Minister’s hedge fund credentials to give Britain the benefit of the doubt? Will Mr. Sunak be willing to take such a risk?

The last few weeks have been a strange ride in politics. We are now off the rollercoaster of the Circuit. A trip to Sunak may look different; it may not have the same twists and turns; but don’t expect it to be particularly smooth or enjoyable.