Rishi Sunak says he is not daunted by the scale of the challenge as he became Britain's third prime minister in two months, pledging to restore trust, rebuild confidence and lead the country through an economic crisis.
The 42-year-old former hedge fund boss, who has only been in elected politics for seven years, has been tasked with bringing an end to the infighting and feuding at Westminster that has horrified investors and alarmed international allies.
"I fully appreciate how hard things are," he said on Tuesday outside the prime minister's residence at Downing Street where he shunned the normal tradition of standing with his family and political supporters.
"I understand too that I have work to do to restore trust, after all that has happened. 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."
Sunak, one of the richest men in parliament, is expected to slash spending to plug an estimated STG40 billion pound ($A72 billion) hole in the public finances created by an economic slowdown, higher borrowing costs and a six-month program of support for people's energy bills.
With his party's popularity in freefall, Sunak will also face growing calls for an election if he moves too far from the policy manifesto that elected the Conservative Party in 2019, when then leader Boris Johnson pledged to invest heavily in the country.
Economists and investors have said Sunak's appointment will calm markets, but they warn that he has few easy options when millions are battling a cost of living crunch.
"I will place economic stability and confidence at the heart of this government's agenda," he said, shortly after he accepted King Charles's request to form a government. "This will mean difficult decisions to come."
He also vowed to put the public's need above politics, reflecting the mounting anger at the sense of perma-crisis that has gripped Britain since the historic 2016 vote to leave the European Union unleashed a battle for the future of the country.
Sunak has warned his colleagues they face an "existential crisis" if they do not help to steer the country through the surging inflation and record energy bills that are forcing many households and businesses to cut back spending.
Britain's youngest prime minister for more than 200 years and its first leader of colour, he replaced Liz Truss who resigned after 44 days following a "mini budget" that sparked turmoil in financial markets.
He will now need to review all spending, including on politically sensitive areas such as health, education, defence, welfare and pensions.
In her farewell speech at Downing Street on Tuesday Truss did not apologise for her short tenure or mini-budget despite it sparking a collapse in the pound and a surge in borrowing costs and mortgage rates.
Sunak paid tribute to Truss and said her plan to reignite economic growth had not been wrong, but he said mistakes were made. "And I have been elected as leader of my party and your prime minister, in part to fix them," he said.
Sunak is expected to retain Jeremy Hunt as finance minister after the former foreign and health secretary helped calm volatile bond markets by ripping up most of Truss's economic program.
"Sunak, a Goldman Sachs analyst who only entered parliament in 2015, must unite his party, aware that voters are increasingly angry over the antics at Westminster as the economy heads for recession.
He was blamed by many in the party when he quit as finance minister in the summer, triggering a wider rebellion that brought down Johnson.
Sunak, a Hindu, becomes Britain's first prime minister of Indian origin.
© RAW 2022