Supreme Court Rules Against Gov't On Rwanda Deportation Case, Big Blow To PM

The UK Supreme Court has ruled against the gov't in its efforts to begin deportations of failed asylum seekers to Rwanda. While not market moving or relevant in itself, it deals a blow to the gov't and PM Rishi Sunak who is already facing a nascent rebellion on the right of his governing Conservative Party.

• The gov't argues that the deportation of failed asylum seekers to Rwanda is crucial for deterring small boat immigration. However, the Supreme Court's ruling puts paid to that, and will force either the jettisoning of the plan or a significant reworking of the legislation.
• For Sunak, he now faces a riled right-wing of his party (see the letter to Sunak published by ousted Home Sec Suella Braverman on 14 Nov). Given the position of the Conservatives in opinion polls (15-20% behind the main opposition Labour party), it cannot be ruled out that Sunak faces a leadership challenge before the next general election.
• In terms of policy implications, a leadership challenge would suck the political oxygen out of the gov't, reducing focus on other areas of policy. Before that, though, Sunak could seek to placate right wingers through tax cuts. Chancellor Jeremy Hunt has stated that he would not implement any tax cuts that could prove inflationary in his 22 Nov autumn statement. However, this has led to speculation that tax cuts for business or reductions in inheritance tax could come through in an effort to shore up support on the right of the Conservative party.