Lessons for the UK from Down Under

The recent British political and market turmoil has seen perhaps unfair comparisons made to Italy. A look at Australia might prove more apt. [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( The recent British political and market turmoil has seen perhaps unfair comparisons made to Italy. A look at Australia might prove more apt. From 2010 to late 2018, Australia cycled through a clutch of prime ministers, most knifed by members of their own party. Labor’s Kevin Rudd had two rounds in that period as leader: having lost to Julia Gillard in a party vote, he subsequently evicted her again (only to lose the next election). The center-right Liberal Party then went through its own process of Shakespearean rivalries and plotting. Key reading: - [From a Failing UK Economy to Party Rifts: Sunak’s Uphill Battle]( - [Sunak’s Prize for Predicting Truss Chaos Is Chance to Fix Damage]( - [Sunak Expected to Keep Hunt as He Readies New UK Cabinet]( - [Biden Heralds Sunak’s Victory as an ‘Astounding’ Milestone]( - [BOE Says Markets ‘Remain Febrile’ But UK Regaining Credibility]( There are lessons in that for the UK Conservative Party. Knee-jerk reactions to public opinion can be dangerous. And a cycle of short-termism due to party infighting can gather steam and be very hard to stop. Rishi Sunak takes office today as UK prime minister, after Liz Truss’s brief but troubled stint. She had replaced Boris Johnson, who was essentially forced out by multiple scandals. Johnson, Truss and Sunak all came to power via a Tory leadership battle (Johnson subsequently won the 2019 election). Truss and Johnson remain lawmakers, and the latter in particular has no love for his former chancellor. He is yet to congratulate him on his promotion. Like the Labor and Liberal parties in Australia, the Tories in the UK are essentially a coalition within their own ranks — factions upon factions and with loyalties that can swiftly vaporize or shift. Sunak recognizes the challenge. His first remarks yesterday after his leadership victory were not to the public but to Tory lawmakers, urging unity. He will be governing without a public mandate, which makes him vulnerable. With the Tories lagging in opinion polls, Sunak may only have a brief window to turn things around to avoid the whispers starting anew within the halls of Westminster. — [Rosalind Mathieson]( Sunak at Conservative campaign headquarters in London yesterday. Photographer: Chris J. Ratcliffe/Bloomberg We will be discussing the latest turns in British politics in a Twitter Space today at 2pm London/9am ET. [You can listen via this link](. And if you’re enjoying this newsletter, click [here]( to sign up for Balance of Power. Global Headlines Threatening behavior | Ukraine’s allies are increasingly concerned that [desperation]( over battlefield failures may lead Russia to escalate its war, possibly with an attack on a target like a dam or even a weapon of mass destruction. Officials said there’s no sign currently that the Kremlin is preparing for such a strike, even as it ratchets up rhetoric that may be aimed more at trying to intimidate Kyiv’s backers. - A group of progressive US House Democrats urged President Joe Biden to pursue [negotiations]( with Russia for a diplomatic end to the war — but within hours backpedaled with a statement affirming their support for his strategy. - Follow our rolling coverage of the war in Ukraine [here](. Artillery and mortar craters pierce the ground next to a destroyed Russian tank in Kharkiv Oblast in Ukraine on Oct. 23. Photographer: Carl Court/Getty Images Europe Position unchanged | China’s Communist Party congress, at which President Xi Jinping gained a third term, “doesn’t change our approach” to [relations](, US State Department spokesman Ned Price said. That strategy includes competing on security while cooperating on global issues such as climate where possible. Biden’s advisers are still working through a possible meeting with Xi at the Group of 20 summit next month, officials said. - Chinese stocks in Hong Kong [rebounded]( gingerly following yesterday’s historic selloff, as traders weighed cheap valuations against the prospects of more market-unfriendly policies during Xi’s new term. - While the selloff was [front-page]( news from Hong Kong to London and New York, in Chinese state media it’s as if the rout never happened. European gas prices are [plunging from peaks]( reached over the summer, but businesses and households will have to wait for relief from the squeeze from soaring inflation. Benchmark futures have dropped below €100 ($99) per megawatt-hour for the first time since June, due to better-than-expected progress in filling storage facilities and mild weather. US Midterms latest - [Fetterman-Oz Senate Debate Unfolds With 556,000 Votes Already In]( - [DeSantis Won’t Say in Debate if He Plans Presidential Run]( - [Biden Says Democrats Can Still Stave Off House, Senate Losses]( Protesters charged | A court in Tehran issued guilty verdicts and indictments for 315 people arrested during Iran’s anti-government demonstrations, as student rallies and fresh labor strikes [buoyed]( protests into their sixth week. Four of the people have been charged with “belligerence,” the state-run Islamic Republic News Agency reported, a crime that can carry a sentence of death or limb amputation. Best of Bloomberg Opinion - [UK Political Stability Won’t Stop Winter Biting: Marcus Ashworth]( - [Anti-Woke Warrior Sparks Fear in US Companies: Adrian Wooldridge]( - [It’s Kremlinology With Chinese Characteristics: Clara F. Marques]( Minimize fallout | Japanese Prime Minister Fumio Kishida sought to repair the damage after his economy minister stepped down over ties to a [fringe religion](, pledging to press ahead with a stimulus package. Revelations about the extent of the ruling party’s connections with the Unification Church, which has a long list of court rulings against it over its fundraising methods, have sent the premier’s support plummeting to its lowest levels since he took office a year ago. Explainers you can use - [Big Oil’s Profits Just Keep Rolling in as World Economy Sputters]( - [This US Analyst Went to ‘Pyongyang-Like’ Covid Zero China]( - [The Two Contenders to Be Next Governor of China’s Central Bank]( Waning momentum | Jair Bolsonaro’s momentum in opinion polls ahead of Sunday’s Brazilian presidential runoff appears to have [stalled]( after a series of blunders and incidents, including the arrest of one of his most outspoken former associates that turned violent. The incident poured cold water on market bets that the president would beat Luiz Inacio Lula da Silva and raised concerns about possible post-election violence. Bloomberg TV and Radio air Balance of Power with [David Westin]( on weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online [here]( or check out prior episodes and guest clips [here](. News to Note - North Korea has finished preparations for a nuclear test, South Korea’s president said, stoking concerns that Pyongyang’s [first blast]( of an atomic device in five years is imminent. - JP Morgan Chase CEO Jamie Dimon said geopolitical uncertainties were among the [biggest concerns]( facing the global economy right now, far outweighing the risk of recession. - Scientists may have discovered a method for making magnets used in wind turbines and electric cars, which would loosen China’s dominance of the [rare-earth metals]( market. - Biden will receive a coronavirus vaccine booster at the White House today as part of an event to announce a new campaign with business to [encourage immunizations]( for Covid-19 and the flu. And finally ... The first rule for setting up a “warm bank” — a [free heated indoor space]( for UK residents facing high energy bills this winter — is not to call it one. “A warm space is a far more approachable place,” says British money-saving expert Martin Lewis, who published a guide to setting up warming centers. With fuel price rises making home heating bills prohibitive for many, a nationwide network of open-access facilities is being established by local governments, health authorities and civil society groups as the temperature drops. Houses in London in January. Photographer: Leon Neal/Getty Images Europe Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( [Ads Powered By Liveintent]( | [Ad Choices]( Bloomberg L.P. 731 Lexington, New York, NY, 10022