Rishi Sunak set to appoint new Tory chairman after Zahawi sacking

The head of the Confederation of British Industry has warned Rishi Sunak against pursuing an austerity “doom loop” of cuts to public spending and tax rises amid fears over a mixed outlook for the economy.

Rishi Sunak is poised to mount a mini-reshuffle as he appoints a Conservative Party chairman.

The prime minister is expected to confirm Nadhim Zahawi’s successor tomorrow after the former chairman was sacked over his tax affairs.

Dominic Raab, the deputy prime minister and justice secretary, is to remain in his role pending the outcome of an inquiry into allegations he bullied officials.

One government source said that the reshuffle would be “relatively limited”, with a “domino” effect caused by the appointment of a new party chairman.

However others suggested it could be more extensive, with cabinet pushed back by an hour tomorrow morning and further appointments expected later in the afternoon.

Several cabinet ministers have been linked to the role of Conservative Party chairman, but few are said to want the job amid concerns that they will end up taking the blame for the outcome of the local elections in May.

Cabinet ministers linked to the role include Grant Shapps, the business secretary, Penny Mordaunt, leader of the Commons and Andrew Mitchell, the international development secretary. Others said to be under consideration include Greg Hands, a trade minister, and Paul Scully, a business minister.

Sunak has repeatedly pledged to stand by Raab until an investigation into allegations of bullying has concluded.

It is said to be weeks away as Adam Tolley KC, an employment barrister, is interviewing at least 24 officials who have worked with Raab are said to have come forward and made complaints.

Red Box Get the inside track on what’s happening in Westminster, straight to your inbox. Sign up with one click
The prime minister has insisted that he wants to follow “due process” before any decision on Raab’s future was taken. Raab has denied any wrongdoing and allies rejected any suggestion that he would resign.

Michelle Donelan, the culture secretary, will take a short maternity leave later this year but it is not clear when her temporary replacement will be announced.