Rishi Sunak gave a speech at 10 Downing Street on Tuesday after being appointed by King Charles III as the new British prime minister, he had accepted an invitation to form a new government.

Sunak said he would try to fix the mess left by his predecessor, restore faith in politics and tackle a "profound economic crisis" but warned the country there would be difficult decisions.  

Standing in front of his new Downing Street office, Sunak paid tribute to Liz Truss. "I want to pay tribute to my predecessor Liz Truss ... But some mistakes were made. Not born of ill will or bad intentions. Quite the opposite, in fact. But mistakes nonetheless," he said. 

"And I have been elected as leader of my party and your prime minister, in part to fix them. And that work begins immediately. I will place economic stability and confidence at the heart of this government's agenda. This will mean difficult decisions to come."

The 42-year-old Sunak is the first person of Indian origin to become British prime minister and the youngest in the country's modern political history to hold the post.

Sunak is expected to slash spending to plug an estimated 40 billion pound ($45 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.

(With input from agencies)