An improving UK economy is not boosting Tory hopes of winning the July election

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Rishi Sunak announced at 7am on Wednesday that inflation had returned “to normal”, ending the pain of spiraling prices. Less than 12 hours later, the Prime Minister used the occasion to launch a surprise general election.

Most elections are decided on the economy. Sunak, surveying the economic horizon, concluded that this “prime moment” was about as good as it was going to get for the foreseeable future.

Sunak and Chancellor Jeremy Hunt concluded, according to senior party officials, that they should go to the country in July amid an improving economy and inflation in April of just 2.3 percent.

Grant Fitzner, chief economist at the Office for National Statistics, announced this month that the economy was “falling apart” after registering growth of 0.6% in the first quarter. Real wages have been growing for 10 months in a row.

According to people familiar with the views of Sunak and Hunt, the outlook for the next few months is considered less favorable, tipping the scales in favor of an election in the summer rather than the fall.

Markets expect inflation to pick up over the next few months as expectations for an early rate cut from the Bank of England fade. More importantly, Hunt has given up hope of delivering pre-election tax cuts.

The chancellor has indicated to colleagues that there will be no autumn statement given that the public finances will not be strong enough to allow him to achieve his expected further 2p cut in national insurance.

Waiting until the autumn left open the prospect of more infighting, leadership speculation and defection by disgruntled Tory MPs while economic growth was limited.

But so far, there is little evidence that the latest good news about the economy is translating into a political boost for Sunak or the Conservatives. The Tories often complain that “voters don’t listen to them”.

Polls show the Tories suffered a decisive blow to their reputation for economic competence – usually a key factor in general elections – during Liz Truss’s disastrous 49-day premiership in 2022.

Since then, Sunak has not been able to regain much ground, although he claimed that the fall in headline inflation in April was proof that “the tough decisions we’ve taken are paying off”.

A YouGov survey of who voters ‘trust on the economy’ shows Tory support fell during Boris Johnson’s time as prime minister, before falling further after the Trust government’s ‘mini’ budget in September 2022 .

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The furore saw Labor confidence overtake the Conservatives on the economy, a lead they maintained throughout Sunak’s time as prime minister and despite steadily improving inflation rates.

“Stability is change” became Labour’s official economic mantra; Party leader Sir Keir Starmer often casts political debate back to the chaotic days of the Truss premiership.

A key part of the problem, Hunt acknowledged Wednesday, is that better economic data isn’t trickling down significantly into household budgets. “It’s tough,” he said, acknowledging that some voters feel “bruised and battered” by economic turmoil.

The claim made by Hunt and Sunak is that voters will soon feel better and should “stick with the plan” and that switching to Labor now would be a dangerous leap in the dark

“Brighter days are ahead, but only if we stick to the plan to improve economic security and opportunity for all,” Sunak said earlier Wednesday.

The problem for Sunak is that time is running out. Given that the economy only emerged from a mild recession in early 2024, the public seems in no mood to give the Prime Minister his due.

Anthony Wells, senior political pollster at YouGov, said the Tories’ ratings on the economy may be up slightly, but they are only “a little less terrible” than they were before.

Wales drew parallels with the devastating economic shock of Black Wednesday in 1992, when Britain was forced out of the European Exchange Rate Mechanism, dealing a severe blow to the economic reputation of John Major’s government.

He added that at the time of the 1997 election the Conservatives had dealt with some of that damage and were “roughly toe-to-toe” with Tony Blair’s Labor Party on the economy.

But even a return to parity took almost five years – not the 18 months after Truss’s failure – and the Major government went into the 1997 election boasting 4 per cent growth and low inflation, rather than the anemic growth seen recently in the UK.

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Lord Norman Lamont, the Tory chancellor at the time of Black Wednesday, said that while the Truss Budget had not caused much lasting economic damage, it had caused reputational damage.

Lamont said many of Britain’s economic problems were hardly the Sunak government’s fault, but that “sometimes people are very unreasonable in their expectations”.

Rachel Reeves, the shadow chancellor, said the Tories would get no credit for falling inflation.

“I can understand why a Tory prime minister who is richer than the king might want to run to the TV studios to tell the British people they’ve never had it so good,” Reeves wrote in the Sun newspaper.

But she said voters just had to “look at their bank balances and the price of the weekly shop to know they are worse off”.

Video: Sketchy Politics: Sunak’s Sinking Sense

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