Amid the gloom, some hope. Yesterday the Bank of England announced inflation had reached its target rate of 2 per cent for the first time since 2021. Since this is the only one of Rishi Sunak’s five targets that he has hit meaningfully, one hopes the news buoyed him, before he returned to visiting seats with 25,000 majorities and contemplating the genuine prospect of losing his own.
Threadneedle Street is not expected to reduce rates. Service sector inflation at 5.7 per cent is higher than gods of the MPC would apparently like. Still, our overall rate is now lower than that of France, Germany, and the EU as a whole. We are on a par with the US. Since pay is rising at around 6 per cent, voters might finally start to feel a bit better off, before an expected rate cut in August.
This raises an obvious question. Sunak called his election last month after better than expected inflation and growth data. He insisted that they showed the economy was improving and that his “plan was working”. Today’s news adds to that narrative. But it also challenges the wisdom of going now. Shouldn’t he have waited until autumn so that an improving economy could bed in?
Some of our readers might be thinking that. Our panel believes Sunak was wrong to call the election for July 4th. So do some of the commentariat. The assumption was that calling the election later would have meant the improving economy would have fed through. Who pays attention to inflation statistics over pay packets? Outside the magic world of the Number 10 bunker, that is.
Waiting would also have given CCHQ more time to prepare. Nigel Farage might have been too committed stateside to grace Clacton with his presence. It would have provided more opportunities to pick apart Keir Starmer’s plans, find his Willie Horton, and sow seeds of doubt. Legislation could be passed, more taxes fiddled with, and Boris Johnson coaxed back from the beach.
But the grass is always greener (especially in Bristol Central). ConservativeHome made the case for a summer election on the assumption that things could only get worse. Six more months of squatting in Downing Street is six more months for voters ready for Labour to hate us more. Would Farage have returned? I suspect the stench of blood would have stretched to Mar-a-Largo.
But what about the economy? Lower inflation, wage growth, third time lucky with the National Insurance cuts – it’s not absurd to suggest that if Sunak’s entire plan was to point to a few numbers, nod vigorously, and hope the electorate would notice, that doing so would be a little easier later in the year. But voters never say thank you, as the self-declared hero of furlough now finds.
Ministers declaring victory over inflation only reminds voters that it reached its highest rate since 1982 on their watch. This Parliament has been the worst for living standards on record. Consumer prices have increased by 23 per cent since January 2020. The response to Labour’s ‘Reagan question’ – are you better off than you were five years ago? – is still a resounding no from most.
From South Africa to India, and the United States to Germany, incumbent governments are being punished by voters for post-Covid inflation. Attempts to hide behind central banks aren’t worth a damn, especially if ministers then try to claim credit for it falling. It’s not the only reason the Tories are heading for their worst-ever defeat. But it’s rather an important one. Thanks Sajid Javid!
The truth is – summer or autumn, Farage or no Farage – we are at the end of an age. Barring Starmer solemnly committing to slaughter the nation’s kittens, Labour would have a ginormous win, and us our electoral Ragnarök. The die was cast. Better to get it over and done with. Rip off the plaster, wave bye-bye to power, and say au revior to Larry the Cat. Every way you look at it…
Hoping a later election would have changed the result is a pointless exercise. Sunak would not have changed, the strategy would not have changed, and voters would not have hated us any less. Against that, the good news about inflation isn’t worth a damn. The only person grateful will be Rachel Reeves. There’s still no money left. But at least one part of the wreckage isn’t still on fire.
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Author: William Atkinson
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