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Rishi Sunak hailed Wednesday’s sharp fall in inflation as “a major moment for the economy”, but the evidence suggests that better economic data is not translating into an upturn in Conservative election prospects.
After failing to damp speculation he will call an election for the summer months, the prime minister declared that “the plan is working”.
Yet Tory MPs often complain that “the voters are not listening”, and that a slew of positive economic news, after the UK avoided a recession with stronger-than-expected growth in the first quarter of 2024, is doing them no good on the doorsteps.
Polling suggests that the Conservatives suffered a decisive blow to their reputation for economic competence — usually a key determinant of general elections — during Liz Truss’s disastrous 49-day premiership in 2022.
Sunak has failed to claw back much ground since then, even if he claimed that the fall in headline inflation to 2.3 per cent in April was proof “the difficult decisions we have taken are paying off”.
YouGov polling on who voters “trust on the economy” shows that Tory support fell during Boris Johnson’s time as prime minister, before slumping after the Truss government’s mini-Budget in September 2022.
The furore saw trust in Labour overtake the Conservatives on the economy, a lead it has maintained throughout Sunak’s time as prime minister and in spite of steadily improving inflation levels.
“Stability is change,” has become Labour’s official economic mantra, frequently turning political debate back to the chaotic days of the Truss premiership, which appears to have been a watershed moment in the political life of the country and in the public’s perception of the Tories as a steady hand on the tiller.
A key part of the problem, as chancellor Jeremy Hunt acknowledged on Wednesday, is that better economic data is not significantly feeding through yet into household budgets. “It is tough,” he said, admitting that some voters felt “bruised and battered” by economic shocks.
The pitch being made by Hunt and Sunak is that voters will soon feel better off and should “stick with the plan”, highlighting the fact that real wages have risen for 10 months.
“Brighter days are ahead, but only if we stick to the plan to improve economic security and opportunity for everyone,” Sunak said earlier on Wednesday.
The problem for Sunak is that time is running out before an election. Given that the economy only moved out of a mild recession at the start of 2024, the public appear not to be in any mood to give credit to the prime minister.
Anthony Wells, senior political pollster at YouGov, says Tory poll ratings on the economy may be nudging up slightly but they are only “slightly less terrible” than they were before.
Wells draws parallels with the devastating economic shock of Black Wednesday in 1992, when Britain was forced to leave the European exchange rate mechanism, which delivered a hammer blow to the economic reputation of John Major’s government.
Wells notes that by the time of the 1997 election, the Conservatives had clawed back some of that damage and were “roughly neck and neck” with Tony Blair’s Labour party on the economy.
But even getting back to parity had taken almost five years — not the 18 months since the Truss debacle — and that Major’s government went into the 1997 election boasting 4 per cent growth and low inflation, not the anaemic growth seen recently in the UK.
Lord Norman Lamont, Tory chancellor at the time of Black Wednesday, said that while the Truss mini-Budget had not caused much lasting economic harm, it had caused serious reputational damage.
Rachel Reeves, shadow chancellor, argued that the Tories would not gain any credit for falling inflation.
“I can understand why a Conservative prime minister who is richer than the king might want to run to the television studios to tell Brits that they’ve never had it so good,” Reeves wrote in the Sun newspaper.
She said voters just needed to “look at their bank balances and the price of the weekly shop to know they are worse off”.
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