Britain’s improving economy is doing little to boost Tory hopes of winning the July election

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Rishi Sunak said 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 this opportunity to launch a snap general election.

Most elections are decided on the economy. Sunak, observing the economic horizon, concluded that this “big moment” was as good as it will be for the foreseeable future.

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

Grant Fitzner, chief economist at the Office for National Statistics, said this month that the economy was “crashing” after growing by 0.6 percent in the first quarter. Real wages have been growing for 10 months in a row.

The outlook for the next few months was seen as less favorable, according to people familiar with Sunak and Hunt’s thinking, tipping the scales in favor of a summer rather than a fall election.

Markets expect inflation to pick up over the next few months amid expectations of an early rate cut by the Bank of England. More importantly, Hunt has given up hope of achieving 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 deliver his desired further 2p cut in national insurance.

Waiting until the autumn left open the possibility of further intra-party infighting, leadership speculation and the defection of disaffected Tory MPs, while the economic advantage was limited.

But so far there is little evidence that the recent good news about the economy is translating into a political boost for Sunak or the Conservatives. Tory MPs often complain that “voters aren’t listening”.

The poll shows the Tories suffered a decisive blow to their reputation for economic competence — usually a key determinant of general elections — during Liz Truss’s disastrous 49-day term as prime minister in 2022.

Sunak hasn’t been able to pull back much since then, although he claimed April’s decline in headline inflation was proof that “the tough decisions we’ve made are paying off”.

A YouGov poll on who voters “trust with the economy” shows Tory support fell during Boris Johnson’s time as prime minister, before falling further after the Truss government’s “mini” budget in September 2022.

The turmoil saw confidence in Labor overtake the Conservatives on the economy, a lead it maintained during Sunak’s time as prime minister and despite steadily improving inflation levels.

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

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

Hunt and Sunak argue that voters will soon feel better and should “stick to the plan”, and that switching to Labor now would be a dangerous leap into the void

“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 did not emerge from a mild recession until the beginning of 2024, it seems that the public is not in the mood to give credit to the prime minister.

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

Wells drew parallels with the devastating economic shock of Black Wednesday in 1992, when Britain was forced out of the European Exchange Rate Mechanism, which hammered the economic reputation of John Major’s government.

He added that by the 1997 election, the Conservatives had recouped some of that damage and were “roughly neck and neck” with Tony Blair’s Labor Party on the economy.

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

Lord Norman Lamont, the Tory chancellor at the time of Black Wednesday, said that while Truss’s budget had caused no lasting economic damage, it had caused reputational damage.

Lamont said that most of Britain’s economic problems are not the fault of Sunak’s government, but that “people are sometimes very unreasonable in their expectations”.

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

“I can understand why a Conservative prime minister who is richer than the king might run to the television studios and tell the British people that they have never had it so good,” Reeves wrote in the Sun newspaper.

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