Rishi Sunak is gambling on a feelgood factor from interest rate and tax cuts to deliver an Autumn election victory.
The PM dramatically moved to kill speculation about a May election yesterday, saying his plan was to trigger a ballot in the ‘second half of the year’.
The intervention came amid mounting hopes that the economic situation will look better by then, with analysts predicting the Bank of England will have started cutting interest rates and inflation will have subsided.
Chancellor Jeremy Hunt has been signalling more tax cuts in the Budget on March 6, which will have had time to filter through to voters’ pockets. November 14 is being widely touted as the election date, meaning the starting gun could be officially fired by Mr Sunak at the Conservative conference the previous month.
However, some Tories also fear there are big risks attached to waiting, including the potential for escalation in Ukraine and the Middle East, and another summer of Channel boats arrivals.
Rishi Sunak is gambling on a feelgood factor from interest rate and tax cuts to deliver an Autumn election victory
Keir Starmer, who held his own New Year launch in Bristol, said: ‘We are ready for an election.’
Labour has been enjoying consistent double-digit advantages in the polls
Mr Sunak used a visit to Nottinghamshire yesterday to dismiss Labour claims that a May election was the ‘worst kept secret in Westminster’.
He said his ‘working assumption’ was that he will call one in the second half of this year.
He acknowledged that 2023 ‘wasn’t the easiest of years for any of us’ amid the continued fallout from the pandemic, damaging public sector strikes and rampant inflation fuelled by wars in the Middle East and Ukraine.
But striking an upbeat tone, the PM insisted the country had turned a corner under his ‘steady-as-she-goes’ stewardship, meaning the Government can afford further tax cuts to ease the cost-of-living squeeze on hard-pressed families.
‘Look, 2023, I’ll be honest, it wasn’t the easiest of years, for any of us, it wasn’t an easy year for our country,’ Mr Sunak said.
‘I’m going to tell you, I know that 2024 is going to be a better year, I want to make sure that all you believe 2024 is going to be a better year too.’
He said he was confident of improvements because he is ‘making progress’ on his five priorities, arguing the economy is outperforming expectations and that debt is ‘on track to be lower and falling’.
A 2p cut to national insurance announced in November’s Autumn Statement, which kicks in tomorrow, will save the average worker £450 this year.
‘This Saturday, a big tax cut is coming in, every working person across the country is going to benefit from it,’ the PM said.
‘It’s worth £450 to an average person in work on the average salary. We want to do more because, as we manage the economy responsibly, we can cut your taxes, give you and your family peace of mind, immediate relief from some of the challenges you’re facing and confidence that the future is going to be better for you and your children.’
Mr Sunak pledged to go further and warned that families would be clobbered with tax hikes under Labour because of its pledge to splurge £28billion-a-year on green energy initiatives by 2030.
Labour and the Liberal Democrats accused Mr Sunak, who visited Woodland View Primary School in Nottingham yesterday, of ‘running scared’ and ‘squatting’ in No 10 by refusing to call an early election.
Mortgage lenders have already started trimming borrowing costs on expectations of cuts to the base rate, giving Brits some much-needed relief.
Goldman Sachs now believes the Bank of England will begin cutting the headline rate in May, reducing from 5.25 per cent to 3 per cent by May next year.
Closely-watched PMI figures on economic activity have also eased anxiety about the country dipping into recession, although UK plc is not performing strongly.
Closely-watched PMI figures on economic activity have also eased anxiety about the country dipping into recession, although UK plc is not performing strongly
Keir Starmer, who held his own New Year launch in Bristol, said: ‘We are ready for an election. The country is ready for an election, people are crying out for change.
‘This has serious implications because he’s basically saying he’s going to be squatting for months in Downing Street – dithering and delaying.’
He also dismissed claims he could try and duck head-to-head TV debates with Mr Sunak, saying: ‘I’m happy to debate. Just bring it on.’
Andrew Goodwin of Oxford Economics said the UK economy was taking ‘the first step in the right direction after many wrong steps’.
‘By the end of the year, people should feel a bit better off than they are now,’ he said.
‘They are still going to be a lot worse off than they were two or three years ago, but at least the backdrop will be slightly less unfavourable.’