Election season in the United Kingdom is in full swing and as the country prepares to head to the polls, the age-old adage “it’s the economy stupid” rings true once again. Throughout history, the winning candidate has often been the one most trusted on matters of the economy. This holds true for both prime ministers and US presidents, as they struggle to win re-election when the economy is struggling, and tend to succeed when it is flourishing.
With this in mind, it comes as no surprise that the current prime minister has called for an election at this particular moment. Recent economic data shows that the UK’s annual inflation rate has dropped to 2.3%, the lowest it has been since 2021. The economy has also officially emerged from recession, with a stronger-than-expected growth rate of 0.6%. The Bank of England is also considering a cut in interest rates, which would have a positive impact on the economy.
However, despite these positive indicators, the overall economic landscape is not without its challenges. While inflation may have returned to “normal” levels, it is still significantly higher than it was just a few years ago. Additionally, living standards have seen a sharp decline under the current parliament, with real household disposable income falling faster than in any previous parliament. This is a significant factor to consider for voters who may be asking themselves the question: do they feel better off now than they did five years ago?
It is worth noting, however, that the state of the economy cannot be solely attributed to the current prime minister or his predecessor. Many other countries in Europe have faced similar struggles due to the pandemic and the recent energy price shock caused by Russia’s invasion of Ukraine. While Brexit may have contributed to some of the challenges faced by the UK, it is not the only factor at play.
Meanwhile, the state of the public finances is a complex and nuanced issue. On one hand, the national debt and tax burden are higher now than they were at the last general election in 2019, with the tax burden at its highest level since the 1940s. However, much of this can be attributed to the cost of the furlough scheme and energy price guarantee, which are widely seen as necessary policies.
As the election approaches, the Conservative party will argue that they are working to clean up the mess and can be trusted more than their opponents. Whether this strategy will prove successful remains to be seen. In the coming weeks, as the parties release their economic plans, we will provide analysis and updates on how these plans may impact the economy and the lives of the British people.
