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The Economy Won’t Save Rishi and the Conservative Party

Updated: 1 day ago



UK Prime Minister Rishi Sunak and the Tories are on the verge of an existential defeat. Sam Freedman, a fellow at the Institute for Government, believes there is a considerable probability the Tories end up with fewer than 100 hundred seats. A loss of such scale could prelude the end of the Conservative Party, one of the most successful political parties in the world. To try and salvage this dire situation Sunak is betting on the Rwanda policy and the economy. Neither will save him from a severe loss. 


The Rwanda plan remains central to the Conservative campaign. Delaying the election until later in the year raises the prospect planes will get off the ground, with migrants in them. A successful implementation may boost support for the Tories, but it won’t win them the election. It appeals to Conservative voters, few besides. Immigration is no longer the priority for UK voters. The economy and the NHS are more important issues. It is an expensive, impractical vanity project. It merely signals the Conservative Party has a plan on immigration. The plan won’t work but there is a plan, nonetheless. 


Rishi has also put his faith in the economy. A safe bet, given the tailwinds the economy will benefit from through 2024. Easing global shocks and the work of central banks are Rishi’s saving grace. Inflation has fallen, and is forecast to fall further. Real wage growth is positive. Interest rates will be cut at least once, maybe more, before October, improving mortgage affordability. The Conservatives should see a poll boost. Presiding over a tamer economy will help signal they are in control. A serious slump or bout of inflation would truly kill the Conservative’s election chances. 


A calmer economic context will enable Hunt to cut National Insurance again in an Autumn fiscal event. Perhaps, more tax giveaways will be pursued. Inheritance tax and stamp duty cuts were touted before the previous Budget. Importantly, this time around, households will be able to appreciate the tax cuts. Fiscal drag (rising nominal incomes dragging households into higher tax brackets) undermined the narrative of past tax cuts. It was too hard to determine whether one was worse off or better compared to what they would have been. Furthermore, high inflation, especially for food, and the elevated price level meant it was hard to convince people they were being made better off. In the Autumn, low inflation will help households acknowledge their falling tax bill. Households will be better off financially at the election and should feel it. 


So, by the end of the year, the economy will be in relatively good shape. Given the UK and global economic context it is the best economic conditions the Tories could hope for. Tax cuts will be salient. The Rwanda plan should be underway. What does this spell for the Conservative’s electoral chances? 


I predict they will still perform poorly. At best, I see “only” a high double-digit Labour majority. The main gains to be gleaned over 2024 are mostly from perceived competence, an improvement on the previous two Prime Ministers but insufficient to sway the election. Two narratives have taken hold that a marginally improved economic picture and Rwanda cannot erase. 


First, there is the pervasive sense that nothing works. NHS waiting lists, councils going bust, the state of the public transport system, school roofs collapsing, prisons full, universities turning to foreign students to fill the funding gap. Softer inflation and positive GDP growth figures will not convince voters all is well. Slightly more money in one’s pocket just isn’t very useful when considering these issues. The Tories must convince the country they can solve these issues. That is a tough sell, given the Tories have been in charge for 14 years. It’s like a husband claiming they’ll start chipping in with household chores after 20 years of idleness. Sure, it may happen but if so, why hasn’t it been done sooner?


Second, there has been too much disruption over the past fourteen years. In that time, there has been austerity, Brexit, a global pandemic, Johnson’s administration with all its lying, and the Liz Truss debacle. Each has chipped away at the patience of voters. The Tories have repeatedly responded with a change of leader. It’s reached a point where instead of signalling a new dawn, it signals chaos. The constant upheaval, even that not attributable to the Tories like the pandemic, is too much for the public now. They want things to quieten down, which explains why ‘boring’ Keir Starmer does well in the polls. 


Decline and disorder. This is the electoral problem the Conservatives must solve. Bar a miracle, it cannot be done. A benign economic environment will limit the chances of complete decimation but cannot come close to outweighing the state (and mind) of the country after 14 years of Tory rule.



Image: Prime Minister's Office

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