Rishi Sunak’s chances of being re-elected in next year’s general election will depend on public reaction to the “autumn statement” delivered in the Commons on Monday by his chancellor, Jeremy Hunt.
“The economy is back on track,” Hunt announced.
The “autumn statement” is a kind of budget, though there will be another one in March 2024. And it is on the economy that the election will be won or lost.
Hunt pointed out that when Rishi took over from Liz Truss as prime minister a year ago and reappointed him as chancellor, inflation was running at 11.1 per cent.
This had now come down to 4.6 per cent. The independent Office for Budget Responsibility has predicted this will fall further to 2.8 per cent by the end of next year and reach the Bank of England’s target of 2 per cent by the end of 2025.
The general expectation, based on opinion polls, is that voters want to see a change after 13 years of Tory government. However, the 20 per cent lead that Keir Starmer’s Labour party currently has over the Tories will probably narrow in the run up to the election.
Hunt announced that the National Insurance that people pay on their earnings – this is to finance the state pensions they receive when they retire – was coming down from 12 per cent to 10 per cent. The government would also honour the “triple lock” on state pensions, which would rise by 8.5 per cent from next April to £221.20 a week. The minimum living wage that all employers have to pay to their employees would go up from £10.42 an hour to £11.44 an hour.
There was also an incentive for business. The tax breaks they received if they made investments would be made permanent.One problem for Britain is that 7m adults are currently choosing not work, depending instead on welfare benefits. To improve productivity Hunt warned their welfare benefits would stop after 18 months if they showed unwillingness to seek employment.
The OBR figures show a particularly sharp downgrade for economic growth in 2024 and 2025 from previous forecasts. 2024 has gone from 1.8 per cent to 0.7 per cent while 2025 has gone from 2.5 per cent to 1.4 per cent.
The figures will be studied carefully by the Indian government which is still negotiating a Free Trade Agreement with the UK.
Labour’s shadow chancellor Rachel Reeves said the Tories have “held back growth, they have crashed our economy, increased debt, trashed our public services, left businesses out in the cold, and made life harder for working people. Does anything in Britain work better today than when the Conservatives came into office 13 years ago? It is time for change.”