The UK’s improving economy is not doing much to boost the Conservatives’ 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 the price spiral. Less than 12 hours later, the prime minister used the opportunity to launch a surprise general election.

Most elections are decided on the economy. Sunak, researching the economic horizon, concluded that this “major moment” was about as good as it was going to get for the foreseeable future.

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

Grant Fitzner, chief economist at the Office for National Statistics, said this month that the economy would “collapse” after growing by 0.6 per cent in the first quarter. Real wages rose for 10 months in a row.

According to people briefed on Sunak and Hunt’s thinking, the outlook for the next few months was seen as less favorable, tipping the balance in favor of a summer rather than a fall election.

Markets expect inflation to rise over the next few months on expectations of an imminent Bank of England rate cut. More importantly, Hunt has given up hope of pre-election tax cuts.

The chancellor has hinted to peers that there will be no autumn statement given that the public finances will not be strong enough to allow him to achieve the expected further 2p cut in national insurance.

Waiting until the autumn left open the prospect of further infighting, leadership speculation and defections by disgruntled Tory MPs while the economic recovery was limited.

So far, however, there is little evidence that the recent good news on the economy is translating into political support for Sunak or the Conservatives. Conservative MPs often complain that “the voters don’t listen”.

Polls suggest the Tories have suffered a decisive blow to their reputation for economic prowess – usually a key factor in general elections – during Liz Truss’s disastrous 49-day premiership in 2022.

Sunak has not managed to recover much since then, although he claimed that the fall in headline inflation in April was proof that “the difficult decisions we have taken are paying off”.

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

The upset saw Labor’s confidence in the economy overtake the Conservatives, a lead it maintained throughout Sunak’s tenure as prime minister, despite steadily improving inflation.

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

A key part of the problem, Hunt acknowledged on Wednesday, is that better economic data is not translating into household budgets significantly. “It’s tough,” he said, admitting that some voters felt “bruised and battered” by the economic turmoil.

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

“Brighter days are ahead, but only if we stick to a plan to improve economic security and opportunity for all,” Sunak said earlier Wednesday.

The problem for Sunak is that time is running out. With the economy only emerging from a mild recession in early 2024, the public seems in no mood to give the prime minister credit.

Anthony Wells, chief political pollster at YouGov, said the Tories’ ratings in the economy poll may be up slightly, but were only “slightly less dire” than 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, dealing a hammer blow to the economic reputation of John Major’s government.

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

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

Lord Norman Lamont, the Tory Chancellor at the time of Black Wednesday, said that while the Truss Budget did not cause much lasting economic damage, it did cause reputational damage.

Lamont said that many of Britain’s economic problems were hardly the fault of Sunak’s government, but that “sometimes people are very unreasonable in their expectations”.

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

“I can see why a Tory prime minister who is richer than the king might want to run to the TV studios to tell the British people they’ve never had it so good,” Reeves wrote in the Sun newspaper.

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