MANCHESTER (England): Falling inflation, the prospect of interest rate cuts and signs that Britain’s economy is gathering some pace sound like an electoral godsend for struggling Prime Minister Rishi Sunak, but history suggests it will all make little difference.
Last week the Bank of England forecast that British inflation - until recently the highest among the world’s rich economies - would fall to its 2% target by the middle of 2024, much sooner than it previously thought. The BoE also signalled that borrowing costs might start to fall.
If the central bank is correct, it would help Sunak, who has sought to take credit for inflation dropping as he prepares for an election expected in October or November. Business surveys - including one on Monday that suggested Britain’s economy is growing faster than its big European neighbours - also point to a brightening economic outlook.
Data on Monday suggested Britain’s jobless rate fell to 3.9% in the three months to November. A 10% increase in the minimum wage and a cut in home energy tariffs in April could also help many households. The problem for Sunak is that history shows even the brightest economic news would probably not dent the enormous opinion poll lead held by the opposition Labour Party - currently around 20 percentage points.
“My guess is the Tories will find it very hard to gain much credit in terms of winning people back - almost whatever the economy does,” said polling analyst Peter Kellner, former president of polling and market research company YouGov. While the Treasury boasts that Britain has ranked top for growth since 2010 among the five largest European economies, it has struggled more recently.
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