Rishi Sunak's election strategy under threat as economic pessimism intensifies

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Promised to squeeze “every last drop of high inflation out of the economy”, but that arduous task could seriously affect the Conservative party's strategy for the 2024 general election. Hunt is under pressure from Conservative MPs to deliver major tax cuts in next year's spring budget, in a signal to voters that better times are just around the corner. But if inflation remains high and the Bank of England is trying to cool an overheated economy next spring, tax cuts could be economically unwise. Hunt acknowledged the risks on Wednesday, when he responded to official data showing UK inflation remained static at 8.7 per cent, and insisted that curbing price growth came before cutting taxes. Asked about tax cuts, he said: “The way to grow the economy, the way to give us more headroom, to spend more on public services like the NHS, to reduce the tax burden, is to tackle inflation.

Inflation is the biggest and most invidious tax rise facing Brits right now because it is eroding the value of their weekly and monthly wages. So that's our top priority.” Rishi Sunak, who has pledged to halve Russia Mobile Number List inflation to around 5.5 per cent by the end of the year, will face questions about the government's strategy at Prime Minister's Questions in the House of Commons on Wednesday. Many economists thought Sunak had set a modest target when he promised to halve inflation in January, although it now looks harder to meet. International economic bodies have previously predicted that he will hit the mark. The high level of public debt, with the UK's debt-to-gross domestic product ratio surpassing 100 per cent on Wednesday for the first time since 1961, is another limiting factor for the government. Analysts said the worse-than-expected state of public finances casts doubt on Hunt's ability to make big tax cuts before the election while sticking to his fiscal rules.



Hunt has promised that the government will “stand firm” in the fight against inflation, but if that means the BoE has to push the economy into recession in the election year, it will present a major political challenge. So far, there has been little public or private criticism from senior Conservative MPs of the BoE and its handling of inflation, despite the central bank admitting it needs to revisit its forecasting models. The bank's Monetary Policy Committee is expected to raise interest rates again on Thursday. However, former Tory minister Jacob Rees-Mogg said BoE governor Andrew Bailey should take "primary responsibility for the bank's failure on inflation", adding that the MPC had taken its lead. “When Andy Haldane warned, as the bank's chief economist, that inflation was not a problem, the governor ignored him and now interest rates are rising more than would have been necessary,” Rees-Mogg added.