Inflation. Political turbulence. Strikes. War in Europe. And more Brexit. 2022 has been eventful to say the least. And a year probably to forget for the UK Conservative Party.
The war in Ukraine and hangover from the pandemic have inflamed inflation and caused a cost of living crisis not seen in the UK for forty years. Yet the Conservative Party, unlike many of its governing counterparts in G7 economies, have emerged in a far more vulnerable political position. 2022 saw the Biden administration galvanised by the most successful mid-term election result for a first term incumbent president since 2002, Emmanuel Macron re-elected as French President, and both the Canadian and Japanese leaders, Justin Trudeau and Fumio Kishida shore up their respective popularity at home. While Germany and Italy have also seen the recent election of new leaders, it is safe to say that 2022 has been a good year for incumbent leaders among the UK’s allies. But not for the UK’s leaders where the Conservatives have allowed internal battles to dominate news headlines.
Boris Johnson was ousted from Number 10 by members of his own Party in July, sparking a painful leadership battle over the summer that resulted in the selection of Liz Truss as the UK’s new Prime Minister. 44 days later, Liz Truss was out, resigning due to the knock-on effects to UK borrowing costs as a result of her ‘mini-budget’, which committed to approximately £43 billion of unfunded tax cuts. Truss’ rationale was that the UK economy was in dire need of stimulated growth in order to stave-off the coming global recession. While this argument won the hearts of many conservative members and MPs, the markets did not agree. The consequence of the mini-budget was a sharp drop in the value of the pound, and a crash in the UKs gilt markets. The Bank of England, already committed to a programme of quantitative tightening to ease inflationary pressures in the economy, was forced to then commit to quantitative easing and buy-up bonds to stabilise the UK’s borrowing costs.
The chapter of UK politics that was Liz Truss was busy, short, and rather quickly ushered in the era of Rishi Sunak and Jeremy Hunt, who put the UK on a technocratic crash diet of higher taxes and lower public spending to stabilise the nation’s fiscal situation. With the pro-Boris wing of the Party, who were 5 points behind Labour in opinion polls when he was cast aside, seizing every opportunity to remind Rishi Sunak of his tenuous political position 20 points behind in opinion polls, what then does 2023 look like in terms of government policy?
While inflation is expected to subside globally, the word ‘recession’ will sit on the lips of many commentators in 2023. How will Rishi Sunak seek to claw back his losses in opinion polls? Does he steady the ship or take a more radical approach?
The answer is we do not currently know. Sunak’s political position in Parliament remains fragile, which could lead to more concessions to backbenchers, or even paralysis further down the road. We have seen commitments to immigration reform in late 2022 and rumours of anti-strike legislation in 2023 that will perturb the unions’ grip on the UK economy. All of this points to attempts to shore up the conservative’s devastating polling in the red-wall, which gifted them a substantial majority in the 2019 general election.
With a potential election looming in 2024, we may also see some reversion to delivering on domestic 2019 manifesto commitments. Levelling-up, upskilling and planning reform chief among them would be a favourable approach for many red-wall backbenchers. A big question will also be lessons that we have learned from recent international events such as the Ukraine War. Many MPs from all parties would like to see how the Prime Minister intends to prioritise the UK’s energy, manufacturing and food security, with a continued commitment to NATO and Ukraine’ struggle against Russia.
As we enter the final stretch toward the next election, one thing we do know is that backbench Conservative MPs will apply pressure on Rishi Sunak to make good on the current polling deficit by setting out his mission for the UK over the next two years.