This week there has been an intense battle for narrative between Labour and the Conservatives on the economy. While Conservatives have sought to downplay the ‘declinism’ that predicts the UK economy’s weak 2023 performance, Labour have capitalised on the headlines with arguments that the economy is burdened by 13 years of Conservative administration.
To kick the week off, the IMF published a gloom-ridden report placing the UK bottom of the 2023 economic growth table. In the report, the IMF said it expects the UK to shrink by 0.6% in 2023, the only G7 country to experience negative growth that’s even lower than Russia’s forecasts. The opposition naturally jumped on the report, highlighting that Conservative austerity policy over the last 13 years has hampered the UK’s economic growth - which outlined will have a knock-on effect on delivering sound public services. The report was well timed with Labour’s international trade conference which brought together Shadow frontbenchers and industry big-whigs to hear Keir Starmer’s plan for delivering growth through global enterprise. The Conservatives however, were quick (and arguably correct) to remind UK voters that the IMF does not have the best (in fact, quite a terrible) track record in forecasting the UK’s output.
Enter, the Bank of England, which this week raised baseline interest rates in the UK from 3.5% to 4%. The UK’s central bank has drawn wide cross-Party criticism over its failure to anticipate inflation and put in steps to mitigate its effect on the nation’s economy to date. However, this week, the Bank of England gave us a nice ray of economic sunshine. In its report confirming the rates rise, the Bank also said that the UK now looks to be reaching its inflationary peak which will soon rapidly decline, with a UK recession shallower and shorter than expected. Many analysts predict that, as many countries continue reshoring energy away from Russia in 2023, that inflation will leave as quickly as it came. While inflation will leave behind far higher prices than we had two years ago in its destructive wake, it does seem that this will slow heavily in 2023. This will lead to lower interest rates, incentivising borrowing once again that could result in better growth for the UK come 2024.
This week also saw the Prime Minister reach his 100 days in office. A poll released by the New Statesman gave Sunak a -18% favorability, the lowest of any recent PM after their first 100 days. Given that the country is currently plagued by the COVID-19 hangover and the war in Ukraine which both continue to drive-up inflation and drive-down growth, there are arguments that -18% favorability is not too disastrous. Could this be the electorate giving Sunak credit for having to manage issues that pre-date his tenure?
In this week's PMQs, the PM did not look too downtrodden. In fact, many commentators observed that he had a lot of fight for a PM currently under fire for sleaze in his Party and economic troubles. In an old school ding-dong on Wednesday afternoon, the likes of which we have not seen much of during recent PMQs, the PM and the Leader of the Opposition, Sir Keir Starmer each took very few prisoners. Starmer attacked the Prime Minister over his failure to get a grip on sleaze, particularly accusing him of showing weakness towards the 24 bullying claims against the Justice Secretary and Deputy PM, Dominic Raab. Rishi Sunak, playing the Uno-reverse card on Keir Starmer, then punched back on the Leader of the Opposition's failure to take grip the trans-row currently engulfing the Party, highlighting the Canterbury MP Rosie Duffield’s comment which stated that being the Labour Party was like ‘an abusive relationship’.
What better way to round-off the working week than with a good political skewering from Piers Morgan? That’s what viewers got yesterday evening on Talk TV as Rishi Sunak went toe-to-toe with the veteran broadcaster to defend his first 100 ways record. On the agenda was Sunak’s five priorities which he has set himself to determine success in 2022. Mr Sunak was also grilled on his finances as well as trans rights. The PM was praised by loyalists for facing the music and not dodging media scrutiny. Beyond that however, the interview does not appear to have received the cut through that the PM was after.