Is everything coming up (red) roses for Keir and Rachel economically speaking?
Their predecessors, Tony Blair and Gordon Brown, famously inherited a rapidly improving economic outlook after the hard yards under Tory Chancellors Norman Lamont and Ken Clarke.
In fact the public finances were then in such good health that New Labour was able to run a fiscal surplus for a couple of years — by 2002 the national debt had fallen to just 29% of GDP. Compared with that, the coffers for the next administration are painfully bare.
But the background economic tone does seem to be noticeably improving. Much will rest on the precise level of the Consumer Prices Index (CPI) when it is revealed tomorrow. Never has so much depended on one tenth of a point.
A fall back to the 2% inflation target rate for the first time since July 2021 will be a huge psychological boost, generating the sort of positive headlines that feed through to the national mindset.
A miss, even by 0.1%, will be followed by new talk of “sticky” inflation, delays in interest rate cuts and general pessimism. No pressure, ONS. Nevertheless the turnaround in mood is palpable.
According to Kantar today, 36% of households feel financially “comfortable”, the highest proportion for two and a half years.
The insolvency data showed the number of companies going bust and individuals going into bankruptcy is no longer rising. None of this will help Rishi Sunak much, the decision about his party’s fate was taken in autumn 2022 when Liz Truss and Kwasi Kwarteng blew its reputation on economic competence for a decade.Just as Black Wednesday and the ERM fiasco did back in the Nineties.
What the country really does not need is the markets running “frit” when Labour win on July 5, ushering in a new period of unsettling instability.
The work done by Rachel Reeves in reassuring business and the increasingly promising economic outlook should ensure that does not happen
