If the next election were simply a referendum on the Conservative record since 2010, voters would evict Rishi Sunak from No 10. The next national vote won’t be a referendum, of course. It will be a choice between the two big parties. But economic slumps shunt most other policy issues to the margins. The Organisation for Economic Co-operation and Development’s warning that Britain will suffer a period of stagnation that no other leading industrialised country will experience in the next two years should see Labour even further ahead in the polls than it is today.
The Treasury and the Bank of England are cutting public spending and raising interest rates to cut demand in the economy. This will, both these institutions think, bring down inflation, but at the cost of increasing unemployment and poverty. Yet inflation has probably peaked. With workers unable to force up their real wages, there is no way of perpetuating the supply shock wave caused by Russia’s invasion of Ukraine beyond its initial blast. The Office for Budget Responsibility predicts that Britain will experience deflation for two years from 2024.
