There’s a good reason voters aren’t thanking Rishi Sunak for falling inflation

Inflation is steadily falling and Rishi Sunak could yet meet his pledge to halve it by the end of the year. When he made the promise in January, it stood at over 10 per cent. It is now down to around 6.5. But according to a YouGov poll, Sunak is not being given credit by the public for the improving situation. Only 8 per cent of respondents credited Sunak with the more positive news on inflation, with the vast majority attributing the better outlook to tough decisions made by the Bank of England.

Even among Conservative voters, just 12 per cent cited government policy as responsible for the drop. The YouGov poll suggested most voters believe inflation has dropped because of external factors such as falling global oil and gas prices. More than one-third of the public said external factors were responsible, while 31 per cent said they did not know. The poll also showed voters overwhelmingly expect to become worse off in the next 12 months, spelling trouble for Tory hopes ahead of a general election expected next year.

Should voters be more grateful to Rishi Sunak?

In a word, no. The 8 per cent got it wrong. The Bank of England has most certainly done all of the heavy lifting to bring down inflation. Raising rates every month for the last year, so that the Bank of England base rate now stands at 5.25 per cent, is causing inflation to come down. It is also heaping misery on homeowners with mortgages to renew.

Should Sunak be more grateful to the Bank of England?

Yes, he should, but it’s only doing its job. Having interest rates set independently should be in politicians’ interests too. When the Liz Truss mini-Budget was directly blamed for a spike in mortgage rates, she never recovered. Making mortgages more expensive, potentially causing home repossessions, would be a lot harder for the Bank of England if it also had to face voters at the ballot box.

Should Sunak be getting any credit at all?

There are ways that governments can bring down inflation, but he isn’t really doing any of them. Inflation can only really be tamed by removing money from the economy. Increasing the amount of interest people pay on their loans is an effective way of doing it, which the Bank of England has done. But governments can also remove money from the economy, say, by cutting public spending or raising taxes. Both such measures are effective but neither has happened. Mr Sunak is instinctively against raising taxes and when it comes to public spending, millions of public sector workers have, over the last year, received below-inflation pay rises of 5 or 6 per cent.

Would Sunak agree he’s done nothing?

No, he wouldn’t. He has said that, while he isn’t raising taxes or cutting public spending, he is resisting political pressure to cut taxes, which would make the situation worse. He told ITV News last week: “I am hurting myself to help you.” Given the public is extremely aware of how unimaginably rich he is, this was not an especially wise thing to say.

But what he meant was that he is hurting politically by not giving his backbenchers what they want, which are tax cuts in time for the election, because he is acting in the wider, national self-interest by trying to bring down inflation.

Should Sunak be disappointed not to be given more credit?

A bit. Lowering inflation is the most urgent challenge for restoring the public finances. If inflation has indeed halved by the end of the year, it’s possible he will go into an election being able to claim he has guided the country through the worst of the economic storm. He may get credit for that.

Is there anything more he could do?

There’s one thing that would have an immediate and very positive impact and that would be to rejoin the EU single market but that is never going to happen. Not merely because Sunak is ideologically opposed to such an idea, but because it would be politically impossible even were he not. He and Jeremy Hunt have been quite successful in laying the blame for inflation on the aftermath of Covid and the war in Ukraine, which has indeed affected both food and energy prices. But the trouble with blaming global factors is that it draws attention to how those global factors appear to be affecting Britain far more than the US, and significantly more than France or Germany.

All serious economic analysis, such as that from economist Mohamed A El-Erian, has laid the blame on two almost uniquely British factors: the tightness of the labour market, caused by a post-Brexit exodus of foreign workers, and the difficulty in replacing them from outside the European Union; and post-Brexit frictions in importing goods, which are a consequence both of Brexit itself and the type of Brexit the government has pursued. They are, in other words, entirely self-imposed. There are ways to ameliorate this damage. He has not done enough.