Sunak gambles election on ‘feel-good factor’ from tax cuts
RISHI SUNAK is planning to hold a general election in the autumn so voters have time to feel the benefit of forthcoming tax cuts and an upturn in the economy.
The Prime Minister said yesterday that his “working assumption” was that he would trigger the vote for “the second half of this year”. Speaking on a trip to Mansfield, Notts, he said he wanted to “do more” on tax cuts after a reduction in National Insurance takes effect this month. It is understood No10 is considering cuts to inheritance and income tax in the Budget on March 6.
Mr Sunak’s comments also came after leading economists upgraded their growth forecasts and said interest rates were due to fall. Government sources said the Prime Minister was hoping that leaving the election to later in the year would leave longer for people to feel the benefit of any spring tax cuts.
Mr Sunak’s comments came after Goldman Sachs predicted that the Bank of England would begin a series of rate cuts in May, taking borrowing costs down from 5.25 per cent to three per cent by May 2025.
Quicker rate cuts will save mortgage borrowers £11 billion by the end of next year, giving them more money to spend elsewhere, the investment bank estimated. As a result, it said it expected the economy to grow by 0.6 per cent this year and 1.3 per cent next year, up from previous predictions of 0.5 per cent and one per cent respectively.
Andrew Goodwin, of Oxford Economics, said falling inflation and the prospect of an interest rate cut represented “the first step in the right direction after many wrong steps” for household finances. He added: “By the end of the year, people should feel a bit better off than they are now. They are still going to be a lot worse off than they were two or three years ago, but at least the backdrop will be slightly less unfavourable.”
“The Prime Minister is right to quash talk of a May election,” said one former special adviser. “The key question at any election for the voter is ‘do I feel better off?’”
The Prime Minister’s comments mean the election may not take place until October or November. However, he declined to rule out a May election categorically. He said: “So my working assumption is we’ll have a general election in the second half of this year and, in the meantime, I’ve got lots that I want to get on with.”
National Insurance will be cut by 2p from Saturday, saving the average employee £450 a year, and Mr Sunak said he wanted to do more on tax cuts.
“This Saturday, a big tax cut is coming in, every working person across the country is going to benefit from it,” he said. “It’s worth £450 to an average person in work on the average salary. We want to do more because, as we manage the economy responsibly, we can cut your taxes, give you and your family peace of mind, immediate relief from some of the challenges you’re facing and confidence that the future is going to be better for you and your children.”
Sir Keir Starmer, the Labour leader, said he wanted an election “as soon as possible”, and added: “This has serious implications for the country because he’s basically saying he’s going to be squatting for months and months in Downing Street, dithering and delaying.”