UK feelgood factor will be stronger in autumn, claims Hunt
JEREMY Hunt said the “feelgood factor” of interest rate cuts would be stronger in the autumn, in an apparent hint at the timing of the general election.
The Chancellor insisted that “there’s all to play for” in the upcoming national vote, despite the Tories’ dire poll ratings, as it was “a choice about the future” and not “a referendum on how you feel right now”.
Speaking to Bloomberg TV during a trip to New York, he said: “The feelgood factor as interest rates start to come down, as people start to feel higher real disposable incomes, will be stronger in people’s minds come the early autumn than it is now.
“People have been through a very bruising period. Obviously decisions about election timing are for the Prime Minister.
“And were we to have an October election, as I’ve said before, it would be possible to have a fiscal event in September, but we would decide much nearer the time whether that was the right thing to do.”
Rishi Sunak has said he intends to call an election in the second half of the year, with October or November seen by many as the favoured period.
The latest possible date until which he could delay the poll is January 28, 2025.
But a disastrous set of local elections in May could force his hand, either by leading to a challenge to his leadership or by persuading him that an earlier polling day could be a better solution than limping on with a divided party.
The latest poll from Savanta for The Telegraph, based on interviews with 2,221 people, put Labour on 43% of the vote with an 18-point lead over the Conservatives on 25%.
Asked about the Tories’ poll deficit, Mr Hunt said: “I’d be very cautious about looking at those polls, because, first of all, as we can see from the challenges facing governments, not just in the UK, but in the US, Germany, France, the electorate have been through a really difficult period with an energy shock, with high inflation, with a pandemic.
“But when it comes to a general election, it’s a choice about the future. It’s not a referendum on how you feel right now. And that becomes a very different decision in people’s minds. And we know in the UK that around a fifth of voters have not yet made up their mind who they’re going to vote for. So we think there’s all to play for.
“And what we’re seeing now is much more positive data beginning to come through, very good prospects for the UK, as confirmed by the IMF today.”
UK INFLATION slowed slightly less than expected last month, leading to City economists and investors trimming their forecasts for interest rate cuts this year.
Official figures showed that inflation dipped in March to its lowest level since September 2021, driven by slower increases for food prices.
The Office for National Statistics (ONS) said Consumer Prices Index inflation stood at 3.2% in March, down from 3.4% in February.
It showed a slowdown in the rising cost of living, but was still above the 3.1% reading expected by a consensus of experts.
The data, which also showed higher-than-expected services inflation, came after the ONS revealed on Tuesday that wage growth is also stronger than expected, after a 6% rise in the three months to February.
As a result, many City economists pushed back their forecasts for reductions to interest rates.
UK interest rates currently sit at a 15-year high of 5.25% after hikes by the Bank of England in an effort to quash inflation.
Experts at ING and Pantheon Macroeconomics were among those who earlier this week predicted rate-setters at the Bank would start cuts in June, but said they now expect this to happen later in the summer, most likely at the Monetary Policy Committee’s August meeting.
ING’s James Smith said the data “all but rules out a rate cut in May, and if we’re right that April’s data proves stickier than the Bank is expecting, then we think that would drastically reduce the chances of a cut in June, too”.
Meanwhile, the often volatile financial markets were even more pessimistic, pricing in that rate cuts
WALES has the unenviable record of having the lowest employment rate and highest level of people classed as being economically inactive of any nation or region of the UK.
Latest quarterly figures from the ONS, for December to February this year, shows only 69.1% (1.4 million) of working-age adults, aged 16-64, in Wales are in employment. The number in employment declined 42,000 on the quarter and 14,000 compared to a year earlier.
For the UK as a whole the level was 74.5%. In England it was 74.9%, Scotland 74.2% and Northern Ireland 71.7%. The highest rate was in southeast England at 78.3%. will only begin in November.
Prime Minister Rishi Sunak said the figures show “that after a tough couple of years, our economic plan is working”, although the reduction in inflation is primarily linked to interest rate rises by the Bank of England and changes to global price pressures.
The drop was heavily linked to a
Wales also has the highest number of working-age adults categorised as being economically inactive at 28.1%, compared to 22.1% for the UK as a whole. England has a rate of 21.7%, Scotland 22.6% and Northern Ireland 26.7%. The lowest rate is in the south east of England at 18.4%.
The total number of economically inactive in Wales is a huge 535,000, which is the equivalent of the Principality Stadium being filled to capacity seven times. Over the quarter the number of economically inactive in slowdown in food price inflation, which was also its lowest for more than two years.
ONS chief economist Grant Fitzner said: “Inflation eased slightly in March to its lowest annual rate for two and a half years.
“Once again, food prices were the main reason for the fall, with prices
Wales rose 37,000 and 54,000 on the year.
The economic inactivity rate, which includes students and those on longterm sick, is the proportion of people aged 16 to 64 who are not in the labour market – defined as not seeking work within the last four weeks, or unable to start work in the next two. For the UK as a whole there are 9.4 million economically inactive.
Enterprise academic Prof Dylan Jones-Evans said: “Simply put, Wales has less people in employment than the rest of the UK and more people out of the economy. Given this, the question is, what are the UK and Welsh governments going to do to rising by less than we saw a year ago.
“Similarly to last month, we saw a partial offset from rising fuel prices.”
Inflation for food and non-alcoholic drinks dipped to 4% for the month, from 5% in February, to reach its lowest level since November 2021.
The increased slowdown was partly driven by a fall in meat prices and address this, as the jobs situation is quickly becoming a serious problem for the future of the Welsh economy?”
The only positive from the latest data, although up on the quarter and a year earlier, is that the unemployment rate in Wales of 3.7% (55,000 people) is below the UK average of 4.2% (1.4 million). The number of unemployed in Wales was up 7,000 on the previous quarter and 3,000 on the year.
The ONS, though, has warned that the unemployment rate data should still be treated with “caution” as it continues to overhaul its labour force survey due to low response rates, with the full revamped version not due to