Rate hope as Bailey says economy is ‘moving in the right direction’
Tories slump to Liz Truss-low in poll on voters
TORY MPs suffered a fresh blow to their confidence yesterday when a YouGov poll suggested their party now has the support of just 19% of the public.
The last time the figure was so low was on the day when Liz Truss resigned as Prime Minister.
The survey also found Reform UK is now backed by 15% of the public, just four points behind the Conservatives.
Labour has opened up a 25-point lead with 44% of the vote, while the Lib Dems have 9% and the Green Party 8%.
If those figures played out at the next general election, the Tories would have just 36 seats in Parliament while Labour leader Sir Keir Starmer would enjoy an unprecedented majority of 398. Reform UK’s new MP Lee Anderson warned his former Tory colleagues: “The gap is closing.”
And his party’s honorary chairman, Nigel Farage, said the four-point gap between Reform UK and the Tories proves “this insurgency is far bigger than Ukip”.
Meanwhile, Tory Brexit stalwart Lord Frost warned his party’s “current strategy is not working and the situation is getting worse not better”.
The poll may hamper Mr Sunak’s attempts to keep his party unified.
The PM is understood to have told MPs at Wednesday’s 1922 Committee meeting that a “small number” of Tory rebels were making him angry. He also warned they “aren’t just harming me – they are harming every one of us in this room”.
Reform UK enjoyed a second boost yesterday when another Tory defected to the Right-wing insurgent party.
It announced Dan Barker, Conservative candidate for Manchester mayor, will now stand for Reform in a bid to beat Labour’s Andy Burnham at the election in May. The Tories have days to find a replacement.
ANDREW Bailey has hinted at interest rate cuts in the coming months as the Bank of England voted yesterday to keep borrowing costs unchanged for the fifth time in a row.
The Bank’s Governor said: “We’re not yet at the point where we can cut interest rates, but things are moving in the right direction.”
Economists are predicting that cuts could come as soon as June.
For the first time since September 2021, no one on the nine-person decision-making body that sets interest rates voted for an increase.
Encouraging
Eight members of the Monetary Policy Committee said rates should be kept at the current 5.25% level at least until it meets next time.
Policymakers maintained borrowing costs at 16-year highs yesterday despite inflation falling last month to 3.4% following its steepest drop since 1978.
Mr Bailey said he has seen “further encouraging signs” that inflation is coming down but added that policymakers have to be sure that it will fall back to its 2% target and “stay there”.
Victor Trokoudes, founder and CEO of smart money app Plum, said: “Market expectations are forecasting three cuts this year, potentially starting
in June. These cuts are estimated to bring the base rate to something like 4.5%.
“With similar downward inflation trends in the EU and US, it will be interesting to see which central bank makes the call first to start cutting rates.”
The Bank said it expected inflation to fall slightly below 2% by the summer but warned the conflict in the Middle East and disruption to one of the world’s busiest shipping lanes in the Red Sea posed “material risks” to prices surging again. It added its contacts had said the Red Sea situation had delayed shipments by two or three weeks from Asia to Europe and that container costs had risen. The Bank said: “The committee has judged since last autumn that monetary policy needs to be restrictive for an extended period until the risk of inflation becoming embedded above the 2% target dissipates.”
Prime Minister Rishi Sunak’s spokesman said: “With inflation dropping to 3.4%, real wages rising, mortgage rates starting to fall, there’s a clear sign the economy has turned a corner after the shocks of the last few years.”
The UK fell into economic recession at the end of last year, but in their report yesterday policymakers said growth was expected to return during the first half of 2024, with business surveys suggesting an “improving outlook”.
However, many mortgage holders are still under the cosh.
Sarah Coles, of Hargreaves Lansdown, said the average household with a mortgage has just £353 left at the end of the month.
She added: “A remortgage could easily swallow this whole.”