UK election speculation mounts in wake of budget

Andrew Hammond

The annual spring budget statement in the UK is always a major national political and economic event. However, Wednesday’s fiscal announcements assumed even higher importance than usual, coming ahead of what may be an imminent general election.
There is growing speculation that Prime Minister Rishi Sunak will throw his normal caution to the wind and this month call the big ballot for May 2. This is the same day as local elections are held across much of the country. In last year’s local elections, the Conservatives lost – for the first time in more than two decades – the mantle as the biggest party in English councils and a further rout looks likely on May 2. If the Conservatives lose big, then it will only intensify the political pressure on the prime minister’s position and he may even face a leadership challenge from within his own party.
By calling a May general election, it is also plausible that Sunak could avoid a new by-election in the Northern English constituency of Blackpool South following the recent suspension of Scott Benton from the House of Commons. The Conservatives would defend a small majority of 3,690 votes over Labour in such a ballot. A by-election there would be the fourth such special ballot held this year. And a Conservative defeat would be the 11th time the party has lost a seat in a by-election since the start of this Parliament in 2019, further undermining Sunak’s standing in his party and the country.
In this context, UK Finance Minister Jeremy Hunt announced new personal tax cuts in Wednesday’s budget – a fiscal event that was brought forward by the government unusually early. Yet, despite the media headlines, Hunt’s announcements are unlikely to fundamentally change the UK’s political weather. In part, this is because voters are increasingly recognizing the poor state of public services and that further investment is needed in them. Many think tanks, including the independent Institute of Fiscal Studies, have particularly highlighted the challenges facing the health service.
Moreover, the consensus among economists is that the economy is likely to be weak for the foreseeable future. For instance, Andy Haldane, the former Bank of England chief economist, has said that Wednesday’s budget will be insufficient to inspire growth, as too many people are still feeling poorer due to the overall tax take going up and interest rates remaining above 5 percent. These economic headwinds make for what he called another year of “sogginess.”
Other economists, including Sanjay Raja at Deutsche Bank and Kallum Pickering at Berenberg Bank, have similar views. Raja stated that the macro backdrop for the UK economy will prove challenging in 2024, while Pickering pointed to the fact that the nation is struggling to meet demand due to weak supply, as indicated by stalling real gross domestic product. So, if Sunak does call an election for May 2, he will be taking an unusually big gamble. This is not least given that the Conservatives are so far behind in the polls.
According to the most recent Electoral Calculus forecasts, the probability of a Labour majority in the House of Commons is 95 percent. Meanwhile, the likelihood of Labour being the largest party is 99 percent. While the polls may tighten in the coming weeks, the direction of travel appears clear. Almost a decade and a half since the Conservatives first took power in 2010 and five prime ministers later, via David Cameron, Theresa May, Boris Johnson, Liz Truss and now Sunak, the party looks increasingly tired and divided. In recent years, there has been a massive amount of churn within senior ministerial positions. Since 2015, for example, the four so-called great offices of state (prime minister, finance minister, home secretary and foreign secretary) have changed hands a total of 23 times. The independent Institute for Government think tank said such ministerial turnover is “very damaging” and means that ministers focus on “quick wins” rather than long-term policymaking.
In part, this is why Sunak has shown some signs of wanting to defer the general election until after the summer, with the last date he can legally hold it being January 2025. In the meantime, he will hope that the nation’s economic fortunes will improve. In particular, he hopes that inflation might fall back to the 2 percent target. History shows that Sunak and other recent “tail-end” prime ministers (beleaguered politicians who come into office at the end of a long period of rule by their parties) tend to put off big ballots as long as possible. This was true of previous Conservative PMs Alec Douglas-Home and John Major, who called the ballots in 1964 and 1997, respectively, very close to the last possible legal date.
Despite the huge diversity of past tail-end premiers in terms of backgrounds, beliefs and styles, a common pattern is that – despite their various talents – they have ultimately proved unable to stop the turning of the political tide against them. After multiple years in office, there is growing momentum for the opposition party, which eventually proves insurmountable.
The fact that Sunak’s attempt to win a fifth straight term for the Conservatives would defy political history is also shown in the growing numbers of the party’s MPs (59 at the time of writing) to announce their retirement from politics. So, it appears unlikely that the government will be able to regain sustained, significant political momentum.
Taken together, this is why Sunak’s time as prime minister is so perilously positioned. No matter if he goes long or short on the election date, the political winds are blowing against the ruling Conservatives and their chances of winning another electoral majority in the House of Commons look slim.