Recession warning puts another Sunak pledge at risk
Rishi Sunak has endured a difficult week for his five priorities thanks to falling GDP, rising national debt and an admission that there is no “firm date” for “stopping the boats”.
Friday brought news that the UK economy shrank between July and September, threatening his pledge to get the economy growing, while his policy on small boats remains in difficulty.
The five priorities have dominated the Prime Minister’s public appearances this year, after he promised in his new year’s speech to halve inflation, grow the economy, reduce debt, cut NHS waiting times and stop small boat crossings.
Saying there would be “no tricks, no ambiguity” on delivering the pledges, Mr Sunak asked the public to judge his Government on “results”.
Following the latest GDP figures, the PA news agency has looked at how his efforts to deliver on the priorities are going.
– Halve inflation
The Prime Minister has met his pledge to halve inflation this year.
Mr Sunak needed inflation to fall to below 5.4% in order to meet his target and the most recent figures showed this has been achieved, with inflation falling to 4.6% in October and again to 3.9% in November.
Economists suggested the fall in inflation was largely due to lower energy costs and rising interest rates rather than Government action, but Mr Sunak hailed the figures, saying he has “delivered” on his “top priority” for the year.
However, Bank of England governor Andrew Bailey sounded a note of caution, saying it is “much too early to declare victory” against inflation.
Despite the fall over the past year, Mr Bailey said inflation remains “too high” at more than double the bank’s target rate of 2%.
– Grow the economy
Friday’s revision to the UK’s growth figures has dealt a major blow to Mr Sunak’s pledge to grow the economy.
Growth was already set to be fairly weak this year at around 0.5%, but the ONS has now revised its previous estimates to suggest the economy did not grow at all between April and June, and actually shrank between July and September.
The changes mean the UK is at risk of entering a recession, especially as figures show the economy continuing to shrink in October.
The vagueness of Mr Sunak’s pledge does give him a little bit of leeway. It is not clear whether he meant the economy would grow over the entire year, or simply from the third quarter to the fourth, and it is still conceivable that one of these measures could be met.
But claiming a technical victory will be of little political use if the UK is in recession, and the overall economic picture is still one of stagnation.
– Reduce debt
It remains uncertain whether the Government will be able to reduce its overall debt by the end of the year.
Provisional figures for November, released on Thursday, suggest the total national debt stands at 97.5% – higher than it was a year ago when it stood at 95.7%.
Revisions to previous figures mean national debt has now climbed fairly steadily over the course of 2023, and underlying debt (excluding the Bank of England) has also increased.
Despite this, Mr Sunak has claimed to be reducing debt, earning criticism from UK Statistics Authority chairman Sir Robert Chote for claiming that “debt is falling”.
The picture is slightly complicated by the OBR forecasts, which suggest debt is on track to fall in five years’ time, and as with Mr Sunak’s growth pledge there is some vagueness that may allow him to claim success on this basis.
But for 2023, the picture is one of debt rising.
– Cut NHS waiting lists
On current measures, it appears as if Mr Sunak will fail to meet this target.
The number of people waiting for NHS treatment reached an estimated 7.71 million in October, around 7% higher than at the start of the year.
But the Prime Minister may still be able to claim some success as the overall waiting list fell in October for the first time this year after reaching a record high of 7.7 million in September.
If that trend continues towards the end of the year, he may be able to claim that he is finally cutting waiting lists, although the regular winter pressures on the NHS combined with renewed strike action may make this difficult.
The number of people waiting for very long periods before treatment has also fallen sharply, with those waiting more than two years down 85% since the start of the year.
Waiting lists of more than 18 months, 15 months and 12 months have reduced over the same period, though the number of people waiting more than 18 months has begun to creep up again.
Figures show an estimated 10,500 people were waiting more than 18 months for treatment in October, compared to just under 9,000 in August and 7,300 in July.
– Stop the boats
The Prime Minister has been forced to admit that there is no “firm date” for “stopping the boats”, despite making it one of his priorities for 2023.
A total of 29,437 people have crossed the Channel in small boats so far this year, and while this represents a reduction from 45,572 in the same period last year the crossings are still a long way from ending.
Challenged by select committee chairs at the House of Commons Liaison Committee on Tuesday, Mr Sunak said there is now no “precise” date for achieving this aim.
Meanwhile, the Rwanda policy, which Mr Sunak believes will be a strong deterrent to further crossings, remains in doubt as legislation to overcome the Supreme Court’s objections faces a difficult passage through Parliament.