2024 general elections: The economy will be the main battleground | Business News

“It’s the stupid economy.” This was, famously, the maxim of Bill Clinton’s campaign team in 1992.

The point is that, despite all the noise, fury and politicking during an election campaign, most people end up voting with their wallets.

And, in fact, in practically all electoral campaigns in recent history, the winning candidate tends to be the one in whom the economy has the greatest confidence.

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Prime ministers, and for that matter US presidents, struggle to win re-election when the economy is doing badly – they tend to win when everything is going well, when gross domestic product is expanding, when inflation is low, when rates interest rates are falling. falling instead of rising.

And in a sense, this helps explain why the prime minister called elections at this time.

This morning we have just learned that the annual inflation rate has fallen to 2.3% – the lowest since 2021. The economy has now emerged from recession, with stronger than expected growth of 0.6%. The Bank of England is close to cutting interest rates.

The problem, of course, is that in many other respects economic history is not especially rosy. The annual inflation rate may have fallen to more or less “normal” levels, but looking back a little further, it is still much, much higher than it was a few years ago.

Living standards, as measured by real household disposable income, have fallen faster in this parliament than in any previous parliament. In fact, this is the only parliament since 1955 that has seen such a fall. If someone wanted to ask themselves: Do you feel better than you did five years ago? Well, the answer isn’t especially encouraging for Rishi Sunak.

But to what extent this is actually down to the Prime Minister (or, for that matter, his predecessor, Liz Truss) is a more complex question than some would have us believe.

Most of Europe faced a somewhat similar experience, as first the pandemic and then the energy price shock that coincided with Russia’s invasion of Ukraine wreaked havoc on their economies. Britain is not exactly alone, even if there are some aspects of recent politics – most notably Brexit – that may have further depressed UK trade.

However, public finances present an equally complex and nuanced picture. On the one hand, the national debt and tax burden are considerably higher today than they were at the last general election in 2019 (in fact, the tax burden is at its highest level since the 1940s). Again, the cost of the licensing regime and energy price guarantees are a big part of the explanation, and these policies are unlikely to be especially controversial.

The Conservatives will argue at the election that they are starting to sort out the mess and that they are more trustworthy than the Labor Party. It remains to be seen whether this strategy will be successful.

But in the coming weeks we’ll start to learn a little more about each party’s economic plans – and we’ll bring you all the analysis as those plans become clearer.