Boris Johnson wants tax cuts – but can he deliver them in time?
Petrol heading for £2 a litre. A £100 bill to fill the average family car with fuel. A warning from the west’s leading thinktank that only Russia of the world’s 20 leading economies will have weaker growth than the UK next year.
Boris Johnson might have hoped for easier weeks to begin his political fightback. A pickup in the economy is vital if the prime minister is to cling on to his job after 148 of his MPs said they lacked confidence in him. Things are not going to get any easier for some time to come.
Speaking in Lancashire earlier this week, the prime minister said voters could be “confident that things will get better, that we will emerge from this a strong country with a healthy economy”.
By “this”, Johnson meant a cost of living crisis that has put paid to hopes of a speedy recovery from the pandemic, a crisis that pushed state borrowing to levels never seen before in peacetime, and taxes as a share of national output to their highest since the 1940s.
Russia’s invasion of Ukraine has meant the outlook has deteriorated over the past three months and the message from Rishi Sunak to his fellow cabinet ministers is that Britain faces challenging times. It will be next year before the economy’s prospects show signs of improving and the coming months look particularly difficult.
Rising petrol prices will make the cost of living crisis worse. The squeeze on living standards will dampen consumer spending at a time when business confidence is weak. A summer of stagflation looms and that, according to some analysts, means the threat to Johnson has not gone away.
Kallum Pickering, a senior economist at Berenberg, said: “The risk of a worsening economy over the summer, as well as bad results in upcoming byelections such as in West
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