Economy doing well? No, Prime Minister, you are just out of touch
Rishi Sunak, on his way to a G7 summit in Japan yesterday, said the UK economy was doing well. Unsurprisingly, this elicited protests at home and an allegation that he is out of touch with reality
When was the last time Prime Minister Narendra Modi took questions from journalists or replied to questions on the economy? His British counterpart Rishi Sunak did take questions on board the plane yesterday evening. He claimed there, as PM Modi too often does, that the economy of his country was looking up, and indeed doing well, despite inflation and high costs of living.
Labour’s Treasury spokesperson James Murray was quoted by The Guardian as saying, "Almost every word that comes out of the prime minister’s mouth shows how utterly out of touch he is and disconnected from the reality of life for working people in our country."
Murray was reacting to Sunak telling reporters, "Economic optimism is increasing, consumer confidence is increasing, growth estimates are being raised."
To be fair, Sunak did acknowledge that official figures for real household disposable income growth had been'‘very pessimistic'—but added that they were now "hugely" better than predicted.
Andrew Bailey, the Bank of England governor, however warned that the central bank would continue to increase interest rates—already at 4.5%, the highest rate since 2008—if there were signs that inflation was persistent. He blamed higher food prices and the tight labour market for the inflationary pressure.
The British PM acknowledged that things felt "tough" for families, an admission that the Indian PM rarely makes, but highlighted the government’s contribution to energy bills. Sounding a positive note on the economy, he said two surveys of business leaders showed "enormous confidence" in the UK.
Sunak cited cheaper prices of beer and sanitary products to support his claim that the economy was looking up and that Brexit was working for Britain. His comments came even as three global carmakers called upon UK to renegotiate the Brexit deal which, they warned, threatened the British automobile industry.
Typical household disposable incomes in UK were on course to be lower by the end of 2027 than they were during the COVID pandemic—this was the forecast from the Resolution Foundation, an independent British think tank, in March.
Huw Pill, Bank of England’s chief economist, also weighed in last month to say that people needed to accept that they were poorer.
Average living standards in the UK have been broadly stagnant since 2007.
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