Jeremy Hunt called a press conference on Friday to outline why the electorate should trust the Conservatives with the economy, but some of his claims appear to have used cherrypicked facts and figures. He gave his speech just over a week after the shadow chancellor, Rachel Reeves, accused the Conservatives of “gaslighting” the UK over the state of the economy by presenting too rosy a picture of what is actually going on.
Here are some of Hunt’s statements on the economy, and some context for his claims.
The UK economy is doing better than other countries, including the US, as it emerges from recession
Hunt appears to be basing this on just one quarter of GDP growth, which showed the UK economy had grown a modest 0.6% compared with the previous quarter. This is indeed better than the US’s 0.4%, and 0.3% in the eurozone. However, the bigger picture shows Britain has emerged from the pandemic in a much worse state of growth than other major world players. Figures from the House of Commons library show the UK’s real GDP growth is only 1.7% compared with its pre-pandemic level; it is 8.7% for the US and 3.4% for the eurozone.
Conservative governments have got the economy back on its feet after the shocks of the financial crisis, Covid pandemic and Ukraine-related energy shock
Hunt said the economy had suffered massive global shocks over the last 15 years. He highlighted the government’s help for families during the Covid years, as well as energy bill support during the price rises after the war in Ukraine began.
However, he failed to mention in his speech the Conservatives’ role in causing a bond market crisis and spike in mortgage rates, after the then prime minister Liz Truss and her chancellor Kwasi Kwarteng presented an unfunded budget. Many people are still feeling the effects of a cost of living crisis worsened by high interest rates and arguably the Conservatives’ management of Brexit.
Living standards grew by 1.3% last year despite the Office for Budget Responsibility predicting they would fall by more than double that amount
Hunt’s claim appears to be based on real household disposable income per head, which grew by 1.3% to £20,779 last year. However, this does not make up for the sharp fall in living standards that occurred during the pandemic, with real household disposable income per head still not back at the 2019 level of £20,963.
The OBR did recently revise up its projections for real household incomes, but in its report alongside the March budget it said: “2022-23 remains the fiscal year with the largest year-on-year drop in living standards since ONS records began in the 1950s”.
Inflation has fallen to 3% after hitting a high of 11%
Hunt is correct that inflation has fallen back to its target. But Torsten Bell, of the Resolution Foundation thinktank, points out in a new report that the UK’s inflation shock has been the largest in the G7, with 11 years’ worth (22%) of normal (2%) inflation occurring in three years.
Real wages have risen 10 months in a row
Real wages have indeed been growing, but this comes after a squeeze, with real wages down 2.3% since early 2021. Bell highlights in his same report that there is a large variation in people’s wage growth: lower earners have done better than higher earners, thanks to the minimum wage broadly keeping pace with prices; and there is a “big public/private split too, with public sector workers’ average weekly earnings falling 5.9% since the start of 2021 versus 1.6% in the private sector”.
The UK has 4m more jobs, more new jobs than nearly anywhere else in Europe
Hunt boasted about the UK’s employment record, with 4m new jobs having been created, but neglected to mention the record 2.8 million people who are not working because of ill health. The UK is the only country in the G7 where the share of the working-age population who are economically inactive is higher than before the pandemic.
Labour governments raise taxes, while Conservatives look to cut them
Hunt claimed Labour puts up taxes and Conservatives aim to reduce them, only raising taxes when they have no choice. Hunt acknowledged that the government raised taxes to help pay for the pandemic. However, he failed to acknowledge that the tax burden was rising from 2019, or that projections show the tax burden is on track to hit its highest level since 1948, driven by the freezing of income tax thresholds, as well as higher corporation tax.
Pensioners should trust the Conservatives to cut their taxes
Hunt rebutted Labour’s claim that the Conservatives’ ambition to abolish national insurance would lead to an end to the state pension as we know it, branding it “fake news” and a “lie”. But he also made the case that the Tories were the party of tax cuts for pensioners, without mentioning that cutting national insurance does nothing for this non-working age group.
