Rishi Sunak falls flat, amid Tory leadership challenge talk

And, given how low he has set the bar on matters economic during his years as chancellor and now as prime minister, that is quite the feat.

Amid a flurry of chatter around the possibility or otherwise of a leadership challenge, Mr Sunak on Monday delivered a speech at the Business Connect conference at the Manufacturing Technology Centre in Coventry.

To say it was uninspiring would be a gentle euphemism.

Mr Sunak talked about the “promise of entrepreneurship” and conceded this had “come under strain”.

Apparently, however, that has been in no way the fault of the Tories.

Mr Sunak, telling a typical Tory tale that evoked memories of Margaret Thatcher, declared: “Now, I grew up in a small business. When I wasn’t at school, I’d work in mum’s pharmacy, serving customers, doing the bookkeeping, cleaning the shop.

“Our pharmacy shaped my beliefs about the economy. That pharmacy was ours; we owned it; we had a stake in its success. If we worked hard and took pride in our work and provided a good service, business would improve. If we didn’t, it wouldn’t. And that’s how it should be - that’s the promise of entrepreneurship.”

Then, giving his version of how things had “come under strain” for people building and running businesses in the UK in recent times, Mr Sunak said: “Covid, war in Ukraine, inflation, all caused major disruption, and drove up the cost of doing business.”

No mention of the Tory hard Brexit, which is viewed by experts as a major contributory factor to the UK’s inflation woe.

The Centre for Economic Performance at the London School of Economics and Political Science last May updated its analysis of Brexit’s effect on food prices.

This paper from Jan David Bakker, Nikhil Datta, Richard Davies, and Josh De Lyon observed: “The cost of Brexit to each household now stands at £250 when only considering the impacts on food since December 2019. This aggregates up to £6.95 billion overall for UK households.”

And that is just the extra Brexit bill for food. Brexit has of course fuelled inflation across the board.

James Moberly and Sven Jari Stehn, economists at heavyweight investment bank Goldman Sachs, declared in February: “The UK has significantly underperformed other advanced economies since the 2016 EU referendum, with lower growth and higher inflation.”

Former Bank of England Governor Mark Carney said last summer: “We laid out in advance of Brexit that this will be a negative supply shock for a period of time and the consequence of that will be a weaker pound, higher inflation and weaker growth. And the central bank will need to lean against that.

“Now that’s exactly what’s happened. It’s happened in coincidence with other factors, but it is a unique aspect of the economic adjustment that’s going on here.”

Yet Mr Sunak did not mention Brexit in the context of the “major disruption” he flagged. In fact, he never mentioned the “B” word at all, even though this is a flagship policy of the Tories.

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Of course, from a political perspective, this is no surprise at all, although it is perhaps worth dwelling briefly on the fact that the prime minister did not even try to come up with a Brexit benefit. Such benefits, of course, remain conspicuous by their absence but that has not stopped the Tories’ fantastical tales over the years.

And what of the “major disruption” caused by Brexit not only through fuelling inflation but also the ending of frictionless trade between the UK and its biggest trading partner? And then, of course, there is the fact that the ending of free movement of people between the UK and European Economic Area has fuelled greatly the country’s skills and labour shortages crisis.

Mr Sunak made a big deal in his speech of the Tories cutting national insurance rates.

And he once again appeared to attempt to claim credit for the Tories when declaring that inflation had “more than halved” and was “falling fast”.

Annual UK consumer prices index inflation has fallen from a 41-year high of 11.1% in October 2022 (to 4% at last count). We should bear in mind that 4% is still double the target rate and that the sky-high inflation already suffered by households and businesses is fully baked in. Prices and costs are not falling, just rising at a slower but still very significant rate.

As outlined, the Tories have fuelled inflation with their hard Brexit. They also propelled it higher by failing to keep a lid on household electricity and gas bills.

So it remains easy to see how the Conservatives fuelled inflation.

In terms of them claiming credit for tackling inflation, the Bank of England has independence in setting monetary policy.

And the Bank’s 2% target for annual CPI inflation has been unchanged since long before the Conservatives came to power in 2010.

Mr Sunak declared that UK economic growth had been “higher than anyone expected”.

That might suggest to people some kind of strength.

However, the UK economy tumbled into recession in the final three months of last year with a second consecutive quarterly fall in output.

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The UK economy grew by just 0.1% last year.

And it is projected by the International Monetary Fund to record the second-weakest growth among the Group of Seven leading industrialised nations this year.

The UK is expected by the IMF to expand by just 0.6% in 2024, marginally ahead of the 0.5% growth forecast for Germany.

France is projected by the IMF to grow by 1% in 2024. The US is forecast by the IMF to expand by 2.1% this year.

Mr Sunak declared on Monday that UK national debt was “on track to fall”.

This was, to be fair, somewhat more precise than his declaration late last year, analysed by charity Full Fact, that “we have indeed reduced debt”.

Charity Full Fact said late last year of the Conservatives’ claim that the UK Government is delivering on Mr Sunak’s pledge to reduce national debt: “Whether or not this is correct depends on how you interpret the pledge the Prime Minister made this year (2023) regarding the national debt. Neither underlying debt nor overall debt has fallen in the past year. However, both are forecast to begin falling as a percentage of GDP in the latter half of the decade.”

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Mr Sunak told his audience in Coventry that the Conservatives’ plan is “starting to work”.

He talked about the UK Government “absolutely moving in the right direction”.

The Conservatives, in recent years and decades, have shown plenty of brass neck in portraying their incompetence on the economy as some sort of prowess.

Now the best Mr Sunak can muster is about the Tory plan “starting to work” and “moving in the right direction”. It should be noted of course that it does not appear as if either of these things is actually happening. However, it perhaps says it all that these declarations were as far as Mr Sunak decided to push the Tory tall tale on the economy before a business audience, some of which, you might well imagine, will have been far from impressed by what the Conservatives have delivered.