The Bank of England’s inflation target was not met, despite Wednesday’s release of headline inflation figures showing a return to more normal levels. Despite this, the Prime Minister has decided to call for an election based on these figures and the stronger than expected exit from recession.
It is unusual to link an election launch to economic statistics, but the PM seems confident in the economic turnaround story to tell the nation. However, underlying measures of inflation, especially in the service sector, remain high at just below 6%, making a Bank of England rate cut during the campaign less likely.
The PM’s pitch will focus on guiding the country through the global crisis with economic support for jobs and bills in order to encourage voters not to “risk the recovery”. The Conservative party plans to promote a vision of a high tech economy with digitized public services, a smaller state, and lower taxes.
On the other hand, Labour plans to fight the election on economic grounds as well. They will emphasize that blame for high prices and mortgage rates lies with the current government and that many families do not feel the effects of the economic turnaround. Labour will push for more green investment, house building, and public money for steel communities.
The campaign is likely to revolve around economic arguments, with both parties taking credit for returning
