Rishi Sunak or Liz Truss? Whoever wins faces a bleak economic outlook
Britain has a chequered economic past so it is not exactly unusual for new prime ministers to take over at times of crisis. It is hard, though, to think of a premiership in recent times that has begun with the skies as dark as they are today.
Liz or Rishi? Tax cuts now or later? In a sense, it doesn’t really matter because whoever takes over from Boris Johnson will be handed one heap of problems.
Harold Wilson took up the reins in 1974 when the country was on a three-day week and inflation was rife. Wilson handed over to Jim Callaghan in 1976 just as a sterling crisis was about to erupt. When Margaret Thatcher defeated Callaghan three years later, it was in the aftermath of the winter of discontent and with inflation on the rise.
Liz Truss or Rishi Sunak will be confronted with a mix of all these problems. Inflation is high and rising. Energy bills will rise sharply for a second time this year in October. A summer of strikes has only just begun. Sterling looks vulnerable on the currency markets.
Wilson and Thatcher at least had the comfort of knowing they had a full parliamentary term to straighten things out. Truss or Sunak will not have that luxury. One or other of them will take over in mid-term, with living standards crashing and not much time to impart a feelgood factor.
The economy is not exactly in recession, at least in the technical sense of experiencing two successive quarters of negative growth, but is showing all the classic signs of heading for a downturn over the coming months.
Retail sales are down almost 6% year on year. Consumer confidence is at its lowest in almost half a century. The latest purchasing managers’ index last week showed manufacturing output contracting and the service sector expanding at its
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