UK Conservatives’ 14 years of economic unrest

Britain’s Prime Minister and Conservative Party leader, Rishi Sunak delivers a speech during the launch of the Welsh Conservatives General Election manifesto on June 21, 2024, in Rhyl, as part of a Conservative campaign event in the build-up to the UK general election on July 4. (Photo by Leon Neal / POOL / AFP)

London, United Kingdom — Britain’s Conservatives are expected to lose the July 4 general election in large part because of economic turmoil from Brexit, high taxation and a budget that exacerbated a cost-of-living crisis.

The fallout has overshadowed widespread praise for the Tories’ huge financial support provided to millions of Britons during the Covid pandemic.

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State subsidies then followed as energy bills soared after key oil and gas producer Russia’s invasion of Ukraine.

Those lifelines contrasted markedly with 2010, when the party won power and imposed sweeping austerity measures, initially in a five-year coalition with the centrist Liberal Democrats.

Polls widely forecast that Prime Minister Rishi Sunak’s party will lose the upcoming vote to the main opposition Labour party, led by Keir Starmer.

Growth 

Britain’s economy has suffered “a decade and a half of stagnation” that resulted in a “toxic combination of slow growth and high inequality”, according to the Resolution Foundation think-tank.

“The overall growth picture has been weak,” its research director James Smith told AFP.

“A lot of that is international: the impact of the financial crisis, pandemic, inflation, shock growth, but the UK has performed worse” than other G7 nations, he added.

The 2008 global financial crisis, when Labour was in power, slammed the UK economy, sparking a painful recession as costly banking bailouts later gave rise to growth-sapping austerity under the Conservatives.

Brexit, Covid, Ukraine

UK gross domestic product suffered a record annual contraction of 10.4 percent in 2020 while national debt soared owing to the Covid pandemic.

Yet the UK government’s furlough program, fronted by then-finance minister Sunak, heavily subsidized millions of workers’ wages in the public and private sectors.

READ: As election looms, BoE set to sit tight on UK interest rate

The economy rebounded in 2021 after lockdowns were lifted, but slowed sharply in 2022 as energy prices skyrocketed in the wake of Russia’s invasion of Ukraine.

Activity was also scuppered by Brexit, backed by former premier Boris Johnson and which saw Britain leave the European Union in full at the start of 2021.

Brexit promised economic prosperity yet sparked trading chaos and labor shortages — hiking costs for many businesses.

“The Covid pandemic and (Vladimir) Putin’s invasion of Ukraine… provided a convenient figleaf that disguises the clear economic cost of Brexit,” said economics professor Andre Spicer at City, University of London.

Mini-budget

The Conservatives were slammed in late 2022 by the mini-budget of Liz Truss — Johnson’s successor — which included unfunded tax cuts that spooked markets and tanked the pound.

It also sent interest rates soaring, ramping up costs for homeowners seeking to refinance — and exacerbating the cost-of-living crunch.

The mini-budget sank the chaotic premiership of Truss, who lasted just 49 days before she was replaced by Sunak.

Heading into next month’s election, Britain’s economy remains fragile after recently exiting a short-lived and mild recession.

Tax 

Traditionally regarded as a party of lower taxes, the Conservatives have ramped up duties during their time in office, particularly in recent years to help fund vast Covid expenditure and to fix the mini-budget fiasco.

The UK’s overall tax burden has accelerated sharply over the past six years, hitting the highest level since 1948, according to the Institute for Fiscal Studies think-tank.

While Sunak recently lowered national insurance — a tax on jobs to fund state pensions, healthcare and unemployment benefits — his fiscal policies and those of his predecessors have seen millions dragged into paying higher rates of income tax.