Rishi Sunak insisted reducing UK inflation remains his top economic priority, as the prime minister struggled to counter accusations his government is failing to help Britons struggling with soaring mortgage costs.
(Bloomberg) — Rishi Sunak insisted reducing UK inflation remains his top economic priority, as the prime minister struggled to counter accusations his government is failing to help Britons struggling with soaring mortgage costs.
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During a heated session of Prime Minister’s Questions, Sunak was repeatedly attacked over his Conservative government’s economic record. Inflation reached a four-decade high of 11.1% last year and remains at 8.7%, while traders are pricing in the possibility the Bank of England will raise the key lending rate to 6% by February — the highest in more than two decades.
It is sensitive political ground for Sunak, not least because the Tories have been engaged in yet another bout of infighting involving former Prime Minister Boris Johnson in recent days — allowing political opponents to portray the party as ignoring voters’ struggles while it tries to settle old feuds.
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But beyond the ugly spats, Sunak is also unable to show that his economic priorities — to halve inflation this year and spur growth — are working. On Wednesday, he insisted his government is “on track” even though inflation remains stickier than the central bank and economists expected at this point.
Economic growth also remains anemic, with the 0.2% expansion for 2023 in the latest Bloomberg survey putting Britain on course for the weakest performance except in Germany among Group of Seven countries.
Sunak was speaking on the same day HSBC Holdings Plc told brokers it will raise prices on UK residential and buy-to-let mortgages starting Thursday, its second increase in under a week.
That gave Stephen Flynn, the Scottish National Party’s leader in Westminster, the chance to quote an old Sunak attack on Liz Truss — that soaring mortgage rates would “tip millions of people into misery” and “mean we have absolutely no chance of winning the next election” — straight back at him.
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“Given that mortgage rates continue to rise, does he still agree with his own electoral analysis?” Flynn asked Sunak.
The premier also came under fire from Labour Party leader Keir Starmer, who warned that “millions of mortgage holders will pay thousands of pounds more next year.” Labour wants to make higher mortgage costs a key campaign theme ahead of a general election due by January 2025.
With opponents smelling blood, Sunak’s retort that the UK is doing better than elsewhere did little to lift the mood among the Tory MPs behind him.
–With assistance from Emily Ashton.
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