UK inflation in October 2024 unexpectedly reached its highest level in the past six months. The inflation rate exceeded the Bank of England (BoE) target of 2%. The increase in inflation has dimmed hopes for further interest rate cuts this year. The failure of the Labor Party to fulfil its economic promises has led to a decline in the party’s popularity in public opinion. According to polls, more than half of the British are dissatisfied with Starmer’s performance. This article examines the impact of the UK economic situation on the popularity of the Labor Party.
UK inflation increase October 2024
According to the UK Office for National Statistics (ONS), UK inflation in October 2024 rose to 2.3%. The UK inflation rate in October increased significantly compared to the 1.7% recorded in September. This increase in UK inflation in October 2024 is higher than analysts’ expectations. The increase was mainly due to higher domestic energy costs. According to the report, persistent inflation in the services sector, which accounts for about 80% of the UK economy, also prevented further declines in inflation. In a monthly comparison, prices rose by 0.6%. At the same time, the Consumer Price Index, including owner-occupied housing costs (CPIH), rose by 3.2% year-on-year and by 0.6% month-on-month.
Hopes for a rate cut by the Bank of England dim
The jump in UK inflation in October 2024 has reduced expectations for a rapid rate cut by the Bank of England. According to analysis, the increase in energy prices was due to the one-off effect of the 10% increase in the energy price cap set by Ofgem on October 1, which was expected to add 0.6 percentage points to inflation. The analysis shows that the expected increase in core and services inflation has not occurred. Consumer prices, excluding energy, food, alcohol and tobacco, rose slightly to 3.3% in the 12 months to October 2024. Services inflation also rose to 5% from 4.9%. This level of inflation strengthens the likelihood that the BoE will not cut interest rates, as inflation is 2.3% higher than the bank’s target.
The most significant contribution to the rise in UK inflation
The most significant contribution to the annual increase in the consumer price index and owner-occupied housing costs from September to October was made by housing and household services, mainly due to electricity and gas prices. Business reported that leisure and cultural sector prices made up for the most significant decline.
Ambiguous outlook for interest rate cuts by the BoE
The prospect of a cut in the base rate by the central bank is not seen due to the rise in UK inflation in October 2024. Interest rates are directly linked to the monthly mortgage payments of millions of Britons. Starmer promised before the general election that he would reduce the interest rate by curbing inflation. The increase in UK inflation in October 2024 shows that he has not fulfilled his promises. The Bank of England increased the interbank interest rate by 500 percentage points about two years ago to curb the consequences of the disastrous policies of the Liz Truss government. On the one hand, the Bank of England’s decision has reduced economic growth. On the other hand, this decision has imposed a heavy cost on mortgage payments. As a result, several small businesses have gone bankrupt over the past two years, and many people have become homeless.
Starmer’s lack of a positive economic outlook
Starmer said the UK economy was in dire straits a month after taking office. He said things would get worse before they got better. He pointed to a £22bn budget gap in the country’s budget. Labor Party officials claim they took over the treasury from the Conservative Party with a £22bn deficit. They say they have no choice but to make tough decisions. However, the evidence for this claim has not been provided so far, and the Conservative Party has denied it. All forecasts indicate that the situation will not improve until the end of this decade. Therefore, the popularity of the ruling Labor Party, as evidenced by polls, has fallen in the past few months. The difference in popularity between the Labor Party and the Conservative Party, which suffered a heavy defeat in the July general election, has narrowed significantly.
The impact of the dire economic situation on the popularity of the Labor Party
Research by Ipsos shows that more than half of the British (53%) are unsatisfied with Starmer’s performance. This is the lowest level of dissatisfaction since Starmer took the helm of the Labor Party in 2020. According to the latest statistics, more than one million British citizens have signed a petition protesting the performance of the Starmer government. The number of signatories to the petition is proliferating. In just the first six hours of its launch, 200,000 people signed it. The findings of YouGov show that six in 10 Britons believe that the situation in the UK is worse than before the general election in the country. Half of those who voted for the Labor Party in the general election say their expectations were unmet. They feel disappointed.
Starmer’s claims about economic reform
The new government claims to have ended the massive public works strikes of recent years and the implementation of the infamous plan to deport refugees to the African country of Rwanda. Starmer also says he has introduced new laws to protect workers and tenants. Starmer also tried to repair London’s economic relations with the European Union during a recent trip to Brussels. Starmer told the BBC that being prime minister has been the most challenging thing he has ever done, but he can handle it. He added: “I have been through this before [as leader of the Opposition]. You get these days and weeks when things are choppy; there is no getting around that. That is like government.”
British people regret voting for the Labor Party: Will there be an early election?
Over the past six months, the Labor Party has acted contrary to its economic promises before the election. The increased UK inflation in October 2024 to the highest level in the past six months has led to increased dissatisfaction with Starmer. The Labor Party has reduced some of the benefits of living costs at a time when people are struggling with a cost of living crisis. The lack of improvement in the economic situation has also affected the popularity of the Labor Party. Many British people regret voting for the Labor Party in the July general election. If the Labor Party does not carry out urgent economic reforms, it may be unable to maintain its power and will be forced to accept an early election.
