Jeremy Hunt will try to use next week’s budget to reverse the Conservatives’ lackluster performance in polls ahead of the next election, with the chancellor widely expected to announce sweeping tax cuts.
However, while Rishi Sunak hopes his chancellor can deliver a near-term economic recovery with flattering giveaways, his government faces growing pressure over the Conservatives’ management of the economy over the past 14 years. The following 10 charts outline the Conservative record since 2010.
deficit
“We can’t go on like this. I will cut the deficit, not the NHS,” David Cameron wrote on his famous campaign poster before the 2010 election.
The Conservatives came to power promising to improve public finances after the 2008 global financial crisis devastated the British economy, resulting in the largest government deficit of the post-war period (pre-Covid). Under George Osborne’s 11th president, this included public sector austerity and welfare cuts.
Sunak also pledged to cut the national debt. But the Conservatives never eliminated the deficit, and the national debt (the sum of annual deficits) has risen steadily from 64.7% of gross domestic product (GDP) in 2010 to the current level of 96.5% – the highest level since the 1960s.
NHS
NHS waiting lists have been soaring since the start of the pandemic, but numbers were already rising significantly before the health emergency due to workforce shortages and underinvestment in infrastructure.
NHS funding is Rising every year in real terms A strict Conservative commitment since 2010. However, growth is well below long-term historical averages, while population growth and aging are also adding to pressures.
Sunak has pledged to cut NHS waiting lists. The Institute for Fiscal Studies estimates that this number will fall after the election, but will not reach pre-Covid levels until at least 2030.
Economic Growth
“Long-term economic planning” is the most popular quote of the Osborne era. But the British economy has suffered historically weak growth over the past 14 years after a slow recovery from the 2008 economic collapse. Then there are shocks like Brexit, Covid and the cost of living crisis.
The National Institute of Economic and Social Research estimates that UK trend annual growth has fallen from 3.4% per year in the post-war period to 1973, to 2.3% at the time of the financial crisis in 2008, to just 1.2% in the years since.
Underinvestment
The UK has historically lagged behind other developed countries in public and private economic investment. Since 2010, however, Britain has fallen further behind due to austerity, Brexit uncertainty and the political drama of five prime ministers in eight years.
The IPPR think tank estimates that the UK’s underinvestment amounts to £500 billion, or 30 Elizabeth lines. Most notably in crumbling schools, hospitals and infrastructure, it cited a lack of investment as the main reason for lackluster productivity growth, a key driver of economic growth.
Global Britain?
Britain’s narrow 2016 referendum to leave the European Union triggered lasting economic turmoil, including tougher trade barriers with Britain’s largest trading partners. Since then, the performance of the British economy has significantly lagged that of other developed countries, with real GDP per capita only slightly above pre-COVID levels, 4% above mid-2016 levels, compared with 8% in the euro zone and 15% in the United States.
U.S. investment bank Goldman Sachs estimates that global trade has not exploded since Brexit, but total trade in goods has underperformed by about 15% compared with other economies and relative to economies remaining in the EU.
Tax increases hit record high
Rising debt interest rates and growing demand for services from an aging population have pushed up government spending. But weak economic growth means weak tax revenue. Sunak has responded, largely in secret, by raising taxes, putting revenue on track to reach its highest level as a share of the economy since World War II.
Sunak implemented a freeze on income tax and an increase in company taxes during his time as chancellor. Even after the tax cuts proposed in last autumn’s statement and any cuts expected in next week’s budget, tax as a share of national income is expected to remain higher than when the Conservatives came to power in 2010.
Wage growth flat
The weak economy is taking a toll on workers. From 1970 to 2007, real wages grew by an average of 33% per decade, but fell below zero in the 2010s. By mid-2023, after adjusting for inflation, average wages were back to levels seen during the 2008 financial crisis.
The Resolution Foundation thinktank estimates that these 15 years of lost wage growth cost the average job £10,700 a year. Performance during this period was rated as the worst for wage growth since the end of the Napoleonic Wars in 1815.
Food bank usage spirals
Rising poverty over the past 14 years has led to a surge in food bank use. The number of emergency food parcels provided by the Trussel Trust has soared from less than 100,000 in 2010 to almost 3 million a year.
Deep cuts to benefits and rising costs of living outweighed the gains from sharp increases in the minimum wage for the lowest-income families. According to the Resolution Foundation, the cuts have reduced the incomes of the poorest fifth of the population by almost £3,000 a year. That sets the stage for a deeper cost-of-living crisis as inflation surges to a 41-year high following the pandemic and Russia-Ukraine war.
Unemployment remains low
One economic bright spot since 2010 has been the continued decline in the unemployment rate, which has reached its lowest level since records began in the 1970s. The official unemployment rate has fallen to less than 4% from around 8% in 2010, and the government’s COVID-19 furlough scheme has prevented a damaging rise in unemployment.
But official data is unclear The economy continues to be highly inactive – When working-age adults are neither employed nor looking for work. This includes a sharp increase in the number of people outside the labor market due to: chronic illness reached a record 2.8 million.
Immigration increased dramatically
Despite Brexit and the government’s repeated pledges to reduce immigration, net migration to the UK has increased significantly. David Cameron said in early 2010 that if he won the election he would limit net migration to “tens of thousands” a year. Net migration will reach a record high of 745,000 in 2022.
The UK population is expected to reach 70 million by mid-2026, a decade earlier than expected. Without growth in population and the UK workforce, the UK economy will grow at a slower rate. Official data showed that GDP per capita had stagnated or declined for seven consecutive quarters as of the end of 2023, the worst performance since modern records began in 1955.
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