Rishi Sunak puts economic stability at heart of July 4 election message
Good evening.
Prime Minister Rishi Sunak today finally put paid to months of speculation by announcing a general election on July 4.
In his speech in Downing Street, a drenched Sunak put his government’s economic record at the heart of his message and said that “only a Conservative government led by me will not put our hard-earned economic stability at risk”.
However, the announcement came on the same day that new data showed inflation had fallen less than expected, dealing a blow to hopes of an early interest rate cut that might have provided a lift for his Conservative party, currently languishing some 21 points behind Labour in the FT’s opinion poll tracker.
“The arguments for July are all negative,” writes UK chief political commentator Robert Shrimsley, suggesting that a surprise election announcement was Sunak’s last card. Most ministers had been kept in the dark about his plan to call the poll.
The mood in Labour leader Sir Keir Starmer’s office was said to be “cool, calm and collected” with the prospect of returning to power for the first time since 2010, representing a remarkable turnaround since the party’s drubbing in the 2019 general election.
Chancellor Jeremy Hunt had earlier celebrated the news that inflation had dropped from 3.2 per cent to 2.3 per cent in April as another sign that the UK economy had “turned a corner”.
The fall, however, was less than expected, leading traders to pare back their bets on the timing and scale of interest rate cuts. Services inflation — which the Bank of England is watching closely as it gauges when to lower the cost of borrowing — also overshot expectations.
So far at least, the electorate remains unconvinced that the economy is on the mend, writes political editor George Parker, in large part because the better economic data is failing to pass through to household budgets.
Consumer confidence across the UK has not yet returned to pre-pandemic levels, suggesting that the public is still feeling the effects of the cost of living crisis, a pattern echoed across other rich countries.
The IMF yesterday warned Hunt against further tax cuts, saying that the “government faces pressing service delivery and investment needs” in its annual health check on the British economy.
The FT editorial board welcomed the election announcement as an end to uncertainty and drift. “There is a widespread acceptance that Britain has not been working as it should. This election must provide an opportunity to start putting it right,” it said.
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Today’s other top stories
Israel recalled its ambassadors to Spain, Ireland and Norway as a “severe reprimand” to the three countries after they committed to recognise Palestinian statehood. The White House said it would work with Congress on possible sanctions against the International Criminal Court after its prosecutor announced it was seeking arrest warrants for senior Israeli and Hamas officials.
Meta’s artificial intelligence chief said the large language models that power generative AI products, such as ChatGPT, would never achieve the ability to reason and plan like humans, as he focused instead on a radical alternative approach to create “superintelligence” in machines.
The UK accused China of providing Russia with “lethal aid” for its war in Ukraine.
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Need to know: UK and Europe economy
Paula Vennells, former chief executive of the UK’s Post Office, apologised to victims of the Horizon IT scandal, but insisted there was no conspiracy “at all” to hide information. More than 900 branch managers were convicted using data from the flawed accounting software, including more than 700 prosecuted by the Post Office itself.
European Commission president Ursula von der Leyen told the Financial Times that making access to EU subsidies conditional on national economic reforms could improve the bloc’s competitiveness against global rivals.
Several EU countries are pushing for sanctions against would-be member Georgia, including the suspension of visa-free travel to the bloc, in response to the government’s Russia-inspired “foreign agents” law.
Need to know: Global economy
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Beijing launched a new chatbot trained on the political philosophy of President Xi Jinping, illustrating the administration’s efforts to deploy new technologies to constrain free speech.
US Treasury secretary Janet Yellen rejected accusations that her country’s industrial policy was “a turn towards American protectionism”, as she urged EU leaders to join it in clamping down on the potential glut of Chinese goods that threaten factories the world over.
Vietnam’s public security minister General Tô Lâm was appointed as the country’s president after a crackdown on corruption, which has brought unprecedented political upheaval just as the south-east Asian country emerges as an international manufacturing alternative to China.
Need to know: Business
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UK retail bellwether Marks and Spencer reported a revival in its food and clothing divisions and its first dividend since 2019 after bigger than expected annual profits of £716mn.
Amazon halted orders for Nvidia’s most advanced “superchip” in anticipation of a better model, as investor anxieties rise about a possible “air pocket” of demand between product cycles for the trillion-dollar chipmaker. An OpenAI-led initiative is trying to wean AI models off dependence on Nvidia’s products.
Tech giants at the Global AI summit in Seoul signed a voluntary agreement pledging “not to develop or deploy a model at all” if the “severe risks” that the technology poses cannot be mitigated, as rivalry for market share reaches new heights.
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The World of Work
The link between financial insecurity and health is most starkly felt by people on lower incomes. What can employers do to help tackle the debilitating effects of money worries and alleviate stress? Find out more in our Special Report: Wellbeing.
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Some good news
Researchers at Oxford university have found that proteins in the blood may be able to predict a person’s risk of developing some types of cancer more than seven years before they are diagnosed with the disease, enabling the development of strategies for prevention and treatment.
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