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Rishi Sunak | AccountingWEB | General election set for 4 July as tax takes centre stage
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General election set for 4 July as economy takes centre stage

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With a general election officially set for 4 July, it’s already become quite clear that tax and the economy are going to play big roles in proceedings.

22nd May 2024
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Prime minister Rishi Sunak announced today that the UK will go to the polls on the 4 July. 

The confirmation of the general election has prompted speculation that the final stages of the finance bill are likely going to be being rushed through tomorrow. A date in the diary also means the Chancellor has played all his cards in the Spring Budget and despite speculation earlier this year, there won’t be a pre-vote fiscal statement. 

It’s also not a coincidence that the prime minister called the general election on the same day inflation fell to 2.3%. Buoyed by the news, the government expects inflation to fall further to around 2% by early summer - quite possibly by the date of the election.

Economy set as key general election battleground 

Framing the economy as a key battleground for the general election, Sunak today said: “I came to office above all, to restore economic stability. Economic stability is the bedrock of any future success.

“Whether that is rising wages and good jobs, investment in our public services, or the defence of the country. And because of our collective sacrifice and your hard work, we have reached two major milestones in delivering that stability, showing that when we work together, anything is possible.

“Our economy is now growing faster than anyone predicted, outpacing Germany, France and the United States. And this morning, it was confirmed that inflation is back to normal. This means that the pressure on prices release and mortgage rates will come down. This is proof that the plan and priorities I set out are working.”

The economy is fast-becoming a battleground for the Conservatives and Labour, with blows being traded time and time again over recent months.

With 4 July now confirmed, we can naturally expect much, much more of it. So what can accountants and tax professionals expect in the month ahead as election fever grips the profession?

Black hole

The Conservative Party has an uphill struggle as they start their election campaign, with opinion polls having them 20 points down. So expect the Conservatives to return to the Chancellor’s pledge in the Spring Budget to abolish national insurance and attempt to take Labour to task over the economy.   

Jeremy Hunt brought the subject to the fore against a backdrop that read ‘Labour’s Tax rises’. Insisting the economy was doing well, he spoke as the Tories released a dossier that accused Labour of having a £38.5bn hole in its costings over the next four years.

At more than 20 pages, the deep-dive asked questions of Labour - namely: “Which taxes will they raise to pay for their unfunded spending pledges?”

“It lays bare that despite what they say, Keir Starmer and Rachel Reeves are following the same old Labour playbook: higher public spending that will inevitably lead to higher taxes,” it added.

However, the Conservatives will find it difficult to shrug off memories of the mini-Budget.

In response to the Conservatives’ claims, a Labour spokesperson called the move a “desperate attempt by the Tories to deflect from their £46bn unfunded tax plan that could lead to higher borrowing, higher taxes on pensioners or the end of the state pension as we know it”.

Hunt also spoke on National Insurance cuts - a measure likely to be part of the Conservatives’ manifesto, alongside a slash to Stamp Duty Land Tax (SDLT). Some MPs have also urged the Prime Minister to focus on cutting income tax or raising its thresholds.

Tax dodgers

Meanwhile, Labour really got their tax ball rolling last month, with the party saying they will target raising an extra £5bn a year by tackling tax avoidance, as well as fund policies to bring down NHS waiting times and introducing free school breakfast clubs for every primary school pupil.

The aptly named ‘Plan to Close the Tax Gap’ has been designed to “relentlessly pursue the money that is owed, with a plan to make sure people pay the right tax in the first place, and that directly tackles tax avoidance and evasion”.

In response, chief secretary to the treasury Laura Trott said Labour “hasn't changed”.

“They remain committed to unfunded spending, including their £28bn a year decarbonisation promise, meaning they will have to raise taxes on working families - taking us back to square one.”

More recently in his six-stage First Steps plan, Sir Keir Starmer gave top billing to delivering economic stability. This would mean “tough spending rules, so we can grow our economy and keep taxes, inflation and mortgages as low as possible”.

The Tories hit back, suggesting his first step would instead be - you guessed it - into the same £38.5bn black hole.

Jibes aplenty

There’s more of the same to come.

Labour have already suggested that the Conservatives are “not doing enough to close the tax gap”, while the Tories have argued that Starmer’s party “cannot and will not take the tough and responsible decisions required to build an economy that supports working people up and down the country”.

Of course, it won’t be the only fight being fought over the coming weeks but whoever can paint the most popular picture of how the economy might look in the years to come will strike a strong blow.

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Replies (6)

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By Justin Bryant
22nd May 2024 17:54

I would get your f/x for your summer holiday now rather than later (I doubt £ will be higher than today's 1.2750 to $ on 5.7.24).

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Replying to Justin Bryant:
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By johnjenkins
24th May 2024 14:22

As an aside, it's time £1 = $1 = 1€. Any currency differences can be represented in the price countries charge for goods and services.

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By FactChecker
22nd May 2024 21:32

It's not clear, to me, what this article is trying to say ... beyond the opening fact in the title:
"General election set for 4 July".

Hypothesising is a pointless exercise where politicians are involved - never more so when the topic is economics and taxation - as we see every time there's a Financial Statement & Budget around the corner.

And this is just a bigger version (with larger unknowns and variables).

The only near certainty is that, despite the hot air on the hustings, there'll be little difference after the event ... there's barely a sliver of paper to slide between the Sunak and Starmer teams' plans.

Thanks (3)
Replying to FactChecker:
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By AndyC555
23rd May 2024 10:58

"there'll be little difference after the event"

Or as George Orwell might have said.....

“The voters outside looked from Rishi to Keir, and from Keir to Rishi, and from Rishi to Keir again; but already it was impossible to say which was which.”

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Replying to FactChecker:
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By johnjenkins
24th May 2024 09:31

Low turnout. Reform, loads of votes but no MP's. Lib/Dems could hold balance of power?

Thanks (1)
By Husbandofstinky
24th May 2024 13:19

“Our economy is now growing faster than anyone predicted, outpacing Germany, France and the United States."

I do like the selective growth figures i.e just the last quarter. The UK is still pretty much bottom of the G7 pile since the pandemic (bar Germany) (re IMF) at just 1.7%. Compared to the US (8.7%) and the Eurozone (3.4%). Way behind.

Politics aside, and the Tories 'the party of low taxation'.... Tax burden the highest since the war.

If there was anytime to lose interest in politics, I think it would be now.

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