The contours of the next election have been set

Since the 2008 financial crash, British politics has been moving faster and faster, and becoming less stable. This frenzy reached its apogee with Liz Truss’s 44-day stint in No. 10 which had enough drama for a ten-year premiership.

One of the challenges for Rishi Sunak is to calm things down and to return politics to a more normal pace. It will be a good sign for the government if the World Cup dominates newspaper front pages for the next month.

However, there is one area where Sunak needs politics to move faster than normal. Jeremy Hunt’s Autumn Statement is the kind of fiscal event that you would expect at the beginning of a parliament. It is about dealing with a difficult fiscal inheritance. It is designed to fix the ‘mistakes’ of the previous administration. It emphasises that tough decisions taken now will bring future benefits. Yet Hunt and Sunak have only two years for their approach to bear fruit. 

We already know the tests by which the government expects the Autumn Statement to be judged. First, will it satisfy the markets? What ultimately doomed the Truss-Kwarteng mini-Budget was the market reaction. The spike in borrowing costs forced Truss to abandon nearly all her plans before they had even been implemented.

Second, will it be seen as ‘fair’? Even if the Truss-Kwarteng approach had not spooked the markets, it still would have been a hard sell. Voters would have questioned whether the abolition of the 45p tax rate for those earning more than £150,000 should be a priority, especially when the 40p rate kicks in at just £50,000. The government also seemed to be moving away from the idea of raising benefits in line with inflation. It was hard to explain the justification for cutting taxes for the richest while contemplating cutting benefits in real terms.