With growth exceeding many economists’ predictions, the Chancellor is coming under increasing pressure to cancel the planned increase in National Insurance.
Office for National Statistics (ONS) figures released today show that the UK economy grew at a faster than expected rate of 7.5% despite falling back in December due to Omicron restrictions.
Average forecasts had been 7.3% growth for the year and a 0.5% contraction in December.
Commenting on the better-than-expected figures, Chancellor Rishi Sunak said the economy had been “remarkably resilient”.
The ONS Director of Economic Statistics, Darren Morgan said the 1% growth in the last quarter of 2022 was “pretty healthy” despite the Omicron surge.
However, GDP in the October-to-December quarter remains 0.4% below its pre-Covid levels of the final three months of 2019.
Calls by backbench Conservatives:
The Prime Minister has come under increasing pressure by backbench Conservative MPs to cancel the planned increase in National Insurance.
The better-than-expected economic news has already seen Conservative MPs call on the Chancellor to rethink the plans, with one MP telling Chamber that “the cost-of-living crisis was the number one issue on doorsteps in my constituency” and that “something will have to budge” in time for the local elections.
Adding that the Chancellor “needed to listen more to the concerns of MPs and scrap the planned rise in National Insurance given the better-than-expected growth figures.”
Final Thought:
On the face of it, today’s economic figures are good news for the Chancellor. The economy has bounced back faster than most had feared.
However, behind the scenes are MPs pressurising the leadership frontrunner with stories from doorsteps across the country. The Chancellor has a dangerous decision to make, does he scrap the deeply unpopular National Insurance increase to win over the backbenchers, or does he stick to his guns and use the proceeds of growth to start paying down the national debt?
Only time will tell, but rest assured, this isn’t going to be an easy decision – and it is one that may cost him the top job.