ALEX BRUMMER: Falling inflation gives the Tories a chance to close the gap

Keir Starmer is now so confident in his power that he is acting as if election victory is a foregone conclusion.

After visiting NATO troops in Estonia, just 100 miles from the Russian border, he has set his sights on visiting Washington for a pow wow with Joe Biden.

A seemingly insurmountable lead in the polls, after four years of the Labor Party's transformation, has boosted his confidence.

The lead comes from frustration with the Tories after thirteen years, the consequences of Covid and the story that Liz Truss crashed the economy.

The Truss interlude shattered the illusion of Tory economic competence in much the same way as Britain's exclusion from the exchange rate mechanism in 1992.

The broader reality is that the Tories are victims of Harold Macmillan's famous aphorism 'events, dear boy, events'.

It was one thing after another in the form of the legacy of Labor loans and debt from the financial crisis, the pandemic and Russia's war on Ukraine.

A sclerotic response to taking advantage of Brexit freedoms has not helped. The Middle East could still make it onto the list as an economic event. The reality is that Britain is emerging from the miasma in much better shape than hoped.

Much of the negativism pumped out by the Office for Budget Responsibility, the Bank of England and global regulators such as the IMF has so far proven to be wide of the mark.

It is impossible for Britain, as a widely open economy, to escape sluggish global production and deteriorating international trade.

An intense commercial relationship with America, Britain's largest trading partner, and improving access to growing Pacific markets provide some immunity. The table is set for a real debate on the economy before the expected 2024 elections.

Starmer and Rachel Reeves, the shadow chancellor, can no longer be trusted to ask voters whether they are better off now than they were 13 years ago. That is not enough given the trauma the country has experienced.

It is even less the case now that, against all odds, the battle against inflation is being won despite the disruptive efforts of doctors in training.

Their demand for a 35 percent wage increase, while consumer prices have fallen to 3.4 percent and average wages are rising 7.3 percent, looks increasingly ridiculous.

One of the main consequences of lower inflation is the rapid change in financing costs in money markets.

It means that the mortgage payment disaster promoted by Labor is in retreat, with far less collateral damage to the housing market and payment arrears than expected.

Crucially, the costs of servicing government debt will fall sharply.

The Chancellor found ways to use the developing leeway, the extra resources, in the Autumn Statement to make work more attractive by cutting national insurance and making the full 'spending' of capital investment permanent.

Following November's figures, Treasury Chief Secretary Laura Trott notes that there is still around £13 billion of headroom.

The opportunities presented by the March Budget to tackle the tax burden caused by the allowance freeze are patently obvious.

There is also an opportunity to create clear blue water in Labor by cutting inheritance tax, which raised £5.8 billion in the first eight months of this fiscal year.

Labor complacently thinks it doesn't have to show its hand. The proposed increases in labor taxes: VAT for public schools, ending non-domicile status and closing North Sea oil tax loopholes are insufficient to make significant changes to public services.

Proposals to overturn planning rules for the construction of houses and infrastructure are vague and underestimate the power of Nimbyism.

John Lewis's proposal to build a block of flats above the Waitrose store in Bromley in Kent has sparked outrage.

There is no reason to think that Labor neighborhoods will be more supportive of train tracks running through the back garden or losing parkland for dog walking.

As for the £28 billion that Labor will spend on a major green revolution from the middle of the next parliament, the source of the funds is a mystery. There is probably a hidden tax agenda lurking in the background.

All this gives the Tories a decent chance to restore their image as the party that will conquer inflation and can be trusted on lower taxes and growth.