No matter their differences, Starmer and Sunak face the same obstacle | Larry Elliott Economics Editor

Think back 12 months to January 2022. Boris Johnson was prime minister and had resisted calls for a lockdown in response to the Omicron variant of Covid-19. It was assumed inflationary pressure from post-pandemic supply-chain bottlenecks would soon abate. Russia’s invasion of Ukraine was still several weeks away. There were rumblings of discontent in the Labour party at Sir Keir Starmer’s failure to register a commanding opinion-poll lead.

All of which is a way of making the point that a lot can happen – to the economy and in politics – in the course of a year. And given that the next election is not going to be held until 2024 it would be unwise to assume the next year will be any more predictable.

Even so, the first few days of 2023 have provided clues as to the strategies the Conservatives and Labour will adopt in the months ahead. The speeches Rishi Sunak and Starmer made last week were light on detail but significant.

Of the five pledges made by the prime minister in his speech, three related to the economy: halving inflation by the end of 2023; to resume growth; and to ensure the national debt is falling.

These are not ambitious targets. Most forecasters expect inflation to come down from its current level of 10.7% to about 5% by the end of the year, and it’s worth pointing out that a lower inflation rate doesn’t mean prices are falling, simply that they are rising less quickly. In any case, bringing inflation down is theBank of England’s job.

Sunak was not specific about when the other two pledges would be met, which renders them largely meaningless. It is quite possible the economy will be posting modest growth by the end of the year, especially if the recent fall in global energy prices is sustained. It is telling, though, that the prime minster felt unable to commit himself to a precise timetable.

As for the third pledge, while there is not the remotest prospect of debt falling as a share of national income this side of a general election, the Office for Budget Responsibility said at the time of November’s autumn statement that the government’s plans were consistent with its objective of having the debt ratio falling in five years’ time. Again, Sunak chose a soft target he knew he was going to meet.

The PM and his chancellor, Jeremy Hunt, hope if they can survive this winter something may turn up. As it might. If gas prices continue to fall, inflation will come down more quickly and the government will save billions of pounds on subsidising energy bills. HSBC says Hunt could have an extra £7bn at his disposal: Capital Economics think it could be at least £10bn. Those savings could be used to boost spending on the NHS, cut taxes or increase pay offers to public sector workers. Europe’s warm winter is a stroke of luck for the government.

The pain announced by Hunt in November has mostly been delayed until after the election, which makes economic and political sense. The chancellor says he had no choice but to announce tax rises and spending cuts, and that Labour would be adopting broadly the same approach if it was in charge.

In a way, this is a tribute to Starmer’s success in defusing the idea that Labour would blow up the economy with reckless spending pledges. Polls suggest Labour is just as trusted to run the economy as the Tories. Yet there is a clear risk of moving too far in the other direction and appearing bland. That was what Starmer was seeking to counter in his “give back control” speech last week, his levelling up pitch to the “red wall” voters who have deserted Labour at recent elections.

Starmer’s political message was clear. We, the Labour party, understand why there was strong support for Brexit in the less prosperous parts of the country. We have no intention of seeking to reverse the decision to leave. Instead, we intend to hand back control of a whole range of powers – from employment support to climate crisis – from the centre so that local people can determine their own future.

Yet levelling up means money – big money – as well as devolving power. A recent study of the reunification of Germany – the biggest levelling up project in recent decades – said Berlin has invested the equivalent of what the UK government spent on the furlough scheme during the pandemic every year for three decades, and even now the divide between the western and eastern länder has not been fully closed. Cross-party support has for large-scale spending has been vital in Germany, and it will be vital in the UK, too. There is no way levelling up can happen if Starmer keeps the “big government chequebook” closed, as he insists he would.

Getting the message right matters because Starmer is the one with everything to lose. He is the one with the big opinion poll lead, while Sunak – like Alec Douglas-Home when he took over from Harold Macmillan in 1963 – has a shot to nothing.

Like Home, Sunak took over after the Conservatives had been in power for 12 years and with the party mired in scandal. Not even Tory MPs expect him to win the election and if Sunak manages to repeat Douglas-Home’s feat of whittling away Labour’s lead and losing by only a handful of seats in 2024 he will be doing even better than his 1960’s predecessor.

That’s because the economic circumstances are quite different. Douglas-Home was helped by an unsustainable pre-election boom in 1964. Halving inflation and getting the economy going again doesn’t really compare.