Rishi Sunak will this afternoon call a surprise early election for July, senior sources have told the Guardian, a contest that will see Keir Starmer try to take power for Labour after 14 years of Conservative-led government.

The prime minister is set to announce the election will be in the early summer, with speculation that it will be held on 4 July, after claiming inflation was back under control and the economy was improving.

Labour is about 20 points ahead in the polls and Starmer is widely expected to become the next prime minister after transforming his party since its historic election defeat almost five years ago.

Sunak will make the announcement after a day of febrile speculation in Westminster, triggered by rare good economic news for the government and an unusually timed Cabinet meeting, with senior ministers changing their plans to attend.

The prime minister, who has long said his “working assumption” was that the election would be held in the second half of the year, was previously thought likely to wait until the autumn and a further tax-cutting budget before holding a contest when so far behind.

However, government insiders suggested that Sunak had been persuaded that with the economic backdrop unlikely to improve significantly before the autumn, and questions over the delivery of his Rwanda deportation scheme, he would be better off going now.

Ahead of the announcement, a spokesperson for Starmer said: “We are fully ready to go whenever the prime minister calls an election. We have a fully organised and operational campaign ready to go. And we think the country is crying out for a general election so I would urge the prime minister to get on with it.”

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