On Wednesday, the day before the rest of us, George Osborne will know whether Britain’s economy has succumbed to a triple-dip recession. By convention, the Office for National Statistics gives ministers 24 hours’ notice of its data, so they can prepare their response to the figures when they enter the public domain.
At one level, it should matter little whether the economy grew or contracted in the first quarter of this year. Either way, the change will be tiny; and the ONS’s initial estimates are prone to substantial revision in months, and even years, to come. What looks like a triple-dip recession at first may turn out in time to have been nothing of the kind. But that prospect won’t curb media coverage on Thursday, or diminish the symbolic importance of the ONS figures.
The larger truth, which future revisions are unlikely to overturn, is that the economy is bumping along the bottom, neither growing steadily nor collapsing. This is why the International Monetary Fund has joined the ranks of those who think Osborne should change course. And recent YouGov data, including our latest survey for the Sunday Times, suggests that the Government’s reputation for managing the economy is bumping along the bottom, too.
Some of these figures are not quite as bad as they were last spring, following last years’ ‘omnishambles’ Budget; but they are still pretty grim. And they have fed a climate of pessimism. Two thirds of us are worried that we won’t have enough money to live comfortably. Only 11% expect to be better off in a year’s time than we are today.
Perhaps our most startling finding emerges from a YouGov-Cambridge survey whose results were published last week. It concerns long-range expectations. We offered two statements and asked people which came closer to their view. The statements are worth quoting in full:
‘Despite today's economic problems, I am basically confident that our children’s generation will end up enjoying a better standard of living than our generation, just as our generation has mostly been better off than our parents’: 19%
‘I am not at all confident that the pattern will continue, of each generation becoming better off. I fear the younger generation will find it harder than ours to enjoy a reasonable standard of living’: 64%
Personally, I should be astonished if living standards in 25-30 years time aren’t substantially higher than they are today. Innovation and technical change won’t stop. Productivity may be down a bit compared with two or three years ago, but at some point, the underlying upward forces will reassert themselves.
However, what drives attitudes is perception rather than reality. The past five years of economic troubles have left their mark. There is no obvious end to them in sight. And these troubles are reflected in people’s lives, not just GDP statistics. Graduates saddled with debt and finding it hard to get a decent job; couples waiting a decade longer than their parents to buy their first home, and so on. Long-term pessimism may be misplaced, but it is not surprising.
All of which suggests that the government should be flat on its back and heading for a massive defeat at the next election. Except that it isn’t. Labour had never established the kind of commanding 20%-plus lead that successful oppositions have secured in the past. Its underlying lead in YouGov’s daily polls has seldom crept above 10%, and in four of the five polls we conducted last week, for the Sun and Sunday Times, it was just 7-8%. This may be a blip but, given the state of the economy and the government’s reputation, it is remarkable how close the two main parties are.
Here are other recent YouGov findings that help to explain why Labour is not further ahead:
These figures are much the same as they were two years ago. But then the coalition was just a year old. Memories of Gordon Brown’s administration were fresh. Coalition policies had had little time either to work or fail. It is now three years since Labour was in power – three years in which Osborne’s plans to revive prosperity have been blown off course and his hopes for a growing, deficit-reducing economy dashed. Labour’s failure in these circumstances to shift these polling numbers in its favour should worry Ed Miliband and his shadow chancellor. The recession of 2008-09, and the rise in government borrowing, caused a stain in Labour’s reputation that has so far been impossible to shift.
The party has two years left to persuade voters that it can be trusted once again to run the economy competently; the Conservatives have two years to show that their medicine is working. If one party achieves its goal, it will almost certainly win in 2015. If neither – or both – do, expect a close result.
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