31/01/2014 06:25 GMT | Updated 02/04/2014 06:59 BST

It's Still the Economy, Stupid

When President Clinton's advisor James Carville famously summed the presidential election up as "It's the economy, stupid," he spoke for generations of politicians who have known that elections are won and lost on the basis of voters' pockets and purses.

As the long run up starts to the next UK election, that phrase has never held more significance. The Coalition Government started its life in the shadow of riots in Greece and the Euro crisis. Since then words like 'austerity' have become a new political battleground and a nervous Clegg and Cameron have watched and waited to see if the recovery would come in time for the election.

The latest figures suggest it has, with a strong set of growth, employment and housing indicators all coming within the last month. So the big question now is, who will reap the political benefit? History tells us that it'll be the governing party, but now we have two. So what does a voter eager to reward a government that got it right do next - vote Lib Dem or Tory?

This is unchartered territory as the UK's first coalition in decades faces its first electoral test. Elsewhere in Europe, it's often tough for the smaller party to get the credit for the big issues in government. They tend to get lost in the news or the bigger coalition partner tends to hold the key Treasury posts and take all the credit.

It's certainly true that Clegg's Lib Dem's have been badly punished by the voters with recent polls seeing the party lagging even behind UKIP and in single figures. This has clearly led the Clegg advisors to worry about how the party is positioned and over the last year there has been a campaign to put clear distance between the Lib Dems and the Tories on a handful of key issues. Even the occasional public row has been welcomed as a chance for the two parties to show their differences.

That strategy might have had some merit when the Tories were looking unpopular and Clegg saw the need to distance himself. However, it looks less wise as the economy grows and with it the Tories' popularity. Perhaps rather than growing apart the Lib Dems would be wise to grow closer again, hanging onto the coat-tails of the growing popularity of the Conservatives?

In truth, the Lib Dems have good reason to share in the credit for the recovering economy. The very formation of a stable government helped, after all. Meanwhile, at each stage they have backed and argued for austerity and in most cases been prepared to take the tough decisions on cutting public expenditure.

There is also a reason why the Conservatives should give their partners some credit. As Labour makes some progress with its 'cost of living' argument, the Tories can point to big changes in removing the low paid from tax burdens - a Lib Dem policy they implemented together.

One way or another, this quicker than expected change in economic news has triggered an early test of the 'who got it right' and 'I told you so' messages we are certain to get in the election. But there should remain a word of caution. These figures may not hold up. I sense that January 2014 has been a cruel month in the high street with rain-sodden and Christmas credit card bill-burdened voters spending less.

That could come back to hit the economic figures in mid-Spring - just in time for the European elections and a possible UKIP shock with it topping the poll. There's a long way to go yet until May 2015.