My, we are a gloomy lot. Last week, I discussed the possible impact of a triple-dip recession. Last Thursday’s GDP figures suggest that Britain’s economy has so far avoided this fate. However, it is also clear that the government’s hopes of steady growth of 2 - 3% a year have yet to be realised. And YouGov research for the Resolution Foundation finds that five years of economic troubles have left a deep mark on public opinion.
These are some of the key findings:
- Only 14% think they are better off today than they were at the time of the last election. 53% say they are worse off.
- There is a widespread sense that the corner has not yet been turned. By 46% - 19% people expect to worse off than today, rather than better off, by the time of the next election.
- One reason for pessimism about living standards between now and 2015 is that less than half the public – 43% - think living standards will return to their pre-recession levels within the next five years (or ten years after the crisis erupted in 2008).
- This pessimism in turn is fed by fears that the problems are too deep-seated for better government policies to make much difference in the short term. 49% think that ‘whichever party was in government, they would be unable to alter this central fact’. Rather fewer, 38%, believe that ‘with the right government policies it would be possible for things to improve fairly quickly’.
- Voters are divided on whether reducing the deficit or expanding demand is the immediate priority. This what we asked:
It's generally agreed that over the next few years, the government needs BOTH to manage the public finances prudently AND promote economic growth. Here are two statements. If you had to choose between them, which would you back - statement A or statement B?
A.‘Managing the public finances prudently comes first. Get that right, and in time the economy is likely to grow’: 38%
B. ‘Promoting economic growth comes first. Get that right, and in time the public finances will improve’: 49%
Don’t know: 13%
So more people prefer the Keynesian to the anti-Keynesian way forward, but not decisively.
Put together the pessimism and the lack of a clear public consensus over what should be done, where does this leave the government and opposition? My judgement is that this is actually better news for David Cameron and George Osborne than for Ed Miliband and Ed Balls.
Here are two reasons why. The first is that for an opposition to make headway, voters must feel not only that the government is failing (which, as I reported last week, they do think), but that there is a swift route back to prosperity. Only if enough of them think that austerity can be vanquished, will they go on and ask themselves the next question: does the opposition have what it takes to slay the dragon? Today, too few people even get to that question, and fewer still answer ‘yes’.
Secondly, the very fact that most voters have discounted the prospect of recovery in the next two years gives the government the chance to win votes if it can confound the current mood of pessimism. To adapt Mr Micawber’s dictum: ‘Expectation no growth; reality, 2% – result, happiness. Expectation 3%; result 2% – result, misery.’
Of course, even if the next two years do see 2% annual growth, GDP per person will still be less than it was five years ago. Labour will be able to say that the government had snuffed out the recovery that was under way at the beginning of 2010, and has presided over a slower return to pre-recession prosperity than Britain achieved in the 1930s. But the Tories and Liberal Democrats will be able to say that recovery is under way and the mess that Labour left is finally being cleared up. And rightly or wrongly, if steady growth has returned, even at a fairly modest rate, then I suspect that the government’s message will prove more persuasive than the opposition’s.