Will an economic recovery produce a political recovery for Labour?

In short, no.

YouGov's Peter Kellner noted (at a Conference I attended on Saturday) that Labour hopes that its political fortunes will start to recover late next year as the economy recovers.  There are four main reasons why I don't expect that to happen (or why it won't matter):

• The recession - or at least very tough economic times - are still likely to be evident at the end of 2009.  Hat-tip to Andrew Lilico.
• It's far from clear that Labour will get any kudos for recovery.  International factors and Bank of England interest rate cuts are just as likely to be credited.
• Even if the recovery is underway we'll still have Labour's huge borrowing and the beginning of the tax rises that Labour have pre-announced.
• Labour will - by the end of 2009 - be in a much worse electoral position than now.  We'll have had twelve months of job losses and repossessions. The PBR was Brown's last, best chance and he blew it. The Tory lead in the ConHome poll of polls is currently 7.4%.  It will be a lot larger by this time next year.

These - and Brown's mishandling of issues like Baby P and Damian Green's arrest - are why I am more sure than ever that the Conservatives will win the next General Election.

Tim Montgomerie

Comments

[Deborah]

An economic recovery next year? They really are clutching at straws.

[Votedave]

I hope you're right Tim. Another Labour term would be a calamity for ID-card-surveillance-society-police-state-bankrupt-Britain.

[Votedave]

Not even an economic recovery would necessarily seal a Labour victory - we would have won in 1997 if that had been the case.

[Yogi]

Tim, your analysis is spot on - but I am a bit worrid about the shenanigans of the Lord of Darkness. My take is that he has decided to bring up the Euro (with the BBC Colluding) with which he hopes to force a few cracks within the party.

Hope I am wrong and that The noble Lord is a discredited spent force.

[Goldie]

With all due respect, Editor, but this is silly. Have you forgotten those essential rules of politics, "events, dear boy, events". A week is a long time in politics and we have no idea what the world might look like in 2010.

Now, if I were a betting man I'd bet on a victory for the Tories and it's quite likely that Cameron will indeed be the next Conservative prime minister.

But there are no certainties.

[Graeme Archer]

I think matters would @worsen@ for Labour, were the economy to improve (I don't think it will), for then everyone's focus will be on debt, personal and national. As votedave pointed out anyway, economic improvement didn't do much for us in 97.

[Tony Makara]

There will be no recovery because a services-led low-wage economy needs credit to power demand and there is far too much debt in the system to free up credit at this time. Labour believe they can circumvent the problem of personal debt by showboating and irresponsible interest-rate cuts, but this strategy will fail. No-one at the top tier of government understands that debt has to be ironed out of the system before the economy can recover.

[resident leftie]

You don't need your four reasons, and Baby P and Damian Green won't make a blind bit of difference. Recovery or no recovery, all that you need to worry about is the size of the next Tory majority, and the program under which they govern. I think it will get down to a largish majority with a Tortoise manifesto, or a slimmer one with a more reactionary Hare one.

The floating voters are getting a bored with Labour, the Tory leader doesn't look like a furniture chewing loon, and you don't stay in goverment for ten years without building up a lot of resentment.

The only person who can lose the next election is David Cameron, and he would have to screw up pretty royally.

[Patriot]

Unless Brown is stopped now it will be many years before we can start to even think about recovery.

From Paul Waugh in the Evening Standard:

""Just when the Chancellor and the PM thought their PBR package may be their salvation, here comes the German finance minister to wreck the party.

Peer Steinbrueck says that the idea of hiking borrowing to pay for a fiscal stimulus is unacceptable. Except, he uses a lovely image to express himself:

"Just because all the lemmings have chosen the same path, it doesn't automatically make that path the right one."

In a new interview with Der Spiegel magazine, he goes on: "Since I've been dealing with economic stimulus packages since the end of the 1970s, they've never had the real effect that was hoped for. In the end the state was just more in debt than before.""

http://waugh.standard.co.uk/

The French finance minister said something along the same lines last week.

[Andrew Lilico]

Well...it would depend a bit, wouldn't it? I don't expect significant recovery next year. But it's not implausible that Q4 2009 and Q1 2010 might look rather better than Q4 2008, particularly because the effects of interest rate cuts should be feeding through in that period. I'm not convinced that that mini-recovery will be sustainable, but I don't think it can be ruled out that we get a quarter or two of growth then.

Now, the key will be who is credited. If the government gets the credit for its tax-cutting PBR and whatever it does in the 2009 Budget, then that will play less well for us than otherwise - there is the risk that "the recovery" is attributed to things that we opposed.

However, the great likelihood is that by late next year/early 2010, we will have had one of the grimmest economic years for decades, with huge rises in unemployment, considerable falls in house prices, and widespread personal bankruptcy. The government is very likely to be blamed for all these things, and will be so desperately unpopular by that point that it may struggle to survive (notional majority or no majority). Labour has a long way to fall from economic news before it starts to gain from recovery. If it doesn't go for an election in Jan/Feb - or the latest March/April - I think it's doomed.

[Cleethorpes Rock]

I think you're right resident leftie. I think every government has its shelf life, and to most voters, Labour has just passed its vote-by date.

[Tony Makara]

The talk of re-habilitating David Blunkett for a return to government just shows how desperate Labour are. They have no new blood coming through, no new generation of new thinkers. Labour needs a period in opposition to create a new political philosophy. New Labour is Old Labour is Stale Labour.

[Dorian the Deliciously Nickable for Saying Stuff]

Resident Leftperson

It's the tortoiseshell that the residents of the left should be vacillating about. As they do. Frequently. Same old Tory nasties pretending to be fluffied up and pink but ready to give Leftie La-La-Land a right good velvet gloved fisting when push comes to shove.

But I doubt it. And I think that you are right. Ceteris paribus.

But all things are not remaining equal and Brown's facile 2.5% VAT tokenism at vast collective expense with itemised green-eyed class war payback is blithering in the context of nigh on GBP collapse.

I am an evil businessman. I earn my salary from the evil machinations of capitalism and in my sector I am seeing competitors ratchet up trade price by 30% with another rumoured at 50% increase by Chrimbo.

Does 2.5% in this, actual, real, market context look even vaguely like smoothing over a short-term downturn? I walked into MFI last weekend and watched the staff, people I know, witness the place being torn apart around them in a frenzy of credit card based looting with power tools instead of AK47s.

Just the beginning and maybe that nasty iron fist will be the only remaining solution. The clunking variety would seem to have faile.

[Mark Fulford]

Tim, your analysis is spot on - but I am a bit worrid about the shenanigans of the Lord of Darkness

We give the LoD too much credit. He's just a naughtly little boy.

[The Bishop Swine]

A recovery would help Labour, but its not that likely right now. The small boost effect of vat decreasing is quite pronounced. This Christmas may well ultimately have been the last good one of the Nu-Labour period by March the numbers going onto the dole will be more apparent. JSA is such a poor benefit that those afflicted will know all about recession. Its a sad fact that Brown has already abandoned so many people to JSA, whilst he had money for Bankers he has offered none to support the jobs that are on the edge of being lost. He most defiantly has nothing for the disabled who are now victimized as work shy. He and his jackbooted allies have chased the beggars and the buskers off the street and hidden the problems well out of sight. His welfare reforms are tight fistedness when real help is most needed. He has almost single handedly destroyed our Pensions and he is in hock to future generations. His investments seem to have been the cover for a massive fraud, which he is not directly responsible, but which happened on his watch. His Party took us into an unpopular and immoral war, at the request of a deeply dyslexic and manipulated George Bush. His Party has enacted laws that are truely dangerous and badly drafted, which we now see lead directly to a police state. I don’t see how he can Win.

[TomTom]

In a world where GM and Ford could file for Chapter 11 and are begging Sweden and Germany for subsidy; where the global derivatives system is in meltdown and Western governments think they can borrow trillions of dollars to throw at bad debt provisions of banks; is one where economic recovery is expected in a little island in the North Atlantic next year ?

What will bring about this recovery ? The London Olympics ? A sudden rush of power station construction ?

Just why should the British economy recover based as it is on credit-financed consumerism linked to houses prices treated as ATMs and this game is over. If 31% BRitain's GDP is in financial services and 25% dividends are from banks and 40% Corporation Tax....just why do we think RBS is going to be a money-spinner and how will house prices inflate without Northern Rock ?

[Wendy]

sorry this is off topic but you may want to look at this a new blog. Fiarly amusing

http://onthejobtherealbritain.blogspot.com/

[olivepeel]

labour hopes that immigration, family breakdown , public sector growth and dependancy may yet produce a hung chamber.

[Simon R]

The obvious answer is yes. If the economy really did recover (not just go along a plateau for a while before the next disaster) and it was shown to be the result of Labour's actions in power, then it would benefit them electorally, and rightly so.

I am a patriot first and foremost, and much as I detest Labour, if they had a better answer to the problems of the UK, you could paint me red and call me Kier Hardy -I would vote for them. I'm not tribal in that sense.

But the fact is they don't. The very reasons that made them destroy the British economy render them incapable of helping it on its way to recovery. They are quite simply economically illiterate, and they show an utter lack of willingness to change.

There is one thing that pleases me about all this, and that is that by the time the Conservatives are in power and trying to bring about recovery, they will be helped by the low value of Sterling, which will boost exports (assuming anyone is making anything here by then) and tourism. Which is some small benefit that they will be able to thank Labour for, for a change.

[Bernard from Horsham]

The article premise is based on the fact that the election will be at the last possible moment. There is no certainty that Gordo wont go early if the latest poll is backed up by others.
poll of polls are meaningless imho.

[Omar Kader]

"Will an economic recovery produce a political recovery for Labour?"

I hope not because with you blue nose conservatives in power it will strengthen the case for Scottish independence, i despise the toffee nose culture of the conservatives but they do have some usefulness in Scotland.

[Patsy Sergeant]

I would go along with what 'Yogi' said @ 17.35. He refers to the 'Prince of Darkness' and the euro, in fact I put a comment on the main thread this morning, quoting from a Mail article today, discussing exactly this subject - renewed interest in us going into the euro.

I fear that the dysfunctional way that this government is behaving at the moment, is unlikely to cure itself from the inside - situations like this don't usually.

The longer our economy takes to recover, I think that the less this government will be able to cope. Brown is not really a natural leader, and he doesn't inspire confidence, if fact whatever reassurance that he appeared to give once, has I think disappeared now! Mandelson, a wheeler and dealer, is more likely to unsettle things further.

Personally I think that if things get really tough, the natural reaction of this government will be to try and hive off their responsibility - somehow - to the EU, rather than go to the country for an election. If people are sceptical - just wait and see!

[GB£.com]

Got to agree with the lilibot. Labour would be mad to leave it longer than mid-2009.

I'd say that 2009 is to 1978 what 2010 is to 1979.

Hopefully Brown will follow Callaghan and bottle it.

[Sally Roberts]

Bernard from Horsham - you may well be right so I think it is our duty as Conservatives to lie, lie and lie again if questioned by pollsters! Tell them you will vote Labour.....
Bring on the Election!

[Another Richard]

"I'd say that 2009 is to 1978 what 2010 is to 1979."

2008 was the equivalent of 1978. Labour should have risked an election this year.

The coming winter is going to be an economic bloodbath and we're more likely to fall into a depression than have en economic recovery next year.

There can be no recovery until levels of debt are reduced.

[Onthejob]

Have to say i always lie to pollsters yougov they ask me how i voted last time i say Labour and then tell them i am going to vote conservativenext time that way it looks like more people are switching side brilliant!

[Northern Tory]

The Economy is going to be the deal clincher. To be perfectly honest I don't think the electorate gives a monkeys, about Damian Green's arrest. It is a story that has grabbed the attention of the "Westminster Village" but the electorate is worried about their jobs and keeping a roof of their head!

[resident leftie]

Today I bought my morning coffee, and got 3p change, thanks to the Chancellor. I popped next door to Woolworths to see if they had anything, and then thought, what the hell, I'll make them an offer! Apparently, I have to speak to head office.

In fairness, though, the VAT change will be particularly significant for businesses with very low margins such as online software resellers. I think I did the sums on another thread, but it's a substantial net margin increase, but only if they don't pass it on.

[Edward Huxley]

Only an idiot would want Brown`s efforts to fail and if the unexpected happened and the economy recovered in the next twelve months he would be hailed as a hero and Labour would win the next election. However, the age of miracles has passed I`m afraid and a Tory victory may be simply the outcome of Brown`s failure, on the grounds that they could not possibly be worse than Labour and it is time for a change.