The economy will doom the Tories if Labour can come up with a plan

The economy will doom the Tories if Labour can come up with a plan

First posted February 24, 2013 by garryk99

The recent downgrading of the UK by Moodys from it’s AAA credit rating will certainly create problems for the Government.

It will make little difference to the UK financially. The UK’s financial position is well known and money markets will have been building this into prices for some time. Similar downgrades in the US and France have not made a real difference to their borrowing costs.

However, the Chancellor and the Government have had their credibility damaged. The perception of lost credibility is very dangerous, and once lost is hard to get back. In September 1992, just months after a remarkable election victory, Black Wednesday damaged the Major Government permanently.

George Osborne was already looking in a poor position, with his Austerity programme being stretch way beyond the period promised in 2010. Growth has stalled badly.

‘It’s the economy stupid’ is the political reality. It sums the fact that a Government need not be that popular, if the public feel that their jobs and economic future looks secure with them. Analysis of YouGov data since 2010 on this very issue paints the Government in a poor position. YouGov run a tracking poll that asks respondents which party is best for the economy in general. In June 2010 the Conservatives topped the poll with 37% vs Labour’s 26%. However, the poll in February 2013 showed a fall down to 27%. The data is plotted below:

Best Party

The same data has been plotted on a CUSUM chart. This essentially shows the trends beneath the noise:

Best Party Cusum

What is clear is that the Conservatives have been in free fall since around March 2012. This is a reference to the ‘omnishambles’ budget, and they have not recovered since. What is also noticeable is the fact the Labour has not felt any benefit, merely moving from 26% in June 2010 to 28% in February 2013.

The notable beneficiary of this has been ‘None’, moving from  7% to 13%. Quite simply increasing numbers of people feel that no party offers any prospect of improving the economy. They have lost faith in the Conservatives, but don’t feel Labour offers anything better. This finding is demonstrated by the correlation between the Conservative figure and the none figure (-0.75). The correlation of the Conservative to the Labour figure is a much worse -0.29.

The outlook for the UK economy is currently poor for the next few years. There looks to be no prospect of a change in economic fortune that would restore credibility back to the Conservatives. Our main trading partners in Europe are suffering very badly, and the overall picture is one of bouncing along the bottom of a long period of low or no growth.

Labour does have a open goal here, if they can have faith in plan not based on Austerity, but one of serious and sustained investment. The last few months has seen some speeches where Ed Miliband has begun to articulate an alternative, yet this embryonic economic plan needs much more flesh and bone. This plan cannot be Austerity-lite, but something different. The price of not creating and articulating this vision could be to enter the next election giving the Conservatives a chance it simply does not deserve.

Labour failing to beat the Conservatives in 2015 would be unforgivable.

10 thoughts on “The economy will doom the Tories if Labour can come up with a plan

  1. Three MP’s from the three political parties go on Safari to India.
    They ignore the advice of the Mahoot & guide and climb down from their Elephant whilst in Tiger country.
    After some time, the three MP’s lose sight of the Safari party.
    Then in the distance, somebody shouts “TIGER”.
    The three MP’s look to one another in horror & fear.
    One MP decides to sit down and remove his running shoes from his back pack.
    “What are you doing” exclaim the other two, “we will never outrun a Tiger?”
    The wise MP, whilst lacing up his running shoes says, “I don’t need to out run the Tiger, I just need to out run you two”.

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  2. If only Labour would stop bashing Greens and start thinking hard about what a new and surviving world will need to look like in 2030. The transition would provide all the purpose, growth & work that’s needed.

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    • I agree… as you say (and as I wrote to Chris on Pam’s nuclear thread, and repeatedly elsewhere)

      ‘The transition would provide all the purpose, growth & work that’s needed.’

      There is, in fact, all the reason for direct government investment and no difficulty in providing a job’s guarantee for all 8.5m unemployed and underemployed. There is a very optimistic story to be told if only the LP would ‘dump’ the neo-classical synthesis idea that ‘QE’ going into the real economy is inflationary.. and dump the ‘wisdom of markets’ rubbish. Tackling climate change and resource sustainability is not going to be solved by ‘green capitalism’ just as leaving housing to the markets has failed!

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      • Labour and the Greens have a tricky relationship for sure.

        I think it’s fair to say that Labour and the Greens both do bash each other from time to time. In truth, they have a similar starting point, yet they can sometimes fall into the People’s Judean Front Syndrome.

        My view, as a Green, is that the social justice aspect and environmental sustainability are linked. While New Labour did spawn some Neo-Liberal monsters, I know enough Labour supporters who have as much in common with Cameron as they did with Blair.

        In addition, The Greens are organised quite informally and locally. The concern is that a grouping with Labour would simply swamp it.

        I also know some Greens who really think Labour 1997 onwards are just another Thatcherite clone. The fear of the Greens is that the part of Labour that Progress represents still has real power.

        Rebuilding this country from 2015 will be an incredible task as radical as Atlee’s in 1945. Labour cannot do it alone, and a broad coalition including the Greens and the Liberal Democrat wing epitomised by Charles Kennedy would be an asset in this effort.

        It can be done, but it requires a real pluralistic effort by all.

        Dare I say it, a broad coalition in the national interest?

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  3. Labour can’t, for the simple and central reason that it is wed to the source of the problem–the capitalist economy. All the “austerity,” “Eurozone crisis,” and the rest is nothing other than the attempts of the already-wealthy to garner yet more profits. The people occupying the countries are of no concern to them, save as a business calculation. That’s a fact, and Labour is entirely devoted to perpetuating this system. Face it.

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    • I think our experience with New Labour rather showed that the Labour Party can ‘wed’ itself to any policy that it wants to.. including Tory-lite ones. To take your comment more seriously, there are more forms of capitalist economies than just the current one. Prior to the 1980, there was a mixed economy – not only health, education, social services were in the public sector but also major infrastructure such as transport, energy, water etc. That type of capitalism looks amazingly benign nowadays… and most people in and out of the LP seem to want a return to those days. I take your (and Ralph Miliband’s) point about the impediments to a parliamentary road to socialism but until there is a mass movement rejecting capitalism, the only way to remove this dangerous government is via the LP. I do not accept that Ed M’s LP is anything like as bad as the Tory/LD government. I see it as currently the only feasible starting point. I also do not believe that the means justifies the ends (unlike New Labour) so I do not support allowing this government another 5y to inflict even more damage on the UK in order to ‘politicise’ the population into revolution. In fact, I think fascism would be a more likely outcome. Amelioration is always a more messy, less attractive option but on the whole, fewer people die.

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  4. It speaks volumes that the Government’s “…there is no Plan B” strategy is still the default setting. Refusing to accept that the financial situation in the UK is likely only to get worse and still reassuring the country that it will be okay. What will it take for Osbourne and Cameron to rethink there deficit reduction plan? A triple-dip recession? If Labour score an own-goal in 2015 I am afraid they will have lost my support forever.

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  5. Ian Aitken’s view ( shared by me and many others) is that Osborne will not change his plan A because it is a blind for his real purpose which is to dismantle the post-war settlement irretrievably.

    https://think-left.org/2013/02/23/project-osborne/

    Osborne has never really expected that the Tories will be re-elected. He hopes to have stitched up long-term contracts for the transnational corporations (which will be protected by the WTO) and crashed the economy so comprehensively that the incoming government will be unable to restore our public services or the NHS.

    The evidence lies in Osborne’s actions rather than his words. He does nothing to close the deficit and all his policies serve to increase it eg reducing tax receipts by lowering corporation tax. eg, reducing the automatic stabilisers in cutting benefits.

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