Economic Optimism #2

As promised, it’s time to take a wider look at economic optimism again.

The graph above shows four regular monthly trackers of economic optimism. GfK NOP and Ipsos MORI both ask people each month if they think the economy will get better or worse over the next 12 months – these are the net figures of those thinking better minus those thinking worse. TNS ask a similar question for the Nationwide, but asking about the next 6 months. YouGov in the Telegraph polls ask about how people think their own household will fare over the next 12 months.

Since we last looked at the graph in April, you can see the nacent turnaround in economic optimism then has grown into a full scale recovery now. MORI is so far the only company to show net economic optimism in positive territory, but everyone shows the public becoming more and more optimistic about what lays in store for the economy. Note that this doesn’t mean people are optimistic about the economy now – other questions show people still think it’s in a pretty dire state – but they do think things will improve in the next twelve months.

What does this mean politically? It’s harder to say than people think. The naive response is to assume the economy getting better means the government recover support – after all, the economy going down the pan damaged their support, didn’t it? In a fair world it would, and I suspect to some extent it does, since optimism is likely to make people feel warmer towards the fear in charge than despair. However, the Major government notably failed to make any political recovery to match the economic recover at the tail end of the last Conservative government, and a good argument can be made that people thinking the recession is ending will make them less risk adverse and more willing to risk a change of government.

Speculation aside, let’s look at the figures. Here, once again, we have the average of the economic confidence figures, and Labour’s average lead in the polls each month.

Still some relationship there at the early stages – Labour went down at about the same time, recovered a bit at about the same time and so on. The relationship seems to break down entirely though from the start of this year: economic confidence has returned, but doesn’t seem to have done Labour any favours at all. It appears economic troubles dragged the government down, but there’s no sign yet of economic recovery picking them up again.


53 Responses to “Economic Optimism #2”

1 2
  1. Anthony, this is a really interesting post (disappointing about the partisan comment above which contributes nothing to the debate), and does seem to show a correlation between economic perceptions and voting intention.

    Yes, the Major government failed to benefit from an economic recovery, but there were other factors in play (perceptions of sleaze, a worn out government, a popular opposition leader etc) that may also be a factor in Labour’s continuing deficit. The expenses issue has yet to fade from peoples’ minds and continues to boost “others” at the expense of Labour.

    Logic might suggest that economic downturns might boost Labour’s fortunes as the party that offers a safety net for those in difficulty. The 1980s and the current period do not bear that out. Times of economic trouble often boost those on the centre right/right of the spectrum for whom isolationist/protectionist policies and “keep your own money” policies are attractive.

    We will have to see what the summer delivers in terms of the public mood, both politically and economically, and whether Labour’s slight recovery continues, and whether the expenses issue has done limited damage to Cameron’s lead or whether it marks the start of a decline from a high point. Events can always intervene but it might be the conference season before we have any real idea of the gap headed into the next election.

  2. Anthony
    This isn’t a comment on the graph, which is interesting, but did you know that the link to the historical polling 1983-87 isn’t working?
    Pete

  3. I am astonished by the number of obviously intelligent people who are perplexed by this issue.

    1)Ask yourself where were Brown & the Labour Party in the opinion polls prior to the Credit Crunch.?25-28% mostly.

    2)The term ‘Brown bounce’ came amid the Credit Crunch not before it.

    The public are now more aware of fiscal realism.there are two forms of debt that we have heard about over the last year one is false & one is true.

    Personal debt:

    Personal debt is a load of rubbish frankly,the reason is 90% of it is mortgage,let me explain if everyone who had a mortgage stopped & rented,they would all show up has having no mortgage debt,in the real-world however renting would be just as expensive.IE Germany,who have no tradition of home ownership & rent all their lives,this is why Germany despite no housing collapse due to price bubble are in a worst recession than the UK,they have no big ticket assets,they rely on high tax society safety net for the populous.

    Also if you have a mortgage & your Central Bank cuts interest rates you benefit to an extent someone renting does not in your monthly payments.

    Government debt:

    Again lets use Germany as a example,Brown as COE used to compare our respective GDP growth to the rest of the G7.

    Germany used to average around 2%
    UK used to average about 3%(during the boom years)

    If you look at the above GDP growth you would have thought UK had done better,you would be wrong.

    UK has had Budget deficits since 2001-2009 of around 1-1/2%- 2% GDP per annum,effectively buying our own growth,Germany in this time has been balancing its budget for the most part.

    So if you disregard the accounting trick,3% GDP growth is really 1-1/2 GDP growh minus the GDP we have bought on the nations credit card.

    So if Germany didn’t have the budget deficit,there 2% real growth & balanced budget was actually better all along then the UK growth during the Brown COE years.

    The Britsih public have woken up to the fact,if the Economy has been so great why do we always have a debt & ever higher taxes to pay for it.

    Brown has been found out.

  4. I would be interested to know Anthony’s view on the headline MORI figures which are restricted to those expressing 10/10 certainty to vote.
    Does the effect of this make them difficult to compare with the findings of other pollsters?
    Would it be wiser to place more emphasis on the responses from those expressing a certainty to vote of at least 6/10?
    I recall from the very beginning of the 2005 Election that a MORI poll for the FT gave the Tories a 5% lead – based on 10/10 certainty to vote. In the event, of course, this did not prove an accurate indicator of what was to happen.

  5. Interesting.

    I suppose the question is – is there a lag in Labour support? Will it in fact recover if economic optimism remains at it’s “higher” levels?

    Or is there some other factor keeping Labour support low? As happened with Major at the fag-end of the last Conservative government?

    I think it’s too early to say. But it would be good to keep track of economic optimism and how it relates to Labour support over the next few months.

  6. Very interesting to see if this translates into increased support for Labour – as said previously i’d be astounded if it didn’t. Combine this with a couple of good weeks (granted this from very low standards) for Brown – strong action on Iran, strong measures on expenses and ever improving news on the economy that’s getting impossible to rubbish and ignore. Whereas Cameron has had some less than favourable headlines in this time.

  7. May I suggest that finally there is a time ‘for a change’ feeling which in one way isn’t rational and which does not relate to the economy or any other issue.

    It’s just the electorate gets bored with whoever is in power and wants them to go. And -although other factors such as a depression are also important- it’s an emotional attitude, not a rational one. I note, for example that the Conservatives in Australia under Howard lost the election at the top of the boom time. I would argue that Labour (like John Major) is also being hit with a ‘we are sick of the party in power , just go’ attitude.

    Finally, in a democracy, there is a group of people who will vote the other lot in just because they recognise change is good and/or hope the new lot won#t be as bad as the last lot.

  8. Jack – I agree. I would also add that the press get bored, and they are responsible for setting the prevailing mood. The pundits want new stories and new people to comment on…

  9. I would not have expected economic optimism to be particularly closely related to political support for the ruling party. I expect many voters are thinking, as I am, “the Government is at least partly to blame for getting us into this mess. Thank God things are looking up. But what do I want for the future? More of the same? No. The prospects of some recovery empower me with much more choice about how to improve the country so I have room to try out something different.”.

    The most important part of that is that voters’ memories are long enough to continue to apportion blame to the Government for causing the recession in the first place – the dominance of that memory can only be shifted by a new, dramatic, intervening feature such as, say, a war in the Falklands. Major never found a suitable intervention, and it doesn’t look as though Brown will either.

    It is also relevant that the Conservatives don’t appear to be a complete shower, even though we don’t really know what they’re offering. And there are also, obviously, all the issues of general fatigue and a lack of confidence that Brown is capable of offering voters a better life through policies (what on earth are they?) across the board.

  10. And what if the improving confidence about the state of the economy turns out to be misplaced? That seems highly likely.

    As the wholesale market for funding has dried up, the housing market is not likely to return to the boom conditions that have prevailed for most of Labour’s time in office. The national debt burden will take years to rectify. The BoE has already warned that interest rates may have to go up. Taxes will also need to rise. So where’s the solid basis for economic recovery?

  11. Alex,

    I would agree with that. The effect may well be that a large number of ex-Lab voters will look elesewhere for an alternative vision. They may not turn to Conservatives in large numbers, but to other parties from across the spectrum. However, by abandoning Labour, they will bring about a Con majority.

    Many ex-Lab voters may well be making their decisions to vote for third parties in the knowledge that Lab are then likely to lose that seat to Cons rather than LDs, Green or whomever, but can console themselves with two thoughts:
    a – Cameron does not seem that bad; and
    b – “I didn’t vote Tory – don’t blame me”

    In this context, the information in the Harris poll earlier this week on 2005 voter retention – where only 48% of Lab voters in 2005 intend to stick with Lab – is perhaps most revealing, and, even if 29% is an overestimate, we could well see a very high share going to “others”.

  12. Paul /Alex – I think also there is a sense among many that we are at end of the line with the current political setup, that is genuinely is not capable of tackling some of the big problems we face. I think that voters across all spectrums are feeling this, but it will affect labour more because the Tories have their tails up and will run with the party to get them in.

    It can surely only be a good thing to have some ‘others’ in parliament, although I suppose it does depend on who they are! ;)

  13. So where’s the solid basis for economic recovery?

    ———–

    With respect, that has nothing to do with this opinion poll. This poll shows people feeling optimistic about economic recovery.

    And it shows an increase in that optimism.

    The relevance of this poll is how it relates to the recovery – or lack of it – of the governing party support.

    And as others have suggested, it may well need more than economic recovery – or the feeling that there is such – to improve Labour’s fortunes.

  14. David,

    I think you misunderstand Dorothy’s point.

    The economic optimism measured here is based on people having an expectation that we will have passed the trough of the recession within the next 12 months and be back on an upward path. Given that we are already nearly a year into the recession (indeed I would argue that we are more than a year in since Q2 08 figures were fudged to read 0.0% instead of -0.1%) it is not unreasonable for people to hold that view.

    However, if those expectations are dashed – as they would be in the event of a “double-dip” – then, notwitshstanding that Labour has not received a gain from the upturn in optimism this year, they could be in for a further wallop if the economy is perceived to be back on a downward path next spring.

    The economic factors to which Dorothy refers are among those which could well trigger a double-dip.

  15. I think economic optimism and voting intention may no longer have a connection due to the effect of Mrs T. Throughout the 80s it was drummed in that the state cannot control an economy and therefore can only create the environment for the economy to propser. I think Major could never claim credit for a recovery as his policies were seen to have caused a recession in the first place.

    Now we have a period of long run growth where Labour advertised that they were creating the environment for growth. That came to a grinding halt last year, with the credit crunch. If a govt’s policies are seen to have failed, then that trust is very hard to get back.

  16. If anyone votes Labour again i will be astounded.Brown wants to carry on spending ive got kids and i dont want them to pick up the tab,as they will

  17. The OECD has just forecast zero growth for next year. This is somewhat more pessimistic than other forecasts. But it does underline the probability that any seriously good news on the economy is not going to be announced until after the General Election. Indeed, in important respects things are likely to feel darkest just as the Election takes place.

    For a few years I have thought that for Labour to win yet another election they would need a lot of good luck. It seems now regarding the timing of the recovery they are on the contrary going to have seriously bad luck.

  18. Voters are going to be sorely disapointed if they genuinely believe that there will be a noticable economic recovery.

    My point being, there may be signs of levelling out, and perhaps modest room for economic recovery; but as many economists are highlighting- unemployment for example will continue to rise until at least early 2010, and because of the relative weakness of financial institutions (and the UK over-reliance upon this sector for GDP) there will likely be a slower recovery in the UK than all major G20 competitors.

    Question: will this hurt Brown or help him further? After all Camerons massive leads in the polls (of 20%+) have all been more modest since the economic downturn began. Mind you the Conservative shadow Chancellor does seem to be over taking Darling recently.

  19. Reference has already been made to the OECD report but in addition we appear to have seen, in order, today:

    Brown finding it difficult, if not impossible, to refute the Tory challenge that he give false figures in last week’s PMQ and then King openly challenging the Govt. to produce more realistic figures to achieve a serious reduction in debt.

    Poitical commentators have already read this as support for Darling (and Tories) against Brown. Does this mean a fresh challenge to Brown in the Autumn in which case is it too early to be quite so sure of a Tory victory?

  20. ‘CRAIG
    If anyone votes Labour again i will be astounded.’

    Surely Brown, at least, will?

  21. The most telling point about the OECD forecast is that, whereas it glibly says the worst is over for the global economy, it points out that the UK will underperform other OECD members and continue to decline into 2010.

    It may be a global recession, but how come the UK is suffereing a deeper / longer down-turn than most ?

    The OECD also high-lighted the need for a sustainable programme of deficit / debt reduction in UK. Just as BoE and the opposition have been saying. Brown denial of the need for this, or his own Chancellor’s plans in this respect, makes his position untenable.

    Maybe the EU conspiracy theorists are right. Crunch time for Brown will come at the November PBR. But by then – or so the EU calculates – Eire will have voted “yes” and Lisbon can be ratified. Brown can then be left swinging in the breeze safe in the knowledge that a UK GE will be too late to scupper the Treaty.

  22. Craig/Ivan to which I would add a nasty war on UK territory (NI), crumbling rail infrastructure, devastated Northern cities and the entrenched racism, sexism and homophobia of the 1980s and even the 1990s… a golden age just depends on who and where you are..

    That said, we have plenty of problems of our own time to deal with.. labour or tories really doesn;t matter much anymore, people just want a change of face and some new ideas I think..

  23. Sorry, should have said Chris/Ivan

  24. “how come the UK is suffereing a deeper / longer down-turn than most ?”

    The OECD doesn’t back that up.

    However, the reasons for the UK being more exposed to the financial catastrophe, are obvious, I’d have thought. The biggest financial centres were bound to be the biggest losers.

    The OECD confirms that the UK economy has benefitted from the fiscal stimulus, and would suffer from a too-quick contraction. Again, rather obvious, but seemingly the opposition don’t get that.

    I expect Cameron will come to regret opposing the fiscal stimulus. The OECD report would be more likely to help Labour’s position than the Tories’

  25. I suspect that reports of this kind have little impact on public opinion. It depends on how much the media highlights certain points in such a reports.

    Mostly a government is judged by results that are obvious to most people such as unemployment figures, the price of petrol at the pumps etc. This may not always be completely fair but I think that’s the reality of the situation.

  26. John TT

    Would that be the bit in the OECD report which said that the UK would see its fastest pace of decline since WWII in 2009 and stagnation in 2010 ?

    Or perhaps the part which said: “To improve stability, teh government should continue to develop a concrete and comprehensive plan to ensure that debt is on a declining path path once recovery takes hold.”

    That latter bit is where Brown seems to be in denial.

  27. “It may be a global recession, but how come the UK is suffereing a deeper / longer down-turn than most ?”

    You appear to be mistaking OECD forecasts, for facts. The facts (i.e. actual decreases in GDP to-date) do not support this assertion.

    When forecasters are differing by more than 50% in their growth forecast for just 1 year ahead, I would advise ignoring the forecasts, because the models have clearly broken down.

  28. YOUGov Prediction:

    I think it will be
    Con 42
    Lab 21
    Lib 23

  29. Corus are sacking nearly a thousand workers, citing a depressed market for them.
    They report the sense that the depression has plenty further to go… they’re order book is down around 75%.

    The closer you get to the primary end of industries, the slower the response to change in market confidence… like turning a tanker.
    I sense that Corus’s projections are very pragmatic, and that until and unless there are signs of pick-up in raw materials and the heavier end of mfg industries, any media punt on “green shoots” stories closer to the consumer end should be disregarded.

    The depression has an awful lot to do with China… you can more or less map (’97 Asian Financial Crisis aside) the opening of China to globalisation with the growth of the bubble in the “Atlantic rim”.
    With so much of the world’s reserves locked up in north-east Asia; and with such embedded cultural norms of economic conservatism (high rates of saving; lower rates of consumerism, and much less public service provision) for these export-led and semi-command economies: I would suggest that we’re all in a bind, until this economic cultural dam bursts (i.e. until China, and other oriental economies start behaving more like “western” ones, in terms of establishing systems to stimulate consumer spending).

    Realistically, the trends would suggest that the bottom of this period is somewhere around 2016; it could take that long for the housing environment to return to plausible price-to-earning rations; but of course, other pressures like immigration and environmental change; and infrastructure demands, can knock that date about a bit.

    …to the politics, Labour is no longer regarded as a socialist party, so the astonishment with why people might not turn to them in hard times is somewhat curious. The fact that the LibDems can’t seem to surmount the credibility barrier in their polling despite the dolly catches they keep getting would suggest, that, as I’ve stated before, only the Tories have any reputation for economic competence at the moment… notwithstanding the range of people who maintain ire and disdain for them.
    It seems perfectly sensible to suggest that, the fact that the so-called centre-left or social-democrats have faired so badly recently, is due to them being exposed as no more economically socialist than the so-called centre right; but an awful lot more meddlesome in people’s daily lives.
    I’d even suggest that the results are quite mild for them… there’s still plenty of people who feel exasperated, betrayed, and angry with “them” (in our country, Labour), but when it comes to the crunch [no pun intended], they just can’t quite bring themselves to ditch them at the ballot box for a more honestly economically socialist party, that might appeal more to “charity beginning at home”; again, arguably because of the competence perception factor.

    The trends to me look like the election percentages are not going to change significantly from what they are now…

    Con 37
    Lab 21
    LDP 17
    Others 25-ish

    (Mind you, the Asian Financial crisis is linked itself to the dot.com bubble that started the Bank of England on it’s merry way cutting the brake fluid with interest rates far too low, and letting a divergent phugoid take hold: and we’re now in stalling phase)

  30. Statto (and John TT)

    “Most” does not equal “All”.

    Just because Germany and Japan have seen a sharper decline than UK to date does not mean that UK is not seeing a sharper decline than most other OECD markets.

    Also, the sharp drops seen in Germany and Japan are due to rapid fall in export demand in these essentially manufacturing driven economies. Similar patterns can be seen in other smaller economies which also have large export manufacturing sectors.

    The UK decline is broader based, and since we have neglected our manufacturing sector for over a decade, we are less well positioned to recover once global demand resumes, hence any recovery is likely to be slow and feeble.

    The biggest danger for our economy is trying to revive growth by stimulating consumer demand (eg temporary VAT cuts or the car scrappage scheme). That merely sucks in imports and benefits other countries such as China, but also on the continent.

    The fundamental problem in the UK is a lack of real investment (as opposed to public spending) due to a pitiful savings rate, itself a symptom of excessive borrowing. Since the savings rate needs to be raised significantly and consistently, at the same time that tax rates will inevitably rise, it is clear that consumer demand is going to remain muted for some time.

    The OECD forecasts merely confirm evidence that I see daily from my clients, competitors, and other government organisations.

  31. Paul – It would help your argumkent if you could show you had in mind the broad thrust of the report, rather than simply spinning your party’s propaganda version of it.

    Once recovery takes hold is a phrase which will resonate with the electorate once Cameron’s plans to slash spending BEFORE the recovery takes hold are exposed.

  32. I must say, the moderation has confused things there – my comment was made before reading a (slightly) more reasoned comment by Paul.

    I still think you’re ignoring the ffact that our economy has benefitted from the fiscal stimulus (opposed by Cameron and Party Line-Toers).

  33. John TT

    On the basis of reasoned argument rather than pushing any partisan line:

    The economy has benefitted in the short term from fiscal stimulus since this has brought forward some consumer demand. However, this begs two other questions:

    a – given that the stimulus has brought forward spending from 2010 to 2009 – what impact will this have on demand in 2010 and therefore the pace of recovery ?

    b – given that the demand brought forward has primarily been consumer spending – likely to have resulted in increased imports rather than domestic production – what is the long-term benefit to the UK economy ?

    The core question is not simply whether a fiscal stimulus was appropriate / effective, but also what kind of fiscal stimulus would be most beneficial in both short / medium term.

    The nature of the stimulus implemented shows that the government has not understood that an over-reliance on consumer demand without sustained investment in the productive capabilities of the economy is how we ended up with multiple deficits (fiscal and trade) and record personal indebtedness in the first place.

    To the charge;
    “You cannot cut your way out of a recession”
    I would respond:
    “You cannot borrow your way out of a debt-trap”.

  34. John TT

    “Once recovery takes hold is a phrase which will resonate with the electorate once Cameron’s plans to slash spending BEFORE the recovery takes hold are exposed.”

    This is more than a little disingenuous.

    If we assume that recovery will commence in 2010 (probably around Q2, but not really noticeable until Q3)
    and that general election occurs in May 2010. Then even if Osborne were to take an immediate scythe to public spending in his first budget (and it is debateable how quickly any cuts could be implemented) they would not bite until AFTER the recovery has taken hold.

    Your argument only holds water if you expect an immediate election and an emergency budget to cut current-year spending.

    But in any case, that is not the issue. The issue is what plans the government has to reduce spending from fiscal years 2010-11 onwards in order to address the structural deficit as well as the cyclical deficit and so bring government debt back on a reducing path.

    The extraordinary – and hence incredible – position we currently have is that the PM and his closest advisor are promising increased future spending in contradiction not only of what most analysts (and -according to the latest YouGov poll – the public) consider to be desirable, but also of his own Chancellor’s projections.

  35. Any promised increase in future spending is on the basis that outcomes will be benign enough to justify them.

    Reduction in the deficit is not necessarily at the expense of spending. Yes, the treasury/Brown/Darling are alone in expecting sharper recovery, but you must accept that there is a possibility that their figures are correct.

    Their projections are based on their optimistic figures.

    “Once recovery takes hold” of course soes not mean in the next quarter after the GDP figure turns to zero or above. In contrast to Osborne’s intention to cut as soon as he gets into Number 11, Brown/Darling believe “Takes Hold” means at least three quarters of reasonable growth.

    Only then should the proceeds of growth be firmly directed towards debt reduction.

    The issue is what plans the government has to reduce spending from fiscal years 2010-11 onwards.

    Sure, and who knows what the tax take will be then, or GDP , or anything else that will allow a detailed plan to be made? Brown will no doubt claim the figures will look better. Cameron won’t bother to address that because he intends to make deep cuts whatever the data say.

    Otherwise we’re back in the quagmire.

    The OECD report, like the S&P report supports that line.

  36. a – given that the stimulus has brought forward spending from 2010 to 2009 – what impact will this have on demand in 2010 and therefore the pace of recovery ?

    Increased VAT and other measures will reduce demand, which will be necessary as (if Darling was correct) growth will be returneing by end of 2009.

    b – I can’t quite believe you are in favour of supporting the manufacturing sector in the way you suggest. You say you are in favour of “sustained investment in the productive capabilities of the economy”, but where’s the evidence that this is a plank of Tory strategy?

    How can you possibly support the UK manufacture of “cheap” goods for domestic consumption?

    That line about only benefitting other countries exposes your position for what it is – essentially inward-looking.

    To the charge “You have to look after your own” I answer, the best way to do that is to trade with others.

  37. John TT

    “Any promised increase in future spending is on the basis that outcomes will be benign enough to justify them.”

    Or put another way – “sharing the proceeds of growth” .

    ….

    “Only then should the proceeds of growth be firmly directed towards debt reduction.” … ergo: they cannot be applied towards increased spending.

    “Sure, and who knows what the tax take will be then, or GDP , or anything else that will allow a detailed plan to be made?”…

    But is that not why the Treasury employs economists to make forecasts and plot projections ?

    Even if one cannot make a precise plan, one should at least have a clear idea of what one is aiming to achieve, and the method of so doing. One cannot pretend that a problem does not exist just because one cannot see a clear solution to it.

    Herein lies the difference between Brown and Darling. Darling may be blamed unfairly for the current mess, but he is proving a better Chancellor than Brown, who, despite earlier plaudits, will go down in history not only as one of the worst chancellors, but also the worst ever PM.

  38. Yes Paul – sharing the proceeds of growth , as Darling would, between debt reduction and public investment –

    Rather than, as Osborne would, between tax cuts (at the top only of course) and debt reduction.

    Your last sentence contributes nothing apart from the sense that you are on this thread as part of your job to spin Tory propaganda.

  39. @Paul H-J
    “The biggest danger for our economy is trying to revive growth by stimulating consumer demand (eg temporary VAT cuts or the car scrappage scheme).That merely sucks in imports and benefits other countries such as China, but also on the continent.”

    True, but you can’t export your way out, if there are few buyers… the east asian experience has been all about them feeding the insatiable consumer appetite of the “west”, whilst not developing anything like as ferocious an appetite for western imports. …they’ve had it fairly easy for a good while; now that consumer conveyer is broken; and they have most of the reddies, the question is, what is the west going to sell them? and how?!
    This is a long game of incubating the seeds of chinese consumerism, so that a more balanced and stable trading situation can develop.

    @ John TT
    “To the charge “You have to look after your own” I answer, the best way to do that is to trade with others.”
    …you can only trade what others want to buy; and you can’t likely sell coals to newcastle; even less so in a buyer’s market… those with reserves can sit and make would be sellers sweat, whilst they carefully invest at home.
    It’s globalisation that’s broken, not simply the UK economy; and the notion that focussing on the internal market is somehow negative seems counter-intuitive to me, given the situation; though I recognise, we have to sell something abroad… but that’s very hard when you’re competing with semi-command economies that can undercut everyone on just about anything …except quality, perhaps …hence the need for a domestic focus on training, infrastructure, and enterprise incubation…. it is small local businesses that will steady the ship, not whimsical transnational corporations.

    It is very telling that we in Britain and America, have effectively the opposite problem with saving that Japan and China have!

    @ Paul H-J
    Anyone who thinks there’d going to be a recovery in 2010 is truly kidding themselves… what on earth could that be based on?! The collapse is still playing out, albeit in fits and starts

    “The extraordinary – and hence incredible – position we currently have is that the PM and his closest advisor are promising increased future spending in contradiction not only of what most analysts (and -according to the latest YouGov poll – the public) consider to be desirable, but also of his own Chancellor’s projections.”

    I agree, and I’m amazed they think they can get away that line!
    Mind you, Brown has been trying to project the image of a veritable Rothschild-cum-Warren Buffet of economics… and he has absolutely no background on training in any area of finance whatsoever, so I read…

    You don’t have to be a Tory to think Brown never knew what he was doing in the first place… it’s not propaganda to simply report what statistics show in concert with decisions and statements made by someone… but worst PM, possibly not… what about Lord North in the late 1700’s – he was a shocker!
    Or the (should-be) topical PM Hamilton-Gordon… now that we’re having an inquiry into a clumsy war!
    Brown’s bad; but he’s no worse than Callaghan!

  40. Promsam – re trade your position lacks logic. Trade with others is not the same as “sell to others”. It’s two-way, and leads us back to growth.

    Isolationism is the enemy of progress.

    The projected increase in future investment, used by Paul as a signifier of poor performance as PM, depends on Brown/Darling’s figures being correct and the Tories/City A.M.’s etc being wrong. I think they are comfortable with the possibility that increased trade and fiscal stimulus around the wortld will lead to a more benign situation sooner.

    I find it strange that you regard that position as so extraordinary.

  41. “Brown/Darling’s figures”

    Looks like those are the only figures we will get now.

    According to the Sunday Times, this years Comprehensive Spending Review has been postponed-till after the GE.

    How much more cynical can they get?

  42. No Colin, they haven’t disbanded the ONS.

  43. John TT

    I am not a propagandist. I have had many arguments with the Conservative front bench (past as well as present) over the importance of manufacturing. My position is not protectionist, merely that I believe we should create an environment for entrepreneurship and investment which allows domestic manufacturing to thrive. Unless we can produce things that people want to buy, we will eventually end up poorer as a nation.

    That has far more to do with education and training; promoting the importance of engineering and research skills; a tax system that incentivises saving and investment instead of consumption; and liberating business from mindless regulations imposed by people who have petty axes to grind but have never been near a productive or competitive enterprise, let alone understand what it is that makes entrepreneurs take the risks which generate the wealth needed to support the massive spending plans of “progressives”.

    For too long our country has ignored the needs of manufacturing to pander to ill-educated consumers and misguided “do-gooders”. That needs to change. It is self-defeating to impose on our own industry obstacles that do not apply to their overseas competitors.

    Incidentally, there is also a “green” element to having local manufacture. It is utterly wasteful of our planet’s resources to have raw materials, components and finished goods being shipped around the world.

    Finally, there is a social dimension too. I would much prefer to have our under-educated unskilled “workers” producing “cheap” goods for local consumption then pay them to sit idle while sucking in imports that the productive sector has to pay for. Not only does that help the economy, it helps strengthen the moral fabric of our society.

  44. The only problenm with bringing home manufacturing of cheap goods is that they won’t be as cheap here. There is something morally wrong in sending parwns on a 10000 mile round trip in order to be shelled by cheap labourers and sold 100 miles from where they were landed.

    However, that’s the system aka capitalism. Let’s hope more like you see the light and reject the nonsensical aspects of it.

    There are plenty of opportunities for entrepreneurs to start successful enterprises, tax breaks, help with funding etc. It’s certainly improved since the (Conservative Govt) days when James Dyson couldn’t get backing. Those were the days of course, when to get a great cleaning product manufactured, there was only one place to do it…Japan.

  45. No Colin, they haven’t disbanded the ONS.

    Since when did the ONS take over the role of the Treasury in planning Public Finances?

    Mandleson said on R4 this morning that the CSR is postponed till after the election.
    He said this was because of the difficulty of forecasting in the recession…..you really couldn’t make this up.

  46. Colin, you suggested we were not going to have ANY figures. That is clearly untrue.

    There’ll be plenty of time and opportunity for the public to consider the differences in what spending Labour proposes and what the Tories propose.

    You’ve just swallowed Cameron’s blustering attempt to distract from the fact that he would take precisely the same approach to the recession that his party took in the early nineties.

    Talk about riots on the streets, it chills the blood to think what would have happened if he’d been elected just before RBS almost went under.

  47. “Colin, you suggested we were not going to have ANY figures”

    John-I meant figures with which economists , the nation’s creditors & political oponents can make judgements about Labour’s plans for FUTURE management of the Public Finances.

    We are to be left,according to Mandelson, with out- of -date Budget figures as we approach 2010-an election year.

    “plenty of time and opportunity for the public to consider the differences in what spending Labour proposes and what the Tories propose.”

    Well of course-that’s the cunning plan!
    Labour have just been caught cold by the Tories-with the help of IFS-quoting Labour’s own Public Finances forecasts & demonstrating that they imply Spending reductions.

    …so-what to do?…we won’t give them any projections at Economy level at all. We’ll just talk about taking n £bn from here & putting x£bn there-Balls did this on Marr & Mandelson did it on R4 this morning.

    Future spending & taxation policy only has meaning in the context of future Public Finances .
    By the simple Mandelsonian ploy of saying they can’t do those now because they don’t know what the future holds, Labour think they have carte blanche to quote any figures they like.

    They have of course demonstrated that none of their Public Finance plans will have any validity until they declare the Treasury forecasts on which they are based.

    You wouldn’t run a whelk stall like this-& your Bank would call time if you tried.

    I haven’t swallowed anything john-I said some days ago in a post here, that Labour’s chosen attack of “Investment” vs “Cuts” post a GE, would only succeed after the disastrous exposure of the last Budget, if Darling produced no more official forecasts before the GE

    But I didn’t imagine they would dare to do it.

  48. I think this has drifted into a partisan argument about whether Labour are right or wrong to delay the PSR, and this really isn’t the place for it.

  49. Brown/Darling’s figures”

    Looks like those are the only figures we will get now.

    Not true, and nor is your denial.

    There will be plenty of official, independent figures. It’s the comprehensive spending review that’s been put off, not the announcements of results or policy announcements.

    “taking n £bn from here & putting x£bn there-Balls did this on Marr & Mandelson did it on R4 this morning.”

    and Gordon Brown just did it in the HofC. Nothing wrong with that. Changing priorities, identifying savings. Making commitments, and exposing the Conservatives’ position for what it is – “do nothing to help”.

  50. Delaying the PSR may well be wrong, but it is not the same thing as abolishing all independent figures.

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