At the end of last year I wrote a piece saying I thought there were four “known unknowns” that might change the political picture before the election campaign. The first was Labour’s final chance to change their leader in January – as we’ve seen, there was an attempt by Geoff Hoon and Patricia Hewitt to force Brown out, but it fell flat and does not appear to have had any lasting effect upon the polls.

The second was the end of the recession and, as expected, this morning’s economic figures show Britain’s economy is officially growing again. So, what impact will this have on the polls and will it produce any sort of Labour recovery?

Polls asking if people are more likely to vote Labour if the economy recovers don’t predict any significant advance – but I wouldn’t take them as a particularly good indicator anyway. If Labour do recover on the back of the economic good news I suspect it won’t be on the back of a direct conscious calculation that they have done well and deserve support (we saw with ICM’s poll for Channel 4 yesterday that a relatively small proportion of people attribute the recover to government action). Rather it will be a more subconscious increase in optimism and the “feel good factor”, leading people to think better of the way the country is going and more likely to back the government.

That said, it’s not actually a given that it will be a positive for the government. In ICM’s marginals poll last weekend we saw that one area where Gordon Brown still had much better ratings than David Cameron was handling a crisis. Populus’s poll this month asked a pair of questions they’ve used several times since the credit crunch – asking who would make the best Prime Minister “right now, to deal with Britain’s economy in recession” and who would make the best Prime Minister going forward after the election – Cameron’s lead over Brown was 11 points on the first question, but 17% on the latter. If Gordon Brown is actually still benefitting by being seen as the best man to lead the country in an economic crisis, the passing of that crisis could, perversely, be a negative for him.

We shall see when the first post-recession polls begin arriving.

52 Responses to “The end of the recession”

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  1. I think we are more likely to see clearly when 4 or 5 post recession polls have arrived.

    The Conservatives ought to point out that Darling had predicted in March for the end of the recession to come by September. At the PBR he was still claiming it would happen before the end of the year – it didn’t.

    There is a real danger that this quarter’s 0.1% growth will be followed by more shrinkage in Q2. That will be very damaging for the country, but especially so for Labour if this news breaks near the beginning of a GE campaign.

  2. Just a notice that I’m going to rebut some of your comments on my own blog.

  3. Neil, a small point of fact which I am going to remind you (before everyone else does):

    The GDP figures refer to growth in the last three quarters of 2009. Therefore, the Chancellor can claim with justification that the economy did start to grow before the end of the year.

    Thus far, the GDP figures are an estimate based on 40% of information. There is potential for that figure to go up (very likely) or go down (not as likely, but still a risk).

  4. I really cant wait to see how this will play out in the polls. What has been seen as a possible boost for labour could be quite bad for them depending how the other parties attempt to take advantage of it. On one hand there is the talk of the “only 0.1% growth” factor. But theres also things like vince cable within the last few hours saying on bbc that the labour policys were right (for the recovery) and implying that the tory “cuts” would be very bad for the fragile state of the economy. (That wasnt even close to being a quote just what i vaguely remember from about 20 mins agoid barely call that paraphrasing)

    Could this 0.1% fragility play more into the hands of labour then if we saw a larger margin of growth?

    Another thing im noticing (could be all in my head) but does it appear that the liberal democrats seem to be going more on the offensive against the conservatives then labour at the moment? Could this be a possible signs of a future alliance incase of a hung parliment? (not sure if alliance would be the right term though)

  5. Faisal Islam said last night on C4 news that there was a fairly strong correlation between Consumer Confidence and incumbent poll ratings.

    Could anyone verify this?

    If so, an interesting line to investigate. Maybe a more concrete way of assessing the impact of the “feelgood factor”.

  6. James –

    There used to be a very strong correlation. David Sanders used to have a model predicting election results based to a huge extent upon consumer confidence.

    If I recall correctly it worked very well until 1997, when consumer confidence had recovered, but the Conservatives still got a kicking. Sanders’ model now also factors in leader approval ratings (and, I think, some other factors. Certainly at the last election he added a dummy factor for the Iraq war too).

    So, Faisal Islam is quite right – consumer confidence does often have a correlation with party support. I’d expect CC to go up now we are officially out of recession and all things being equal that should be a positive factor in Labour support. On the other hand, we’ve seen from the experience of the Sanders model in 1997 that it isn’t a direct correlation and it doesn’t always work.

    As I said back in November, I think this is the known “event” that has the most potential to give Labour a big boost. But there’s also a counter argument as mentioned in the post above. I really don’t know how this one will play out.

  7. If it takes two quarters of negative growth to make a technical recession, why does it take only one quarter of positive growth to get out again?

  8. But I note that in Australia the Conservative govt lost the election at the height of the boom as ‘time for change’ was more important..

    More than one factor will influence voting…

  9. If anyone thinks the exact percentage of growth makes any difference, they have been breathing too rarefied air. In fact a statement saying the recession has ended won’t make a blind bit of difference. Most people don’t even know what a recession is, in fact economists don’t even agree. If there is overtime, falling unemployment, a feeling your job is safe, a general feeilng things are getting better, thats what people regard as an end to the recession. As it happens with unemploment not likely to fall much, threats to public spending, talks of tax increases and rising inflation……I can’t see anybody feeling things have got much better this side of the election.

  10. From what we already know about the public perception of Labours contribution towards national solvency, this miniscule advance in growth will be almost as big a loser for GB as no growth at all. On another thread today, I have talked up the LDs
    chances due to Chilcot and this limp out of reccession. It would appear I am in a minority of one at present, we will see.
    By the way, I in no way support the LDs, its my veiw of the way the wind is blowing.

  11. Does this change much really?

    We have known for some time that the end of 2009 would see the end of the recession.

    We all knew that this would give Labour the platform it needed-to say Con cuts in 2010 will “jeopardise” the recovery.It has-they are.

    Indeed the fact that Q4 numbers are so weak ( weaker than expected) gives Labour more reason to attack 2010 cuts.

    Osborne has already faced this attack & put his counter arguments.

    So just more of the same slanging match.

    What really matters is a) what people are feeling in their own lives about jobs, and b) what choices people express about their future PM.

    I don’t see any reason for a) to have changed as a result of Q4s numbers
    The answer to b) has for some time been Cameron rather than Brown-if only by a narrow margin.

    So I think the only way any of this will play for Labour is if their attack on 2010 cuts gains credibility .

    As an aside, I’ve just watched a Scottish textiles manufacturer on Sky News complaining that export opportunities are going begging because of lack of Bank lending.

    Given the stuff spouted about the efficacy of “monetary stimulus”, there is something which does not add up here.

    It is no surprise to me that Obama has finally had enough with the Banks.

  12. BM – because we are no longer in a state of recession, since one of the last two quarters of growth wasn’t negative. There isn’t a definition of “recovery” that the country has to meet, we just don’t meet the definition of recession anymore!

    Bryan Coombe – the figures themselves don’t make that much difference and naturally, the direct effect upon people who have seen their income fall, or have lost jobs or whatever won’t be changed by it. The reason it is important is that it will get a lot of media coverage, will be picked up by people, and to take one of your critieria, will make people think things are generally getting better. It’s the reverse of some of the recent budgets – they didn’t actually make the recession worse, but Alistair Darling standing up and giving bad news made the recession more real to those who had not been directly personally affected.

  13. What is interesting is the weakness of the recovery. How will we do in this qtr?

    Well the year got off to a very bad start due to the bad weather. We have seen VAT go up and the car scrappage scheme end.

    There has to be a chance that we may dip in the qtr which means that 2 weeks before election day the Tories will have all the ammo they need to batter Labour.

    Both Portillo and Diane Abbot agreed with this on This Week.

  14. Roland

    On another thread today, I have talked up the LDs
    chances due to Chilcot and this limp out of reccession. It would appear I am in a minority of one at present, we will see.

    I think you are absolutely right. Improvement in the polls, some good performances by Vince Cable, and a reminder of the ‘illegal war’ could push the Lib Dems close to labour or even better.

  15. Anthony

    I think that few people will register the technical bit about the recession ending (despite the publicity) I know fewer people interested in economics than I do politics (now I think about none actually), it will wash over them.
    And those that do will not make them feel better, that only comes with personal experiences, more overtime, better job security. This is the kind of non story that only sad people like me and other not so sad people on this board notice for more than five minutes.

  16. Fat lot of good economic recovery did John Major in 1997.

    It won’t do Brown any good here either.

  17. More to the point is people will want to know after so much has been spent by Labour, quantative easing by the Bank of England, measures to boost spending such as car scrappage scheme etc and a cut in vat etc, is why after ALL of this the economy only managed to grow 0.1%

    Not a very good return for our money is it.

    Dont think the average Joe will be too impressed at all. And if Q2 doesnt show any improvement or in fact another fall then it really is the end of Brown and Labour

  18. @Neil – my recollection is that Darling predicted an end to recession in Q4, in which he is entirely correct. At one stage Brown was implying an end in Q3, but Darling was much more cautious, and rightly so. much will depend on Darling’s forecasts, but I think he does deserve credit for what seem to be remarkably accurate PSBR forecasts. This is one of the toughest numbers to predict, and he predicted a £175b deficit in March and only had to upgrade this to £178 in November. This is remarkably accuracy, given the scale and nature of the recession, and while many people were highly critical of his projections at the time he has proved to be largely honest in his assessment on this score. What is more interesting is that many now expect him to undershoot this borrowing projection with recent monthly figures coming in several billions below predictions. January will be the key month and this is when we will see whether the increase in Corporation Tax receipts continues.

    In terms of the GDP figures, I’m sure Labour will be disappointed with the weak results here, but as Colin says I’m sure they will use it as part of the attack on the Tory spending policy. Like others, I feel GDP numbers have no bearing on how people vote – it’s whether it translates into a sense of easier or harder times ahead. Confidence is rising, but as with ’97, maybe with a long serving government with many other negative issues built up over time the economic confidence linkage to party support starts to break down?

  19. Sorry chaps I hate to disagree but I think the size will matter.
    Of course a considerable proportion of people wont care or bother to understand. But a considerable proportion of people will know that point 1 % is very little. It certainly does not give any room for trumpet blowing or massive celebration. In all its like giving OAPs 50p rise – derisory. We know there is not much credit around for Labours efforts in economics and this certainly wont help.

  20. Still of the opinion that big gains for the LD will come out of already dis-satisfied voters who had switched to Conservative from Labour, rather than coming out of Labour’s already low figures. The anti-war vote is already pretty much in the polling, the Inquiry is just telling them what they already thought. With the damage already done to Labour, LD will gain over the Conservatives simply by reminding people that the Conservatives were backing the war too.

    I am sorely tempted to bet on hung parliament, and may have a twenty pound flutter on it.

  21. Colin:

    “Indeed the fact that Q4 numbers are so weak ( weaker than expected) gives Labour more reason to attack 2010 cuts.”

    This is along the lines of what I imagine to be the case. I was saying a year ago that a return to growth before a general election would actually tip the balance in the Tories’ favour because the electorate would be more confident about a change of government and a shift away from the Labour years of government and consumer credit.

    Given how weak these figures are (and by the way I wouldn’t take it for granted that the initial estimate will not be revised down) it may tip the balance back in the government’s favour because cutting back on public spending this year seems more of a risk. Indeed, even though the Tories are stuck with their argument now, I wouldn’t be surprised if an incoming Conservative government pulled back from the scale of cuts they wished to make in 2010.

    If I was in the Treasury then I would be concerned about these figures. We know that retailers reported a consumer binge in the Christmas period to take advantage of the VAT cut. If consumers now take stock in the months after the new year and quantative easing ceases at the end of February then there is a real possibility that the economy will shrink in Q1, or at least remain stagnant. If this does happen then the figures will be released only weeks before polling day. This would surely be a huge blow to a government claiming to be nurturing the recovery.

  22. For the first time , this afternoon, I can see that Chilcot may have negative polling , & possibly GE results for Labour.

    The testimony from the senior legal advisor at the Foreign Office , and his deputy ( who resigned) that FO legal advisers unanimously told Straw that the War would be illegal , and that he chose to “disagree” with that advice, is extraordinary- said to be unprecedented.
    The way the then Attorney General was required by ministers to advise them when it was effectively too late to stop the war, was also highlighted.

    Straw has to come back. His second visit will not be a comfortable as his first.

    I can’t remember whether Chilcot is one of Anthony’s known unknowns-but I think it might qualify after today.

  23. @COLIN
    The facts you report are what set me of on my Lib Dem tack.
    This need not directly provide any votes for DC but surely Labour must take a hit.

  24. @STEPHEN
    I agree, exactly my reaction to how the public will react.

  25. Edward:-

    Clearly I agree with your third para-at least that it ” may tip the balance back in the government’s favour “.

    It is not clear to me though, that what Osborne has pubblicly flagged for action in 2010 amounts to the sort of significance that Byrne & Brown try to accord it.
    I stand to be corrected , but as I understand it Osborne has pledged to cut advertising budgets , tax credits for people earning over £50,000 & child trust funds for better-off families from 2010.

    It is complete nonsense to claim that these moves would bring about a double dip.

    I’m not sayingthat Cons don’t have other plans too for 2010-but they haven’t announced them-and of course Mandelson recently indicated the massive scale of cuts to come under Labour from 2011.

    But when did any of this stuff relate to the facts. If Brown & Byrne can convince people that Cons are going to throw thousands of people on to the dole within weeks of gaining office-then unless Osborne says they wont, some people may believe it.

    Re. Q1, all the media comment seems to be that a Q1 GDP decline would be very bad for Labour.

    I’m not so sure-at least I don’t think it will alter the logic of their central argument-Cons would destroy weak recovery from recession by cutting ( massively/indiscriminately/ etc ) in 2010.

    Brown has always seen this as his get out of jail card-it’s the only one he has got & he will play it to the bitter end.

    Whether he can make the mud stick-who knows?

  26. ROLAND-I hadn’t seen your thoughts on Chilcot.
    Sorry if i duplicated what you put forward.

    I’m not sure about “no votes for DC”-if this revelation about ignoring the legal advice gathers media miles, then there might at least be some understanding that Cons-like everyone else-believed what Blair & Goldsmith said.
    Think how the Military must be feeling after today’s evidence!

    I agree though that only the LibDems can claim the moral high ground.

  27. ALEC

    As highlighted on Guido’s blog this morning Brown’s & Darling’s economic growth/recovery forecasts over past 2 years were hopelessly inaccurate.

  28. @COLIN
    On another thread I waxed lyrical about the LDs chances when I heard this.
    I suggested C41 L24 LD24, it was largely poo pooed.

    By the way, I know how the military feel. My son is in the Para’s
    and they hear allsorts at the present time. Your assumption is about right I think.

  29. I hope your son stays safe Roland.

  30. @COLIN
    Thanks for your kind thought. However, when you see his battalion you begin to take pity on the Taliban.

  31. I hope the paras have more success in Afghanistan than they did in Northern Ireland.

  32. ‘@WOLF
    I will treat your comment with the contempt it deserves.

  33. @WOLF

    That really was quite poor, I must agree.

  34. Anthony, there is a new “known unknown” – will an ONS revision change the story?

    We must bear in mind that the 0.1% growth is a PROVISIONAL figure. There are two revisions due before a May election. The average revision is between 0.2 & 0.3 %, so it is plausible that before the election, we could be told “The recession is NOT over”

    And people tend to react to unexpected bad news. If we are told, in the February or March revision that we’re still in recession, this may be very bad news for Labour.

  35. Cynosarges

    The Government is perfectly entitled to get updates from their statisticians at any time – although the UK Government statisticians have already demonstrated their willingness to go public to criticise misuse of that data.

    However, the PM is free to call an election whenever he wishes, so I wouldn’t rule out an election before May.

    My understanding is that a 2 Feb announcement could lead to a 25 Feb GE : a 9 Feb announcement could lead to a 4 Mar GE : a 1 Mar announcement could lead to a 25 Mar GE.

  36. Most recent revisions have been upwards. If it turns out the economy grew 0.3%, that’s not going to shift many votes – it’ll get barely any coverage. If it’s -0.1%, then naturally Brown will get blasted from a dozen directions and we can call the campaign over.

    I don’t see the end of the recession as being a significant primary factor. Firstly because, as others have said, statistical economic recovery doesn’t switch many votes, and secondarily because 0.1% is a tiny figure.

    On the other hand, it will strengthen Labour’s message that Cameron will put us back into recession (always assuming we’re still recording growth come March, naturally). Whether people are willing to buy that message is very doubtful – reputable economists may overwhelmingly say that now is not the time to cut, but the public are still supporting Dave. Nevertheless, if that message is going to swing any votes, it’ll be more likely to swing them if Labour is slowly leading us out of recession.

  37. @COLIN
    “We all knew that this would give Labour the platform it needed-to say Con cuts in 2010 will “jeopardise” the recovery.It has-they are.

    Indeed the fact that Q4 numbers are so weak ( weaker than expected) gives Labour more reason to attack 2010 cuts.”

    @EDWARD (commenting on Colin)
    “Given how weak these figures are (and by the way I wouldn’t take it for granted that the initial estimate will not be revised down) it may tip the balance back in the government’s favour because cutting back on public spending this year seems more of a risk.”

    I’m not disagreeing with either of you, but there seems something Alice in Wonderland about the idea that the weaker the economy the better for Labour. Their argument appears to be “Because we ran the economy so badly, it is in such a weak state that the country can’t afford to take action this year to put it right, so vote us back in again.” Hardly a ringing endorsement!

  38. @ LESLIE

    Yes it is Alice in Wonderland-I agree-but we are supposed to discuss the effect on the Polls-not what we believe. ( it’s hard though I would agree!)

    So yes your neat encapsulation of :-

    ““Because we ran the economy so badly, it is in such a weak state that the country can’t afford to take action this year to put it right, so vote us back in again.”

    maybe how you would put it.

    But Brown would omit the first seven words.

    Whether the electorate will add those words in themselves-or not-or question the underlying premise-or simply have made their mind up already is anybodies guess.

    But it is certainly Brown’s key electoral strategy-always has been since the recession hit.
    Nick Robinson on the 6pm News reminded us that Brown told Labour MPs at the post Hoon-Hewitt love-in that this would be the central plank for a Labour victory.

    I notice that Hammond this evening has been finessing the Tory line into -must ensure low interest rates for at least a year to foster the recovery.
    I think that’s code for Low interest rates=no problem funding government borrowing=confidence in the Markets=show you mean business about getting the deficit down.

    I just wonder how much of this argument registers with normal people (unlike us on here.)

  39. Anthony, as you yourself say in the next thread:

    “It is very easy to overestimate the extent that people vote with their pocketbooks”.

    For Labour to benefit from the ‘end to the recession’ they need two things.

    1. To believe it is at an end
    2. To believe it is more likely to stay at an end by voting Labour rather than Conservative.

    If – a big if – Labour can get both of these messages across, the recession, the economy, will still be the deciding factor in the forthcoming GE.

  40. I should add, I don’t believe Labour can win – even if they do get those messages across.

    But they can get a “score draw”.

    By contrast, if the Conservatives get across the message to voters that either

    i. The recession has not ended or
    ii. That any recovery will be safer with them

    Then the Conservatives will have a good sized majority.

    It will ALL be about the economy in this sense.

  41. It won’t make much difference. People’s minds are made up.

  42. @OldNat

    “The Government is perfectly entitled to get updates from their statisticians at any time”

    No they’re not. Statistics such as GDP change are announced on a schedule. Brown is free to creatively misinterpret statistics at any time however.

    @Edward Carlsson Browne

    “Most recent revisions have been upwards”

    Not so. Last two revisions were upwards, the previous four downwards. Over time, upward & downward revisions pretty much match out.

  43. @Edward Carlsson Browne

    Further info. The BBC website has a plot of the recent GDP revisions

    prior to this period, GDP revisions tended to have slightly larger magnitudes

  44. @COLIN

    You’re absolutely right of course that Labour would deny the first seven words of my summary of their position, and I would have been better off – in the spirit of non-partisanship – starting with “Because we have had such a long recession and only the beginnings of recovery …”. However for their position to be credible, they need to convince people that the recession was an act of god/Bush and that the slowness of the recovery – compared to the rest of the G7 – is not their fault either but the fault of the “system” they inherited in 1997. It’s not going to be an easy sell.

  45. I work with incomplete and inaccurate data every day, just as the ONS does. It is ludicrously easy to slightly alter some assumptions of likelihood about future data to change forecasts by several percent, let alone fractions.
    I wonder how likely is it that the staisticians have been ‘encouraged’ to show an end to the recession in these figures, and will be ‘encouraged’ to revise upwards any revisions?

  46. @ John B Dick

    Sometimes the shortest and simplest of comments speak volumes (I’m one to explain myself in the most complicated way as possible).

    I agree with you 100%. The polls have been constant and solid for so long I think it won’t make a noticeable difference at all, with a difference of no more than +/-couple of points in the forthcoming short-term polls.

  47. If you look at GDP per capita we are still in recession.

  48. @ LESLIE

    “It’s not going to be an easy sell.”

    I agree ;-)

  49. “However for their position to be credible, they need to convince people that the recession was an act of god/Bush and that the slowness of the recovery – compared to the rest of the G7 – is not their fault either but the fault of the “system” they inherited in 1997. It’s not going to be an easy sell.”

    No, that would not be an easy sell, Leslie, but I think they are likely not to try to sell that (it is after all a system (ie the City as a major player) that Brown was proud to have developed himself rather than inheriting it), but to concentrate on selling policies for continuing growth rather than shrinkage. Most sensible people know the world went into recession and that the world is coming out of it.

    Are we the “sick man of Europe”? is a good question.

    Would we become the “sick joke of Europe” under the policies of the alternative? is an equally good one.

    Depends where you stand and as Colin typically points out in his restrained and honest way, we are not here to be partisan.

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