With the budget tomorrow, I thought I’d update this chart from a year ago. It shows the two YouGov polls preceding each of the last eight budgets, and the two YouGov polls that followed each one, giving us a sign of whether the budget gave the government a boost or not.

As you can see, budgets have generally not given the government much of a boost – the most positive one was 2005, which took Labour from three points behind to two points ahead. I am sure is it no coincidence that it was a pre-election budget!
As someone has pointed out, it was actually 2006, so not a pre-election budget – my earlier cynicism was unwarranted. The actual 2005 budget didn’t have much of an effect at all.

The two most recent budgets have been disastrous in terms of Labour’s position in the polls. In both cases Alistair Darling was forced to deliver news about just how bad the economic situation was, and both turned a Labour deficit of around about 6 points into a Conservative lead in the mid teens. Clearly a similar result from tomorrow’s budget would be disasterous for Labour, but with the country out of recession a more positive message from Darling may be able to avoid a similar result to 2008 and 2009.


92 Responses to “On budget bounces…and budget slumps”

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  1. Just had one of my mid afternoon moments. Saw the headline ‘Hoon and Hewit Face Probe’ and for a brief moment I thought the Commons authorities had come up with a Bladerunner style device to test whether these two are really New Labour replicants, programmed to seek out cash. I really should have a nap after lunch.

    On the budget, I can’t see this producing the poll plunge for Labour of last year. Despite Osborne’s attacks regarding Darling’s honesty (parroted by many on here) last years budget set out the scale of the deficit problem honestly and accurately. His strategy was clearly not to try to delay the day of reckoning, but to get the bad news out of the way well before an election. This time the public knows things are bad, and Darling will attempt to muster all his credibility to outline an improving situation. There will be some good news announcements, but in the main it will be fairly dull. I am expecting him to use the lower than expected deficit to forecast reduced current year growth in order to appear more credible, but with a return to good growth in 2011 he can also forecast this will mean the structural deficit will be less than anticipated and therefore attempt to persuade the markets that while things will be tough this year the long term deficit position is laregely unaffected. This gives room for some modest growth measures and much talk of locking in the recovery. These aren’t unreasonable assumptions – growth of 3.5% in 2011 would be a historically slow recovery, and I think most market commentators have got their forecasts wrong on this one.

    The other point to bear in mind is that this budget, unlike earlier set piece parliamentary events, comes after the Tories have been subject to a fair bit of pressure. Whereas last year the automatic reaction of voters fed up with Labour was to flock to Cameron, now many are not so sure. Even if people are disappointed with the budget, which is less likely anyway, its not a given that they will head for the Tories.

  2. MITZ

    “. Which direction they go in is down to Darling alone, with a side order of Osborne’s response.”

    The response to the Budget speech is made by the Leader of the Opposition rather than shadow Chancellor, who makes his response the day after the Budget speech in the debate on it..

    The convention means that the Leader of the Opposition is able to make a general speech on the state of the economy while the shadow Chancellor is able to spend a day analysing the details of the budget before making a considered response, something that would not be possible if his response came immediately after the Chancellor’s speech.

    I agree with you that the Shadow Chancellor’s response will be more interesting in terms of the detail, & the key points of criticism. I always try & watch it for that reason-it’s where you actually learn something about the budget.

    But it gets far less publicity than the response on the day by the Leader of the Opposition, which tends to be merely a chance to encapsulate fundamental differences in thinking, in a nice sound byte.

    I always think it’s a tough call for the Opposition Leader, who has those frantic huddled heads together briefings from his Shadow Chancellor colleague throughout the Chancellor’s speech.

  3. The immediate response by the leader of the opposition is a complete waste of time. He’s hardly going to say “May I be the first to congratulate the Chancellor on an excellent budget” is he?

    Osborne’s response, the more I think about it, will be critical. He needs to debunk the growing feeling that he is the Tories’ weak link and fast.

  4. According to Stephanie Flanders, Darling will reduce his forecast for 2010/11 growth, leaving that for 2011/12 unchanged ( at 3.5%)-and compensate by revising the definition of the structural deficit down.

    So there is still room for criticism of the key element in Labour’s deficit reduction plan ( at least as declared pre GE)-growth rate of the economy. Consensus third party forecasts are nearer 2% than 3.5%-and that makes one hell of a difference when crunching out the resultant deficits & cumulative debt. As ever IFS will crunch the numbers & they always get respected commentary.

    The other thing which SF touches on is the change -since last year-in perceptions about which party might actually be delivering fiscal policy after the GE. To the extent that this has moved towards Labour, there might be a more serious analysis of the effects of perceived flaws in this Budget.

  5. MTZ

    “He needs to debunk the growing feeling that he is the Tories’ weak link and fast.”

    Well certainly-but to my mind he has a much more important task.

    He has to explain why Labour’s plan for the Public Finances , over the next Parliament, will be bad for the economy & the country . THis should not be too difficult.

    Then, however, he has to explain -to a seemingly reluctant audience-why his plan will be better, and why people should vote for it.

  6. Your mind, my dear chap, is clearly somewhat elevated above the norm. Most people will be thinking “This government has been a bit rubbish, ennit? But wot are the other lot gonna offer, eh?” or words to that effect.

  7. @colin – the growth rate is the nub of the issue. Given the slower than expected inflation rate and the likelihood that interest rates can stay lower for longer, I would repeat my view that 2% will prove to be well below what we will achieve in 2011. There are oceans of spare capacity in the economy and signs that exports and manufacturing are already picking up. UK is well placed to benefit once Europe returns to stronger growth, so I really think the 2% forecasters are wrong. In my view, the worst thing for all of us would be to listen to discredited city forecasters, and by assuming the worst look to cut spending in a self fullfilling prophecy.

  8. @ MITZ

    ““This government has been a bit rubbish, ennit? But wot are the other lot gonna offer, eh?” or words to that effect.”

    I tries so hard to express that thought-you do it so much better-thanks ;-)

  9. British Gas employees have voted to strike. Rightly or wrongly, surely this is building a narrative?

  10. @ ALEC
    ” the growth rate is the nub of the issue”

    It is-it always has been -I agree.

    ” I would repeat my view that 2% will prove to be well below what we will achieve in 2011. ”

    Thanks-you really didn’t need to.

    The point though Alec-since no one will actually know before electing the new government , what 2011/12 growth rate will be-is who will believe whom?

    And whilst you & I , and high rise buildings full of financial professionals can agree that this is a very important & relevant debate, as MITZ so succinctly puts it the only question for millions of our compatriots is :
    ““This government has been a bit rubbish, ennit? But wot are the other lot gonna offer, eh?” .

  11. So what will be the general election result?

    First truism —–no one likes politicians particularly at this time
    Second truism—-automatic Labour and Tory voters will always
    do their own thing.
    Third truism—–floating voters will decide the result
    Fourth truism—-the economy and its perception will be the issue
    that swings it.
    Is the recession really the fault of G Brown’s lot?
    Are things getting better or not under his leadership?
    Would Dave & George make things better or worse for for me and the UK?
    Forget about the flimflam that attends every election— at the
    moment its far from clear who will win the economic argument

  12. Do the GMB, RMT and Unite really want a strong Tory government? It’s beginning to look that way.

  13. @colin – “Then, however, he has to explain -to a seemingly reluctant audience-why his plan will be better, and why people should vote for it.”

    There are two interesting points about this. Firstly, his plan could be little different to Labour’s. With the Tories lack of specific numbers there is no way to assess accurately what his plan is, and such policy specifics as there are suggest the difference will in fact be quite small.

    Secondly, if Osborne actually does what he has implied, although not specified, and go for fast and deep cuts, there is very good economic evidence that this will be more damaging for the medium and long term economic outlook than Labour’s plans.

    As voters, we are caught between a rock and a hard place with Tory economic policy. The lack of clarity means judgements are extremely difficult to make. What I think he wants to do I find genuinely frightening, but he could equally be moderately benign.

    [Snip – Alec, you are slipping into why you personally don’t like Cameron a lot these days. It really is not the place for it! Start a blog or something :) AW]

  14. If Allistair Darling predicts a 3.5% growth forecast tomorrow- he’ll be comitting electoral suicide.

  15. YouGov/ITV London reported in Evening Standard…

    C:40(+1) Lab: 31(-4) LD: 18 (=1)

    Changes compared with last poll which was an aggregate of regionals, which were properly weighted.

    http://www.thisislondon.co.uk/standard/article-23817842-labour-closing-gap-on-tories-poll-shows.do

  16. 2006 vs 2005
    Thanks – I understand now why I was so puzzled but we got there in the end.

    The lesson remains that budgets, by themselves do not win elections. Was it not interesting about that enormous MORI error in April 2005? By May they were boasting about how near to the result they got it. Rather immodest not to remind us of the situation a month before.

    Also I don’t know whether there is any history of practically no movement in the last month of a campaign, as was in this case.

  17. Alec, perhaps the growth rate will be much higher than most people think – and clearly, it needs to be.

    The National Institute expect 2% a year till 2015, which would mean growth of 1% a year from 2005 to 2015. Factor in growth in the population over that period, and you could be looking at the lowest rate of growth in GDP per head since a very long time back.

    Coming on top of anaemic growth in the current decade, that’s neither a record, nor a prospect, that would make me want to entrust our future to the current incumbents.

  18. @nickr
    There’s something strange about that YouGov poll in the London Standard. The webpage is entitled ‘labour closing gap on Tories poll shows’ but the headline is Cons take 9 point lead and it shows that Lab is down 4 points.
    Contradiction. Or am I missing something?

  19. @sean,

    You right to say it needs to be…

    Where do you see it happening? A you factoring in a Tory win and surmising that avoiding of inflation/interest through quick debt repayment may allow growth to flow again?

    Nations with Britain’s current profile rarely exceed 2.2%.

  20. London Poll
    I could not find when the field work was done. Yet the reporter talks about BA and sleaze?

  21. Evening standard is only for London region

  22. Cameron was going on this morning about the need for big cuts in 2010 (without any specifics). That sort of approach would be quite dangerous for the Tories, I would have thought.

  23. Julian, judging by the comments, I think it’s somehow got mixed up with reporting of the Opinium poll. But some sort of Yougov poll has clearly just been released. I don’t know if it’s a separate survey for London, or a reuse of the past week’s datasets, re-weighted to match London’s demographics.

    Eoin, overall I’m very pessimistic, about the future for this country, and the future for most Western countries. I just think we’ve got into the habit of thinking the rest of the World owes us a living, just as the full blast of competition from East Asia is starting to hit us.

    I think in the medium to long term, we need to really rein back public spending, to enable taxes to fall, and the private sector to grow. For the government to be spending 52/53% of GDP (and up to 70% in some parts of the country) is just not sustainable.

  24. @SEAN FEAR……………It’s a new You-Gov poll for ITV London Tonight.

  25. Eoin

    Yes of course – London – (I assume they use Government Office Mayoral boundary). Without further analysis it does beg a few questions but perhaps YouGov will be able to release details shortly.

  26. @Sean,

    For the most part I would agree with you. It is all about competitiveness and economies of scale…

    I know the side effects are potentially disruptive but expanding the common market seems a logical procedure for competetion, either that or the high end market that Mandleson talks about…

    Turkey and Ukraine (as if), entrance to the EU seems common sense to me….

  27. Sean, I don’t understand what your Tory PPB directed solely to Eoin does to our understanding of the London poll.

  28. Howard, Eoin asked me a question (which I agree, is not related to polling) and I answered it, so far as I could.

  29. @Howard,

    Sorry my fualt, :(

    Sean’s a Tory brainchild- I wanted the man’s opinion, who else is going to give as informed opinion?

    No matter how much your opinion differs from someone you should always come away from a conversation with your position altered (not drastically i’d hope)- otherwise you ahve learned nothing….

  30. @ HOWARD

    RE: Nobody gave you a welcome when you began posting…

    … Your posts are always a welcome sight to me :-)

  31. Eoin and Sean,
    I understand your discussion about choices to be made in macro economic choices and we’ve had that from the Tory economists (pain now bonus later monetarists) and Labour ones (Keynesians, spend spend spend pay back later ) in those two letters to the press. Ther’es a choice and what the polls show is what the ordinary punter makes of it. At present, the choice is clearly Keynesian by the man in the street.

  32. AFAIK Keynes was actually pretty orthodox in his views. He advocated running surpluses in good times so as to afford deficits in bad times.

    Keynesian politiicans, OTOH, run deficits in the good times, and max out in the bad times, But, I agree, they reflect public opinion.

  33. @Howard,

    I am with you I must say… a job saved is a life saved… is a home saved, is a child saved, is a relationship saved etc etc…

    fight for every job. at least if there’s a wgae there’s hope!

  34. @ SEAN, EOIN, HOWARD

    RE: I just think we’ve got into the habit of thinking the rest of the World owes us a living.
    ————————————————————–
    We have become a nation of shop-keepers (ie. a service economy). Whose vision for the UK was that?

    And we have now lost the capacity & belief in ourselves that will be needed if that (sad?) state of affairs is to change.

    I would suggest that none of the political parties have much to offer on this. It would take a post-war type initiative & I doubt any of them have the bottle. Even if they did, would they get a mandate from the people when government borrowing causes such angst in the opposition & people only seem to care about the economy in terms of their own, immediate £5/ month gain or loss.

    Well, that was a bit gloomy. Normal :-) Amber will return shortly.

  35. Eoin Clarke

    I’ve given you my views on those 4 Scottish seats on the previous thread.

    Today I’ve been concentrating on watching the 1994 BBC series on Watergate.

    I wonder what made me think that was appropriate? :-)

  36. @Amber,

    And in that blog you have encapsulated precisely why I have never voted. There would never be a mandate for it ………. :( :(

    But thats democracy and I am happy to accept I am on my own :(

  37. @ SEAN FEAR

    AFAIK Keynes was actually pretty orthodox in his views. He advocated running surpluses in good times so as to afford deficits in bad times.
    ————————————————–
    Again, the 5 year parliament does not facilitate this good sense. Politicians fear that they will create a surplus which the other party will ‘spend’ in their shadow budget.
    The example usually given is Bush ‘spending’ Clinton’s surplus by promising big tax cuts.

  38. What about a Bolton N East?
    Pendle?
    Durham?

    ——-

    I’d put my money on these…

    Con Bolton NE
    Con Pendle
    Lab Durham

  39. @David in F, Thanks :)

    If you could look at Norwich labour held seats for me at some point i would really aprreciate it… I think there is three

    i see all three going blue but I would like your opinion…

  40. @ SEAN FEAR

    “I think in the medium to long term, we need to really rein back public spending, to enable taxes to fall, and the private sector to grow. For the government to be spending 52/53% of GDP (and up to 70% in some parts of the country) is just not sustainable.”

    Sean I do agree.

    I think that many people have failed to understand what a temporary & unsustainable boost to the economy, the credit bubble provided.

    There is a black hole there now which will not easily , and certainly not quickly filled. It is the essence of the “structural deficit”.

    To go on & on pretending that a weakened private sector can be somehow brought back to taxpaying life simply by pushing up the State’s share of GDP is crass.

    If we are not very careful, there will come a time in UK, when those in the private sector who’se livelihoods & pensions are first at risk in a downturn, will refuse point blank to go on funding the sacrosanct livelihoods & unequal pension rights of the ever increasing army of those employed by the State.

  41. SPELLING good god
    unwarrented
    disasterous

    I hope Anthony Wells is a brilliant speller with a dodgy
    spell checker

  42. I doubt the truth of these polls – particularly ‘you-gov’ which always under-estimates the Tory lead.

    I believe Dave will win and with a large margin – to heck with these absurd polls

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