With under a week to go till the by-election tomorrow’s Times has a Populus poll of Eastleigh (£). Voting intention now stands at CON 28%, LAB 11%, LDEM 33%, UKIP 21%.

If one assumes that the Ashcroft poll earlier this month was conducted by Populus using the same methodology, then this suggests that the Conservatives and Labour have both gone significantly backwards during the by-election campaign, while UKIP have advanced into a solid third place.

I’m hoping we may have more Eastleigh polling over the coming days so I’ll update once it arrives or once we’ve seen the Populus tables.

UPDATE: Rick Nye has kindly sent me over the detailed tables for the Populus poll so here are a couple more things worth noting:

First, there is a very high level of don’t knows or refusals. Populus interviewed 1001 people, but a quarter said don’t know and a further 12% refused to give a voting intention. In a close race that high proportion of don’t knows obviously have the potential to change things.

Secondly, Populus don’t just ignore those don’t knows. Like ICM they assume that a proportion of them will end up voting for the party they did in 2010. This adjustment made no difference to the Lib Dem lead, but reduced the reported level of UKIP support (as they didn’t have many former 2010 voters to reallocate).

Without the reallocation of don’t knows the topline figures would have been CON 26%, LAB 12%, LD 31%, UKIP 25%. The reallocation of don’t knows has worked very well for ICM and Populus at general elections, improving their accuracy, but I remain uncertain about how well it works at by-elections. Without it the position between UKIP and the Conservatives is very tight.

Thirdly, everyone assumes that the UKIP support comes mainly from the Conservatives. It isn’t quite the case. 17% of 2010 Tory voters are saying they would vote UKIP, but so are 11% of 2010 Lib Dem voters and 10% of 2010 Lab voters.


194 Responses to “Populus give the Lib Dems a 5 point lead in Eastleigh”

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  1. @Martyn (“Why aren’t people more logical?”), Richard in Norway (“Hope they have a decent candidate…”)

    Fwiw here is Michael White’s assessment (from an article about Boris Johnson getting the doorstep brush-off):

    “In Diane James (articulate and smartly dressed, she looks more the Tory candidate than Hutchings), Ukip has a sharp candidate and an upbeat mood in its campaign HQ on the high street.”

    Marta Andreason MEP defecting to the Tories from UKIP is no big surprise, she has been in conflict with the party since resigning as treasurer in 2009 and has been calling for Farage to resign since May 2011… it balances out Roger Helmer MEP who defected the other way a year ago.

    David Campbell Bannerman MEP has made the journey both ways and is currently a Conservative.

    Richard Norton, 8th Baron Grantley defected to UKIP in 1995, but no longer sits in the Lords.

    Malcolm Pearson, Baron Pearson of Rannoch and Willoughby de Broke both defected in 2007. David Robert Stevens, Baron Stevens of Ludgate became the third UKIP lord in 2012.

    David McNarry MLA, an ex-Ulster Unionist now represents UKIP in the Northern Ireland Assembly.

    Alexander Fermor-Hesketh, 3rd Baron Hesketh a one time Tory party treasurer defected to UKIP in 2011, but perhaps the biggest loss was Stuart Wheeler, current UKIP treasurer, who still has the disinction of making the single largest donation to a political party in the UK (£5 million to the Conservatives in 2001).

    Toby Young and Daniel Hannan were both calling for the Conservatives to give Nigel Farage a free run in Eastleigh… this tendency among Conservatives who would like to see UKIP “come home” would go ballistic if James were to achieve an almighty upset on Feb 28th.

  2. Mmm-Marta Andreasen.

    A talismanic heroine for people like me.

    Sacked by the European Commission as EU Chief Accountant for blowing the gaff on EU accounting & fraud, after Prodi refused to listen to her revelations.

    Yes-I think she will have an effect when she is deployed by Cons.

    But not in Eastleigh.

  3. @ ALEC

    “I have the sense tonight that the UK’s economic position is unraveling and that we could all be in for some straightened times, ”

    @ Moody’s

    “At the same time, Moody’s explains that the UK’s creditworthiness remains extremely high, rated at Aa1, because of the country’s significant credit strengths. These include (i) a highly competitive, well-diversified economy; (ii) a strong track record of fiscal consolidation and a robust institutional structure; and (iii) a favourable debt structure, with supportive domestic demand for government debt, the longest average maturity structure (15 years) among all highly rated sovereigns globally and the resulting reduced interest rate risk on UK debt.

    The stable outlook on the UK’s Aa1 sovereign rating reflects Moody’s expectation that a combination of political will and medium-term fundamental underlying economic strengths will, in time, allow the government to implement its fiscal consolidation plan and reverse the UK’s debt trajectory. Moreover, although the UK’s economy has considerable risk exposure through trade and financial linkages to a potential escalation in the euro area sovereign debt crisis, its contagion risk is mitigated by the flexibility afforded by the UK’s independent monetary policy framework and sterling’s global reserve currency status.

    The stable outlook on the UK’s Aa1 sovereign rating partly reflects the strengths that underpin the Aa1 rating itself — the underlying economic strength and fiscal policy commitment which Moody’s expects will ultimately allow the UK government to reverse the debt trajectory. The stable outlook is also an indication of the fact that Moody’s does not expect further additional material deterioration in the UK’s economic prospects or additional material difficulties in implementing fiscal consolidation. It also reflects the greater capacity of the UK government compared with its euro area peers to absorb shocks resulting from any further escalation in the euro area sovereign debt crisis, given (1) the absence of the contingent liabilities from mutual support mechanisms that euro area members face; (2) the UK’s more limited trade dependence on the euro area; and (3) the policy flexibility that the UK derives from having its own national currency, which is a global reserve currency. Lastly, the UK also benefits from a considerably longer-than-average debt-maturity schedule, making the country’s debt-servicing costs less vulnerable to swings in interest rates.”

  4. If this poll is credible and well-publicised in Eastleigh, might it generate more switching to UKIP this week? Perhaps even enough to take the seat?

  5. “The interesting question IMO is how many Labour voters will lend their votes to UKIP as a one-off gesture in order to defeat both coalition parties at the same time?”
    This is exactly how I would now vote if I were living in Eastleigh.
    It doesn’t make much difference to practical politics if UKIP come second but it’d be devastating for the Tories politically.

    And as far as losing the AAA goes – Osborne’s going to be under intense pressure now, from his own side, to abandon deficit reduction targets (already missed) and go for massive tax cuts.
    Hardcore Labour supporters wouldn’t be very happy at all but it’d give Osborne some political breathing room – and if we are to believe that cuts + tax rises (both of which removed demand) is partially to blame for the lack of growth then targeted tax cuts are a very good way to stimulate demand.

  6. In what way would “tax cuts” be different from “more borrowing”?

  7. I think there is an assumption that the UK downgrade is not going to have a real world effect, and that (as @Colin suggests) the agencies are still happy with the UK position overall.

    Of course, this begs the question of why downgrade, but that is up to the agencies. The biggest question is whether the move will have an effect. Commentators seem to agree today that we are likely to see another hit on the pound, which has been slumping recently. This has already filtered through into public consciousness via a sharp increase in petrol prices, which would seem likely to continue. As the eroding of household spending by inflation has been the main reason behind the poor economic performance and the loss of AAA, that isn’t great news.

    Such a scenario should make exports more competitive, but the figures yesterday for the EX PMI data were dreadful – no end in sight for contraction there, so exporters here will still be swimming against the tide.

    It’s also worth pointing out that when others lost their AAA, they complained that our debt position was worse than theirs but we retained AAA. This was because markets believed Osborne’s rhetoric. The deficit is moving the wrong way, and the debt mountain is ballooning under his stewardship – massively so.

    My suspicion is that UK is much more vulnerable to severe market reaction to losing AAA than many have assumed, as so much of the benign approach by markets to the UK position is based on sentiment, not numbers.

    We can give Osborne some credit I think in this – it was his rhetoric that convinced markets about the deficit reduction intentions of this government (possibly while also collapsing consumer and business confidence, but that’s another debate).

    Right now, Osborne is naked but for a flimsy piece of cloth, while the hurricane is blowing. If he were to have those last threads of credibility whipped away in the wind, we would see him in all his glory, and in truth, there wouldn’t be much to see. I think this AAA loss could well be more significantly economically than people think.

  8. Paul Croft
    In view of various rabbits being pulled out of hats in advance of the by-election (Rennard, Marta Andreasen -what next) and the somewhat hysterical preceding posts on this thread, may I offer my services as –
    ‘Expectation Management Monitor’?

  9. “In what way would “tax cuts” be different from “more borrowing”?”
    It wouldn’t – it would involve borrowing more, but it wouldn’t involve more government spending.
    That’s the way it’s different from the usual Keynesian cry of ‘more infrastructure spending!’.

    Tax cuts at the bottom (income, VAT, etc) leads to more demand (effectively the whole point of more infrastructure spending) by increasing consumer spending.

  10. Can’t for the life of me see why folk think this poll is terrible for Labour. If it were followed by polls elsewhere showing LibDems likely to hold seats then fair enough. However, if Lib vote stays strong in Tory targets but weak in Lab then it is all but game set and match for next election. Secret chortles of delight to be heard from the Watson household methinks.

  11. And of course, you don’t have to do it with tax cuts at the bottom, you can introduce a time-limited secondary currency (which you’d have to just call ‘vouchers’ for narrative purposes) – each person gains a certain number of credits each month (for as long as you’re continuing the ‘tax cuts’) which have to be spent by the end of the month, at which point their account resets.

    .. of course, this sort of system would need to be implemented *after* this recession ready for the next one as we need the economic stimulus now and not later.

  12. @THE CHEESEWOLF

    My thinking exactly – there was some speculation that the Tories would benefit because the Libs would lose the Labour tactical voters but it looks like the Labour tactical voters are staying tactical.

  13. @alec

    You write magnificently. I don’t know whether your analysis of Osborne’s predicament is correct. Your description of it in your final paragraph is a delight.

  14. Were I EM I’d be concerned. It was always a very big ask to perform well in this seat…and never forget Labour failed in Saddleworth in Feb ’97 only to come from third to take in in the GE a few months later.

    That said really since 1972 or thereabouts Labour has had a problem in suburban southern England which parallels the conservative problem in the great cities.

    If EM really wants to be One nation his response to this must show a real willingness to go back to the drawing board and find out what it is that makes these voters prefer either LibDems or UKIP to considering putting a cross by Labour. It does seem to me to be a baffling aspect of the social changes of the last fifty years and it’s A conservative party problem too – but opposition is the best time to try and think about it. Clearly, as DC is finding out cuddly sloganising isn’t enough nor is picking off a ‘soft’ issue to demonstrate you’ve changed sufficient.

    This is now more cultural than political problem & there may be nothing that can be done but sometimes independent voters like to see politicians seriously engaged with an intractable problem that cannot be resolved in their favour simply because they believe there is something which needs to be done.

  15. Sauce for the goose is also sauce for the gander…

    If, as I have heard numbers of Conservative MP’s now argue, a Mansion Tax is unfair upon the rich because many of them are asset rich and cash poor why doesn’t the same logic apply to the poor who happen also to be asset rich or at least bedroom-rich by DWP definition and cash poor?
    Either the same logic applies to the rich and poor i.e. the ‘space ‘ you live in doesn’t accurately reflect your needs or it doesn’t.
    If the enactment of the Mansion Tax leaves some living in big houses unable to pay their dues I hope there will be a lot of Conservative MP’s patiently explaining to their rich friends in their mansions that they’d better sell up, pay up & move to a smaller house in a less desirable area.
    But as ever the simple rules that apply to the poor who need to be punished for their shameful poverty to make them do the right thing will not be applied to the rich who always need to be rewarded shamelessly to do the right thing.

  16. How Labour do in Eastleigh is irrelevant. The party lost deposits in Newbury and Christchurch and then won a 179 seat majority a few years later. Labour voters can however help to defeat the coalition parties if they so choose by lending their votes to UKIP on a one-off basis.

  17. @Howard

    Can I be “Lack of hysteria Monitor” then? (In terms of monitoring posts which fail to add sufficiently to the general mood of hysteria….)

    Anyway, to lead by example, M Smithson has seen the Populus tables even if they’re not yet published and reports that:
    “the big message is that this battle is far tighter than the 5% Lib Dem lead might suggest.
    Very significant numbers of 2010 voters for the three main parties, 30% or more in each case, are still saying they don’t know or refused to give a voting choice”

    So that confirms the gist of my earlier post. A large chunk of that Populus poll must be made up of reallocated don’t knows, none of which will have gone to UKIP on the premise that not even a tiny portion of don’t knows can possibly break to UKIP if (next to) no-one voted UKIP in 2010. And that premise is a load of b**ls in this context. So UKIP must be closer than they appear in the headline figures.

  18. @ALEC

    I agree with @CHARLES…nicely written….though the image of George clutching his gold standard having lost the loin cloth of triple AAA rating rather devalues the tease in his economic striptease.

  19. Anthony

    Have you likewise seen the Populus tables and, if so, might you be able to report on the VI before the DL/won’t say reallocation?

  20. European Commission’s latest GDP forecasts for 2013:-

    Greece, Spain, Italy , Netherlands , Portugal-all GDP contraction.

    EZ -0.3% ( unemployment to reach a new record of 19.3 million)

    France +0.1%

    Germany + 0.5%

    UK + 0.9% ( then 1.9% in 2014)

    France & Portugal expend time targets to reduce deficit to 3% GDP.

  21. Rick has only just sent to me.

    Before reallocation the topline figures were CON 26, LAB 12, LD 31, UKIP 25. So the Con-LD gap was the same, but UKIP were much closer to the Conservatives.

    For those interested in the others, it was NHA party 1%, none for TUSC, EDs or Wessex Regionalists, 5% for “other others” (which I expect actually means none of the above, as there are no other candidates likely to get any meaningful support)

  22. The BBC releases 3000 pages of witness statement to the Pollard Review………….covered in black ink.

    Do these idiots not understand how it looks ?

    Yet another “Public Service” cynically & shamelessly puts two fingers up to it’s customers & funders in a blatant refusal to be transparent & accountable.

    Just enough is visible to see what a vipers nest of infighting & mutual dislike the organisation is.

    Meanwhile, after quietly beavering away , a different approach shows how it can be done. ( TOH-did you see this ?)

    http://www.telegraph.co.uk/health/healthnews/9889500/Hinchingbrooke-Hospital-private-firm-transforms-failing-NHS-trust.html

  23. If the tories fail to win eastleigh, combined with the loss of triple A, then the coming weeks are going to be very fraught for cameron.

    I cant see him being replaced before the next election, but he is going to be facing more and more problems with his own party – lots more plotting and sniping, possibly a leadership challenge. The pressure to sack osbourne may become irresistible. Strong echoes of the last major government.

    I think IDS may come increasingly unstuck over the bedroom tax and universal credit as well.

  24. @ Andy JS

    “Labour voters can however help to defeat the coalition parties if they so choose by lending their votes to UKIP on a one-off basis.”

    It’d be a difficult leaflet for UKIP to write but your analysis is spot on. The damage done to the Tories from a UKIP win in this by-election would be massive and for a Labour supporter should be well worth the damage of a lower percentage of the vote than at the last GE.

    Lib Dems got their tactics of a quick election spot on. They already had all the info on the constituency, were helped by the first two polls for the standard ‘close two horse race’ leaflet (presumably they have been doing that?), and not enough time for the other parties to get up to speed.

    Eastleigh is very enlightning for a question some of us have been asking for a long time about what happens to the Lab to Lib Dem tactical vote where Lib Dems are the only alternative to Tory. Unlike a typical by-election there is no reason to suppose a GE vote would be much different in this case apart from maybe the UKIP vote being lower and possibly turnout changing things a bit.

  25. @Anthony

    Many thanks.

    Your fact based response passes the hysteria-generating test with flying colours.

  26. Hopefully I am not misrepresenting Anthony’s previous analysis of the UKIP vote but he seems to have got it spot on that it is not particularly EU issues that are making people vote UKIP.

    The Tories have a candidate who would probably not be far out of place in UKIP, certainly anti EU, but have still leaked votes to UKIP. This suggests that this is a judgment Tory voters are making on the economy and, protest vote or otherwise, they are happy to vote for a party who they see as being not that different to the Tories but not the Tories!

  27. Some of the contributors suggestion the move to UKIP by Labour supporters is some sort of one off gesture just confined to Eastleigh seems rather like wishful thinking.
    I would suggest that there is leeching from both Tory and Labour to UKIP and far from some tacticle move what we see are people moving to UKIP from both parties.
    Although not a supporter of UKIP myself it is easy to see why anti EU voters would move to UKIP, and amongst the less well off, those who see cheap immigrant labour as a threat, and likely to become more of a threat next year.
    Personally I think it would be a disaster if UKIP were in power the fiscal problems of this country are so great they shouldn’t be left to a party of chancers.
    But those that see a move to UKIP as mainly a Tory problem should really think again.

  28. Shevii – no, you have it spot on. They are people more likely to be concerned about Europe than the man in the street, but are mostly motivated by issues like immigration and unhappiness with the government. It’s an anti-immigration vote and a general protest vote.

  29. @Shevii

    My advice to UKIP would be to circulate a leaflet in the more Conservative parts of Eastleigh, with a bar chart showing the Populus poll before DKs are reallocated, with a headline “only UKIP can beat the LDs”.

    Best odds on UKIP 14/1 with Paddy Power but I’d be surprised if that lasted long once the full details of the Populus poll become apparent.

  30. @Cheesewolf/Couper82

    I’m with you on your analysis of the Eastleigh poll and the overall electoral implications for the three main parties if what it is suggesting will happen on Thursday does in fact come to pass. This is a Tory v Lib Dem marginal and tells us nothing about how voters will behave in Tory v Lab or Lab v Lib Dem marginals. In that sense it’s not a national harbinger although, and this is potentially lethal for the Conservatives, it suggests that the “Anyone but the Tory” candidate, whoever that may be in the circumstances, still has quite a rich seam of votes to mine. Despite Clegg’s unpopularity, the Lib Dem vote collapsing nationally and residual antipathy towards them from Labour supporters post the coalition formation, tactical voters appear to be still holding their noses and doing what needs to be done to prevent a Tory MP being elected.

    The Corby by-election told us where we’re at currently in the Labour v Tory slugfest and Eastleigh will shed light on how the Tories are likely to fare against incumbent Lib Dem MPs, especially where Labour voters have a chance to vote tactically against them. It also tells us a little bit about how UKIP are faring in the aftermath of Cameron’s Referendum pledge.

    In this convoluted political context, I can see nothing but desperate news for the Conservatives.

  31. @Cheesewolf/Couper82

    I’m with you on your analysis of the Eastleigh poll and the overall electoral implications for the three main parties if what it is suggesting will happen on Thursday does in fact come to pass. This is a Tory v Lib Dem marginal and tells us nothing about how voters will behave in Tory v Lab or Lab v Lib Dem marginals. In that sense it’s not a national harbinger although, and this is potentially lethal for the Conservatives, it suggests that the “Anyone but the Tory” candidate, whoever that may be in the circumstances, still has quite a rich seam of votes to mine. Despite Clegg’s unpopularity, the Lib Dem vote collapsing nationally and residual antipathy towards them from Labour supporters post the coalition formation, tactical voters appear to be still holding their noses and doing what needs to be done to prevent a Tory MP being elected.

    The Corby by-election told us where we’re at currently in the Labour v Tory slugfest and Eastleigh will shed light on how the Tories are likely to fare against incumbent Lib Dem MPs, especially where Labour voters have a chance to vote tactically against them. It also tells us a little bit about how UKIP are faring in the aftermath of Cameron’s Referendum pledge.

    In this convoluted political context, I can see nothing but desperate news for the Conservatives.

  32. So good, I said it twice.

    Apologies, especially to all those who don’t like reading my posts once let alone twicW

    lol

  33. Yes I think Shevii and AW are saved from appearing before the Paul Croft beak.

    With don’t knows high, it shews how important turnout will be. I originally thought Con would be a shoe in (the UKIP 2010 vote was pretty miserable) but the protest leak to UKIP is clearly big and so that is very damaging to Con chances. I still think a 28% for Con shews how resilient the Con vote is.

  34. I don’t see the loss of Moody’s AAA rating as significant in economic terms.

    If the pound goes lower, so what? That would help exporters in the long run. And there’s no need to raise interest rates while demand is weak and the Bank of England is buying gilts. In fact, if the downgrade leads to expectations of higher inflation in the longer term that is a good thing, as some moderate inflation is what the economy needs, due to the fact that negative real interest rates would stimulate investment and consumption.

    The only downside I can see is if this leads to expectations of increased austerity, which really would be catastrophic. So if Osborne announces more public spending cuts in response, we are in for big trouble. Otherwise, the effect of the downgrade is entirely political, not economic.

  35. Labour into 4th. Conservatives might go into 3rd.

    Interesting poll. Any info on the UKIP VI regarding where it’s coming from?

  36. Oh dear. If this result comes to fruition, where LD > Con, but [Con > UKIP AND (Con + UKIP) > (LD+Lab)], we could have a situation where the Conservatives would have beaten the Lid Dems had the election been done by AV.

    Relies on a number of assumptions, and the 2011 referendum wouldn’t have made a difference anyway as AV wouldn’t have come in yet, but it would still be hugely ironic.

  37. “Any info on the UKIP VI regarding where it’s coming from?”
    Psst, StatGeek, it’s partially answered in the main post..

    “17% of 2010 Tory voters are saying they would vote UKIP, but so are 11% of 2010 Lib Dem voters and 10% of 2010 Lab voters”

  38. I swear I posted before reading Anthony’s Update above. So am feeling rather chuffed, smug even.

  39. @CB22

    Apology accepted. :p

    “In this convoluted political context, I can see nothing but desperate news for the Conservatives.”

    Up until this poll, some Lab posters were predicting (hopefully) big gains for Lab, while others were predicting a Lib win.

    It’s still looking like a Lib win unless there’s a massive shift from UKIP to Con or Con to UKIP.

  40. @Tinted Fringe

    Ta. There’s been an update since I last read it.

    Given those numbers, one wonders if the polls will influence the final result more than ever.

  41. Re AW update-

    Have I got this right that everyone expressed a preference other than 37% don’t knows and refused? If so, I don’t see why there should be any re-allocation of ‘don’t knows’ because the turnout is unlikely to be 67%. More pertinent would be a question to those 67% of ‘how likely are you to vote’ followed by ‘are you really sure about that’ if they say ‘yes-100% sure to vote’.

  42. Statgeek
    Yes there was a fair amount of Expectation Management error being made in previous threads by Lab partisans here, now hastily being rowed in.

    My only thoughts about the Con preparation for this election were to ponder why a ‘local’ candidate was not selected. Perhaps no one applied but it seems to me that selecting a safe local candidate in these circumstances is better than parachuting a celebrity one in, not that they did that either. In fairness, the Con lady has stood in Eastleigh before and got a good vote out (or somebody did) , so she could do again perhaps.

    How’s that for a lesson in EM?

  43. @Colin – given their record, I don’t think I would bother quoting the EU Commission for any kind of economic forecasts.

  44. @ Turk

    I sort of half agree with your analysis re the UKIP vote danger to Lab as well as Con. However at this stage in the game we are not really yet talking about some earthquake where UKIP seriously looks like it can gain seats let alone form a government ( I would still hold to this view even if UKIP took Eastleigh). All the polling we have seen says UKIP currently take massively more from Con than they do from Lab, so strong polling for UKIP can only be good for Lab.

    Clearly there could be a tipping point and Eastleigh could be an example of this and there will be a percentage level of support for UKIP above which they take more off LAB than off Con- ie first 20% of UKIP vote comes mainly from Con but if they reached 30% of the vote then that marginal increase takes more of LAB.

    Speaking unscientifically I found it very easy to convince my in-laws (basically pro Labour) who were considering UKIP in 2010 not to do so with a simple comment that they are right wing Tories- although I think they ended up voting Lib Dem so it didn’t save a Lab vote. So if UKIP became a threat to Lab they would have plenty of arguments to counter the UKIP threat which would appeal to their base support.

  45. @Colin

    Thanks for the article. I have been watching the Hinchinbrooke story with interest for some time now and with quiet satisfaction.

    On the economic front the loss of the AAA rating will make little difference, certainly Osborne has already made it clear he will not change direction. Pity he didn’t cut deeper though, the economy would have been in much better shape if he had.

  46. @Howard

    I for one am prepared to admit that my expectations of a week or two back turned out to be way off the mark, in terms of the ability of Labour to benefit from a LD collapse (that collapse itself still seems real enough, the Labour benefit from it is not). But it was me getting it wrong through wishful thinking rather than any attempt at expectation management. Mea culpa. I hope that most of us here post what we think, not what we want others to think.

  47. ALEC

    Yes-as for so many economic forecasts these days.

    Actually it isn’t the absolute numbers which are of interest, so much as the comparative ones in EU.

    If the pattern shown by the Commission’s forecast transpires, 2013 & 2014 will see GO being able to cite best economic performance in Europe.

    The elephant in the room though is Debt-the thing which spooked Moody.

    Given GO’s starting point-Deficit of £159 pa-11% of GDP; no deficit reduction plan that was feasible, would have stopped Debt growth to levels of concern.
    GO’s very first plan saw peak Debt at 70% ish of GDP.
    The twice extended timescale of deficit reduction now pushes that to 85% +

    Moody’s calculation is 96% peak Debt in 2016 .

    At this level, as Moody points out, it only takes another serious external shock, and your economy is beginning to stare at the nightmare of unsustainable Debt servicing costs-ie Greece et al.

    GO is in a strange position of economic growth prospects better than Germany, and Debt levels headed towards RoI levels.

  48. @ Alec

    My economic forecasts have been more accurate than any of the ‘professionals’ forecasts- I have been rolling my eyes and saying ‘we’re doomed, we’re doomed’ in a rather poor Scottish Accent!

    PMI’s start next week- I’ll give you 5 minutes before bringing myself on as the sub :-)

  49. Colin
    “At this level, as Moody points out…”

    That’ll be the Moody who first downgraded Japan in 1998 whilst giving AAA rating to sub-prime horse meat, will it?

    The saddest and most illogical aspect if the last three years has been this insistence that the credit ratings people matter, and the designing of our economic policy to match. When in reality, there is no correlation between the ability of monetarily sovereign countries to sell their debt and the ratings agencies’ opinions of them.

    A tragedy if incompetence, ignorance and pig-headed stupidity.

  50. “On the economic front the loss of the AAA rating will make little difference”
    Perhaps economically – but politically it’s toxic.

    In 2009, Osborne said that the loss of AAA under Brown (that didn’t happen) was putting our economy at risk – and just the risk of losing AAA meant that we needed a snap general election.
    He has consistently made the political point that keeping out credit rating proved that we were on the right track.

    And while it’s easy to create a new narrative, saying that rating agencies are only one measure (and objectively speaking, they’ve been a persistently poor measure) – these sorts of quotes will come back to haunt him.

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