Economic Optimism

I’ve mentioned this a couple of times in my write ups of the weekly YouGov/Sunday Times polls, but I thought it worth looking at more closely. Without much comment it appears that people are gradually becoming more optimistic about the economy (or given the net figures are still negative, less pessimistic). There are there regular polls on economic optimism – the YouGov ones for the Sunday Times (actually YouGov do several different trackers on economic optimism, but they are all showing the same pattern), Ipsos MORI in their monthly political monitor and a monthly poll by Gfk NOP for the European Commission. All three are shown in the graph below:

As you can see, the three lines show slightly different results (they ask different questions, and NOP calculate their net figure a different way), but the trends are broadly the same, and all three show a uptick in May this year (though the NOP uptick is less dramatic than the YouGov and MORI ones).

What remains to be seen is whether it is sustained – the graph show previous spikes in economic optimism that eventually came to nowt, more economic bad news could do the same here. If it is sustained, the question becomes what effect it has on politics. My own view is that some degree of economic optimism and recovery (even if very slight) is a prerequisite for the Conservatives to stand a chance at the next election, though by no means enough on its own.

Worth keeping an eye on.


174 Responses to “Economic Optimism”

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  1. Guido Fawkes is on fine form with this Labour donation story – I’ve never seen anyone who can be so myopically outraged.

  2. @ Peter,

    IMO there’s a clear philosophical difference between Ed Miliband and New Labour. The New Labour position (which sounds Blairite but was really implemented primarily by Brown) was “Don’t rock the boat of the financial sector driven/house price bubble bolstered/London based economy- it’s working well so let’s not tamper with it. Just skim some money off the top and hand it out to everyone else to balance out some of the resulting inequality.” From the beginning, Miliband has been pretty emphatic that this position is unaffordable/morally indefensible/politically unsustainable post-crash and Labour needs to deal with the underlying structural sources of inequality/big bills for the Treasury rather than just papering them over with tax credits. Both his vague philosophising (predatory capitalism) and Labour’s few concrete policies (the NHS/social care merger, Ed Balls’ new house-building plan) are targeted to address this.

    The problem he’ll face if he ever gets into government is that 1) handing out tax credits is relatively easy; changing the fundamental structure of the economy is hard and 2) I don’t think Ed Balls is fully on board. A healthy skepticism about Miliband’s ability (and perhaps desire) to accomplish what he claims he wants to accomplish is probably merited. But he is saying something different.

  3. CB11
    Ah, so AN is Andrew Neil. Any more for any more?

    I cannot imagine that these programmes have the slightest effect on VI. I am astonished that contributors here place such high value on them.

  4. I can totally understand why opponents would charge Labour with hypocrisy and journos put that charge which AN (Andrew Neil) did to JS (Jackie Smith) on DP (daily Politics) quite fairly but being a party member my line at present is that I would like to know more as the DT (Daily Telegraph) spin will of course be anti-Lab.

    It won’t affect VI one jot of course either way.

    Norbold – keep up man/woman :-).

  5. post crossed Howard.

  6. CB11

    @”Jim Jam can no doubt speak for himself, but I didn’t get the impression from his post that he thought there was anything hypocritical about Labour’s acceptance of the donation.”

    I didn’t suggest that Jim Jam did think that.

    I was agreeing with him that the issue raised by AN was hypocrisy ( criticising Google for use of the Tax Law to minimise taxation on income , but encouraging a Donor to do use the Tax Law to minimise taxation on a donation)-which JS sought to avoid ( by concentrating on the Red Herring of Labour’s potential tax liability on possible future dividends)

  7. JIM JAM

    What a straightforwardly honest chap you are.

    …I’ve probably said that before……just wanted to update it.

    You are correct to recall that AN quoted the DT report that the donor had said the use of shares was very tax efficient for him-and JS questioned the veracity of that report.

    One would only need to speak to the Donor I suppose-or a Tax Accountant -to establish the tax efficiency of the gift in question.

  8. Shev11

    My point was rather tounge in cheek re donations, but
    that donation story although obviously not on the same level of google tax avoidance schemes at least on the BBC and Sky news has overtaken EM speech on welfare, which is a pity because people should hear what the oppositions thoughts are on dealing with welfare even if like me you may disagree with what they say.

    But like all counter stories they are usually the fault of the party sending one message having creating another more trivial one earlier which the media pounce on which overtakes the original important message, this happens to all parties certainly it’s happened to the Tory party on more than one occasion.

  9. I also liked the EM speech but for different reasons, as frankly he was saying many things the Conservatives have been saying. I don’t see how anybody can say this isn’t moving to a more centre right view on welfare as opposed to old left.

  10. TURK

    @”certainly it’s happened to the Tory party on more than one occasion.”

    It certainly has!

  11. @ PeterCairns

    Still the Labour left don’t matter because unlike retired Tories with UKIP the Ambers of this world have nowhere else to go.
    —————-
    LOL :-) I am very happy with the direction Labour is taking.

    You mistake my dark humour against Liam Byrne for something more than it is. Also, I like Mark Serwotka’s directness; & I think he has much of substance to say but that doesn’t mean I agree with all of it all the time.

  12. Just back after dinner to comment that all this (whatever ‘this’ is) leaves me cold. I cannot imagine that the 96% of voters, not interested in politics, have another view, but would be interested in evidence that it is otherwise.

    Some trade union bod has some obscure current affairs site excited. Wow, hold the front page.

  13. @amber, Mark Serwotka is always well worth listening to.

    xxxxxxx

    I am afraid I have the opposite view. Mark Serwotka often uses the sound bite that the coalition are asking his members to ‘work longer, pay more and receive less’, yet I always tend to think ‘and your point is…?’

    People are living like 15-25 years longer than they used to, so quite frankly we are all having to do all parts of his sound bite, not to mention that annuity rates have totally collapsed. I hope this isnt seen as partisan, as to me its economic common sense?

  14. There was a story recently about a UKIP councillor being convicted of shoplifting. Everyone knew it wasn’t one of the
    other parties because the shop concerned was Poundland.

  15. Howard

    As I sort of remarked earlier, the obsession that some have with highlighting tiny morsels of “good” bad news about EM or DC etc etc etc etc is a bit odd [to put it p’litely as William Brown would say] because no-one realy gives a toss.

    I have met no-one who knows the name of a single “highly important” political blogger – I doubt many know more than three government ministers.

    The BIG picture is what counts: whether Andrew Neil caught someone out with a cunning line of questioning or not means nowt.

    On another matter – the rape/sentence in Manchester today. One of those sentenced was from Iraq. In my left-of-centre view, anyone allowed to live here should always be on license and at the end of their sentence for a particularly heinous crime I would want to see them returned to their country of origin. We have enough evil people here already.

  16. Very impressed with Ed’s speech. I like the idea of tackling the causes of high welfare spending rather than just cut spending and leaving people to struggle – the huge increase in cost of housing benefit is clearly due to the massive increase in house prices.

    The Tory policy of just trying to re-inflate the house price bubble is just increasing the deficit – as he correctly points out, the welfare bill is soaring despite the failed policies of austerity.

    You just have to look at the figures here:

    http://www.ons.gov.uk/ons/dcp171778_309625.pdf

    Net Social Benefit spending:
    2008/9 153 Bn
    2009/10 167 Bn
    2010/11 173 Bn
    2011/12 181 Bn
    2012/13 191 Bn

    So that’s increased by 38Bn in the last 5 years

    Compare that with income tax over the same period:
    2008/9 153Bn
    2009/10 144Bn
    2010/11 151Bn
    2011/12 152Bn
    2012/13 152Bn

    So income tax revenues have actually dropped over that same period!

    Not sure how the Tories could ever present their stewardship of the economy as having been a success with these sorts of figures, it needs a new approach, at least Labour have recognised that and are offering an alternative.

    As a person who has never voted Labour, after this speech if he continues on this path he has my vote. Just need some proper growth policies now and they will walk the next election.

  17. Richard

    I’m rather bemused by your surprise. In a modern, liberal democracy, when your economy bums, tax receipts go down and welfare costs go up. That’s not rocket science. It’s Econ101.

    That was the core of the debate about Austerity. Fail to ignite growth and your deficit will do naughty things despite your best efforts. Because of the facts set out in Para1.

    EM in his speech stated the single most bleedin obvious point that everyone seems to have overlooked. To get welfare costs down, get the economy moving.

    In the long term of course, a fair part of the so-called explosion of welfare under New Labour was actually tax credits. Had The System more equitably apportioned the proceeds of growth between 1990-2007, that would perhaps have not been necessary. But it didn’t. It put the top line increases in wealth disproportionately into the pockets of the rich and allowed median wages to rise very sluggishly. Sort out THAT disparity and another big chunk of the welfare bill vanishes.

  18. @spearmint – ” …handing out tax credits is relatively easy”

    And safer too some would say:

    h
    ttp://touchstoneblog.org.uk/2013/01/why-progressives-need-to-defend-tax-credits-as-well-as-calling-for-stronger-wage-growth

  19. I cannot imagine that most voters can form an opinion on the basis of vague discussions about welfare and taxes. Everyone’s relationship with the state is formed from a complex plus and minus of taxes taken and benefits acquired.

    Whether voters are satisfied with the result is clearly variable for each. Is one person buying more at max VAT (are they even aware of that part of it?) and all the other stuff like council tax (relief therefrom?) and so on.

    Sound bytes that are splaying around the airwaves may have temporary influence (I doubt it) but what really matters is whether voters feel good about things.

  20. Wouldn’t it be better to abolish tax credits and raise the tax threshold by an equivalent amount? Letting people keep their own money must be more efficient than taking it off them, paying loads of bureaucrats to process it and then give some of it back.

  21. NOOOOOOOOOOOOOOOOOOOOOOOOOOOO

    FRED !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    [itsa bt dull actually]

  22. In EB’s interview with the Beeb following his Mansion House speech he was twice – asked what Labour’s priorities would be for the economy, and twice answered that a Labour Government would prioritise staying in the EU, as out biggest market and as our gateway to world trade.
    Personally I support this strong position on remaining in Europe, not just from the economic standpoint but for reasons of labour market development and equity and or cultural reason – grossly neglected in the past. But I don’t see how this position can be reconciled with any equivocation about an in/out referendum.

  23. for cultural reasons – (porridge in laptop).

  24. Has anyone ever ever crunched the numbers to figure out if “allowing us to keep our own money” is/is not more efficient. A cursory look at rates of tax across the world certainly doesn’t demonstrate conclusive evidence. There are some right basket case low tax countries, and some amazingly efficient high tax ones. And visa versa to roughly the same proportion.

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