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. First!

    A couple of years back, the economy would have been the easy answer to the Conservative’s 2015 future. Not so sure now.

  2. Did anyone spot the result of the Rawmarsh (Rotherham) by-election in mid-May?

    UKIP 1143 (46.5%; +46.5)
    Lab 1039 (42.3%; -24)
    Con 107 (4.4%; -8.5)
    BNP 80 (3.3%; -17.6)
    TUSC 61 (2.5%; +2.5)
    LD 28 (1.1%; +1.1)
    UKIP gain from Lab
    Majority 104
    Turnout 25.7%
    Percentage change is since May 2012

    I know the area well, as my father was brought up in Rotherham, my grandfather working down Silverwood Colliery when it existed. It’s about as solid working class traditional Labour as you can get. That by-election result would have been unthinkable even in the nadir of Brown’s premiership.

    A result like this knocks on the head the idea that UKIP is not a major threat to Labour as well as the Conservatives.

  3. @Phil Haines

    Nicely shoe-horned.

    I live just outside that area. There were several local issues that effected the result, not the least of which was that there was only an election because the bloke who was in the seat suddenly quit to become a PCC, which annoyed quite a few people.

    The turnout was also half of what it had been in the previous election for that seat.

    It would be a mistake to assume that this one result means UKIP are a major threat to Labour.

  4. Anthony,
    Just a thought but another interpretation worth considering is that;

    “What is being measured isn’t what we think?”

    After two or three years of belt tightening and getting used to less, are people perhaps are just;

    “Adapting to Austerity”

    One way to test it might be to poll people on both how their income has changed, how they are dealing with it and crucially;

    If it has been as bad as they thought it would be.

    If on that last question the answer is we’ve had to cut back but we’ve avoided the worst, then for all people may be felling more optimistic, it might be because it hasn’t been as bad as they feared.

    You might ask;

    “Whats the difference”,

    but it could be important in how party’s craft there message for the future.

    Campaigning against the terrible coalition cuts might not be such a good idea if people have got used to them and they can’t be reversed.

    Peter.

  5. Did you once plot incumbent VI against economic optimism Anthony. ?

    If so could you point me to it please.

  6. @ Phil Haines
    Seats where 21% of the electorate voted BNP last time around are far from typical….

  7. @Joshu

    That doesn’t really allay my concerns. Some local issues, election caused for reason other than death (but not scandal), low turnout. Not untypical circumstances for a by-election. Opponents will always find a superficial excuse to attack the incumbent party – resigning on becoming a PCC sounds just that. Shouldn’t cause earth tremors in normal circumstances.

  8. Phil Haines
    There was a by-election in Weston -Super -Mare Central ward on the day of the locals,a rock solid Labour ward, the Labour vote dropped by less than 1%,with Labour retaining the seat with 1044 votes UKIP came second with 449. T he Tories dropped to fourth from second,their vote collapsing.
    Labour put out 4 leaflets,did an extensive canvass and had a good,local candidate.
    From this l deduce that ,as ever with elections ,a lot depends on local factors,but that where a party is well organised and makes an attractive case then Labour’s vote is relatively solid.l’ll say no more cos l know that the plural of anecdote is not data!

  9. As ever with politics, if there are any tremors between now and the election on the stock market, it will effect the economy and the incumbant faces the wrath. Investors are already getting twitchy at the current highs and as stated below, once the money printing stops from the governments around the world the crash will follow. I assume the economic optimism will follow the stocks down if it happens.

    http://www.marketoracle.co.uk/Article40260.html

  10. Phil Haines

    On Rawmarsh local election

    Turnout dear Phil, dear Phil, dear Phil, turnout dear Phil, dear Phil, turnout.

  11. In that by-election, said resigning guy had also been instrumental in having his wife selected as the candidate…

  12. @Howard

    I agree, when working class former voters consider there is no reason to turn out, Labour has a problem. That was your point?

  13. The problem with an economic revival is its lack of uniformity. If as seems likely the economy does revive over the next two years, and it is mainly confined to the South East etc. then the rest of the country becomes resentful, and see a government which they already see as elitist in an even poorer light.

  14. David

    But who gives a rats @rse about the rest of the country?

  15. RiN

    The general election result depends on what happens in the Midlands.

  16. RiN

    @”But who gives a rats @rse about the rest of the country?”

    The Government actually.

    Surprised you are not familiar with the initiatives of the Industry Secretary from your party.

    Things like this :-

    http://www.nelep.co.uk/news/2013/03/%C2%A37m-from-growing-places-helps-create-hundreds-of-jobs-in-south-shields/

    or like this:-

    h tt p://www.themanufacturer.com/articles/north-west-leading-350m-regional-growth-fund-applications/

  17. Well in NW Leics. we’re pretty likely to throw out Andrew Bridgen but we’ve had a bit of a UKIP surge in the locals too. Having an MP arrested (albeit wrongly) for sexual assault doesn’t do great things for his PR.

  18. “Britain’s economic recovery is gaining strength and speed according to data that suggest the dominant services sector grew last month at the fastest rate in more than a year.

    The PMI index soared to 54.9, up from 52.9 in April, bringing it back into line with its long-term average. A figure above 50 signals an expansion in activity, according to data company Markit, which compiles the survey.

    The volume of demand from new orders was so great that the PMI registered the first back-to-back increase in the level of work outstanding since September 2007.
    The PMI for the services industry, which accounts for more than three-quarters of economic output, follows strong PMI readings for the manufacturing and construction sectors this week.
    Chris Williamson, chief economist at Markit, said the economy had “moved up a gear”. On his calculations, the surveys were consistent with quarterly real growth of 0.5 per cent in the second quarter of the year. The economy grew 0.3 per cent in the first quarter, a faster than expected rate.
    “For the first time in a year, manufacturing, services and construction sectors are all now reporting higher levels of activity,” Mr Williamson said.”

    FT

  19. “People’s faith in the system has been shaken by a system that appears to give a minority of people something for nothing and other people nothing for something.”

    From EM’s speech on Welfare tomorrow.

  20. Phil Haines
    Indeed. At least I suppose so, but normally i would assume that 75% of the voters didn’t give a monkey’s about the local election, in this case. Unless the same turnout is expected for the GE, then this election is irrelevant to that latter event.

  21. ““With inflation descending back to target and economic growth reviving, Mark Carney’s appointment as BoE governor is looking less like the biggest ‘hospital pass’ in central banking and more like a remarkable piece of timing/good fortune,” said Ross Walker, an economist at RBS.”

    FT

    Surprised Merv. didn’t try to stay on for an extra year.

  22. “From EM’s speech on Welfare tomorrow.”

    Where did you find that Colin ?

  23. Adventures in Crossbreaks:

    I haven’t had a chance to look through yesterday’s thread yet, so I apologise in advance to anyone whose excellent points I’m about to ignore. But I did a little study of my own on the question of where Labour (and Tory and Lib Dem) VI has gone and I thought I’d share the results.

    I took all the YouGov polls since January, stuck the 2010 voter crossbreaks into a spreadsheet, did 5-poll rolling averages to smooth them out a bit, multiplied them by each party’s 2010 vote share so they could be compared, and then graphed them. The results are below. They’re slightly unintelligible, for which I also apologise, but it’s a complex system and this was the best way I could find to graph it. It lets you see all the defectors from the 3 main parties and where they’ve gone.

    Obvious caveats about crossbreaks apply, also I’ve omitted Not Votings and Don’t Knows, the Greens and the nationalist parties.

    All voters: http://i.imgur.com/zl14D5I.png
    Tories, gains and losses: http://i.imgur.com/s9QhYRd.png
    Labour, gains and losses: http://i.imgur.com/UWDRIII.png
    Lib Dems, gains and losses: http://i.imgur.com/46ZRqjl.png

    So what did we learn?

    – “The Tories are falling because they’re losing core voters to Ukip!” Yep, they are. Everything else is holding steady for them- their decline is wholly attributable to the rise of Ukip. No surprise there.

    – “Labour are falling because people have finally realised that they have no policies and/or George Osborne has fixed the economy!” Maybe so, but it’s not showing up on YouGov. Lab -> Coalition defections have remained flat since January. Labour have lost about 0.5% in Tory -> Lab defectors and another 0.5% in LD -> Lab defectors, but that appears to be because those people are defecting to Ukip instead. I hesitate to interpret that as an endorsement of either the Government or Ukip’s economic credibility. It also raises the question of which “serious” party these people return to in 2015 if they reject Ukip- back home to the Tories/Lib Dems, or back to Labour?

    – “Labour are falling because they’re losing core votes to Ukip!” This probably accounts for most of their decline. Ukip’s gained 1% from their 2010 voters and skimmed another 1% off the Coalition defectors who were defecting to Labour back in January. Our resident Ukip boosters can do a little dance of vindication. (That’s only half of the loss of 2010 Lab voters since January, though. I suspect the rest have gone to the SNP.)

    – “Lib Dems are weird.” Lib Dems who stuck with the Government up until January are now defecting to Ukip. I am really struggling to come up with a rational explanation for this. That’s not a protest vote, that’s just… baffling.

  24. Colin

    The economic news is getting better and it’s interesting to see splits arising in the ranks of the Labour party for a change, over the EU vote and the abandoning of the principle of universal benefits re pensions and child benefit. plus the adopting of coalition spending plans.

    I think we are in for a interesting few months as long as the DC can keep his back bench in line and his own PR machine can step up many gears.

  25. CHORDATA

    @”http://www.thecommentator.com/article/3722/exclusive_ed_miliband_s_speech_tomorrow_attempts_to_rebrand_labour_as_the_party_of_work

    [Snip – AW]

  26. TURK.

    Agree with your last remark completely-they are pathetic at present.

    Yes-things seem to be moving. I was thinking maybe 1.5% GDP growth looked on for this year. It could be better than that.
    In terms of the numbers-given the 2013 Budget assumed 0.6% GDP growth this year & 1.8% next year- I can see the prospect of improved deficit reduction forecasts in the next Budget……..which would be a first for GO!

    As you say -interesting politically-I have thought for a few moths now that EB’s narrative is wrong & will look very dated come 2015. I haven’t seen anything to change that view.

    But it is so hard to say what economic effect is needed-& where-to actually move VI.

  27. @Turk,

    Even if the economy does start to pick up a bit, I think it’s more likely to affect medium or long-term polling rather than polling in the short-term. The link between GDP and voting intention is tenuous at best – and many would say non-existent or inconclusive.

  28. @Phil Haines

    As had been pointed out, that Rotherham result was occasioned by the Labour incumbent going off to be the new PCC (and appointing a fellow Labour activist as a deputy on a lot of money) and trying to pass the seat on to his wife.

    I think the only conclusion to draw from that particular episode is not to try to stitch up the public quite so openly.

  29. Sorry Anthony-couldn’t resist.

    Could a -should a.

  30. Fascinating Martin.

    We could have politics like Danish TV !

  31. Quite a good speech from Mr. Miliband. Sounds as if JSA might be raised to a decent amount for those who’ve worked for a long time.

    Won’t be tremendously popular with the left, but I think ‘benefits linked to time working’ could be traded off with ‘guaranteed work after some time unemployed’ to placate them.

    In the end, it’ll probably win him more votes than it loses. How come we’re seeing policies drawn up now though? Do they know something we don’t about the probability of the coalition lasting?

  32. @Colin

    Doesn’t Scandi telly involve a lot of sweaters and corridors? So basically, it’s Gyles Brandreth…:-)

    rgdsm

  33. @ Anthony Wells

    I don’t quite understand the removal of my two posts. One was data that contradicts Colin’s quote and supports David’s (both posts still there) about regions loosing out a massive scale.

    The other was about economic growth and considering that this thread is about economic optimism (less pessimism).

    (It also responded/clarified a point on credit card payments and balance transfers).

    [I haven’t taken any posts away and I can’t see anything in the spam trap or moderation queue, so I don’t know what happened to them. Try posting them again. It is, incidentally, always a good idea to avoid the word casino when writing about banking (or words like viagra, cialis, penis extention and so on… but clearly they are somewhat less likely to turn up in most posts! AW]

  34. MARTYN

    Not in Borgen-the series in question from your link.

    Mostly suits-the PM insists on ties for her male cabinet colleagues. Birgitte wears very tight white shirts-she is a Centreist Moderate………but those shirts don’t seem moderate to me.

    Anyway-it was a great series & the prospect painted in the Economist article almost persuades me that a political system like that would be attractive here.

    .

  35. Thanks Colin

    I didn’t see what got snipped but if it was an insult then thank you Anthony for removing it.

    In case I’m a tad bolshy in the next few days it’s because my father-in-law died today. My dog last Wednesday & my f-i-l today, I’ll be glad when next Wed has come & gone !

  36. CHORDATA

    It wasn’t an insult-more a sly dig.

    I am sorry for your loss

  37. @ Colin

    Why bother having any politicians at all ? With fast internet, there is no reason why UK citizens could not vote on issues on a regular basis and appoint select committees of experts who hold civil service departments to account. Such committees could publish reports setting out pro/cons of the various options. They could then go on to look at legislation drafted by civil servants and hold internet based public votes on legislation.

    A new type of democratic system which would have its faults, but I don’t see why it could not work. At the moment, most people who vote in an election, have no idea what they are voting for. Few people look at the parties manifestos and go by what they hear in the media. Involving as many people in a proper democratic process, would therefore seem a good thing.

    If you needed to have a figurehead to represent the country, then perhaps we could hold a national election every four years to appoint someone to the role. As a republican, I would like to see a President, with the royal family not having anything to do with our political or courts system.

    Would it not be great to have no political parties in the current sense. When you only have two main parties who generally form a goverment, with a small party occasionally being involved, I don’t think that is desireable.

    ‘viva la revolution’ !

  38. A dig ? Shurely not….lol

    No worries & thanks.

    I’ve just read that speech & there is plenty to like in it, particularly the recognition that £71pw for somebody who may have worked many years is peanuts & the need to build housing instead of paying ever increasing rents to landlords.

    I’m curious about the testing of ESA claimants because if there is a need to reform anything, it’s those damned ATOS tests !

    Sadly by the time the media have spun & respun it, the words & the intent behind the message will have been twisted out of all recognition & all we’ll hear about is how Labour are just like the Tories.

  39. R HUCKLE

    I don’t think that works.

    You can’t have the country run be “experts”-they never agree with each other-and they are usually wrong.

    As for committees of them holding the civil service to account-if elected politicians can’t do that-no chance.

    No -you need a political philosophy-a vision of the “good society” and all of that. Then you vote & keep your fingers crossed.

    Anyway,I’m still thinking -very deeply -about the prospect of a PM like Birgitte Nyborg.

  40. CHORDATA

    Pleasure.

    Better not respond on the speech-anyway he hasn’t given it yet, so will await the Press reaction.

  41. @COLIN

    “…Not in Borgen-the series in question from your link…”

    I swear to goodness: I’m the only person I know who preferred “The Bridge”

    “…the prospect painted in the Economist article almost persuades me that a political system like that would be attractive here…”

    Possibly: I think the AV debacle killed off any chance of that for my lifetime, and I understand the reasons why. However, the political system outlined does have the virtue of being, in the end, perhaps a little bit more honest.

    rgdsm

  42. MARTYN

    I enjoyed THe Bridge very much too-but hard to compare with Borgen -very different.

    I think there is another series of The Bridge coming.

    I thought the most fascinating bit of The Economist piece was to attribution of EU type political allegiance to those particular UK politicians. Quite thought provoking.

  43. @ Anthony Wells

    “but the trends are broadly the same”

    Of course it depends how you define “broadly” but the shape of the trend functions (whatever way you calculate them) are rather different and YouGov’s is more different compared to the other two.

    Once you remove the line that shows the discrete observations as if these were parts of a continuous function it is clear.

    It is not in contradiction to the noted increasing levels of the last two observations.

  44. @Colin

    Indeed. My interest in the pan-European political parties and their associated political groups is they are very useful statistically: we can track movements in political beliefs over time and across countries, and there’s nothing a room likes more than a map, unless it”s an animated map. And the parties outlined would enable a closer alignment of politician and party…

    …and yet, and yet, and yet. A paper I read on the way (I think) New Zealand reformed its political system acknowledged that the primary actors in reform were the parties, not the people, and that a system that failed to acknowledge this will eventually fail itself. And I think that’s a valid observation. So I don’t hold out hope for reform.

    rgdsm

  45. @Chordata

    Missed the bad news in the conflab. My sympathies.

    rgdsm

  46. @Colin
    “Experts are usually wrong”

    I have to disagree, I think this is a classic tabloid myth. In my experience experts are usually right on the facts of the matter and recommended actions – what they lack is the vision and purpose to turn understanding into vision and concrete action.

  47. Experts are always wrong when they disagree with your core beliefs and invariably right when they confirm your prejudices.

    Osborne and the right-leaning parts of the media spent 2.5 years from early 2010 sagely pointing out the “expert” economists who had developed the idea of expansionary fiscal contraction, or the dreaded cliff at 90% debt ratio level.

    Now that the work of those “experts” has been demonstrated to be worth less than a sack of horse sh*t, and that no serious economist now believes in expansionary fiscal contraction in the current circumstances, the media take has switched to “Ah, but experts never reach a consensus and they are generally wrong anyway.”

  48. a bit partisan tonight lefty! :-)

    as I have noted over the past few weeks reading the Stockman book, there are still plenty of influential voices who think the size of some of the debts we have around the world and QE programmes will come back to bite us and impose austerity that makes the current cuts look nominal. I know you keep going back to the point about spending to grow, but it’s still a fine line. For example, there is no way we can risk £9bn on a temporary VAT cut.
    In summary, I am totally round to the point of view that this isn’t linked back to the neo-con model, or Thatcher or whoever the left blame the current world financial crisis on. It’s a long term build up related to the move to FIAT and the much deeper deficit spending this move allowed, and has simply grown over time, obviously much worse in cyclical busts, that are inevitable.

  49. Ambivalentsupporter.

    The economy being a vote catcher is very much uncharted terrority certainly in the past it’s not really been at the top of why people vote for a party except perhaps some Tory voters, however, the last few years have seen the biggest finacial crash in modern times.

    Austerity has in one way or another affected most people in the UK and the economy is now at the top of what voters think is important.

    Personally I don’t think the economy needs to enter a period of boom in the next couple of years it just needs to show steady progress so people feel there’s light at the end of the tunnel.

    If it does then the Tories narrative of blaming Labour for bad fiscal management of the economy and saying to the voter do you really want to hand the economy back to EM/EB may well have an effect on VI.

    Certainly if the economy goes tit’s up in the next two years then the Tories have no chance, so in that respect the economy is already playing on VI.

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