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. Dead cat bounce if you ask me!

    The general medium term prospects for the UK economy is grim.

  2. Having analysed the “worried about your job” tracker that YouGov does, it appears that since the start of the year those worried about their jobs has come down. However, this is for the most part in only the South and London. The rest of the country has not seen as clear a reduction – or none at all.

    If this is the same pattern for the wider tracker of economic optimism, it suggests that this is probably what many suspect, that it is another one based on house prices and the economic strength of London.

  3. Martin Williams
    I don’t see any identifiable cause for a new economic miracle either. Perhaps if a science group in Cambridge invented a new elixir of llfe, but this time patented it so all the rest of the world had to pay through the nose to have it (instead of giving it away as in the past), then i could believe in it.

    We had the coal but the steam age is over and it’s cheaper from Poland anyway (etc, etc).

    I just don’t see where we have ‘the edge’ (except the arts and theme parks).

  4. Some of our theme parks are very tired now.

  5. @SoCalLiberal

    Thanks for the link to the Ed Edelman retrospective – plays fine. I’ve lined it up to watch later because I’m a bit tired. Looks interesting.

    Btw, watched Kiss Me Deadly (1955) on YouTube the other night, it’s a bit dark, but that’s why they call it film noire I suppose. Couple of Bunker Hill interiors featured (Hill Crest Hotel, corner of Olive and Third, and the Donigan Castle).

  6. MARTYN

    Thanks.

    Two things struck me about those allocations of UK politicians to EU type parties:-

    First-how much it made one think a bit more deeply about some individuals.

    Second-what a narrow , closely defined , set of issues were now the “core agenda” of each of those parties. The broad church / internal coalition we are used to had gone ; the overarching concept & vision if you like had gone, & the choice was now all sorts of bits & pieces.

    I struggle to think of an analogy -& the best I can think of is scrapping the England Football Team & it’s manager-and replacing it with four or five squads , each with their own core agendas ( defence, midfield, attack etc) & their own managers -putting them on the field & expecting them to “negotiate” a single team , a team captain, and a match winning plan.

  7. HOWARD

    @”I just don’t see where we have ‘the edge’ ”

    Fortunately , the CBI & the current Government have slightly better vision than you do. ( and why should you understand about this anyway ?)

    This is CBI’s list of sectors where we have-in their opinion- “clear competitive advantage & high growth potential”

    Aerospace
    Agri-food
    Automotive
    Chemicals and Pharmaceuticals
    Creative industries
    Green technology and services
    Knowledge-intensive business services.

    There web site has further information should you wish to increase your knowledge of this matter.

    ( ps they are very keen on graphene-which GO has thrown a few million pounds at )

  8. Newsnight now; Ed Miliband to announce benefit capping tomorrow. Coming over to a more Conservative position?

  9. Colin,

    “Fortunately , the CBI & the current Government have slightly better vision than you do.”

    I add a third “yes” to the claim that Howard doesn’t know where we have the edge; I would add that the government and (to a lesser extent) the CBI doesn’t know either. Nor do I.

    I shall know where we have the edge, in a few years when I can look at the profit figures of firms and sectors. Until then, investors are the only ones with the incentives to actually do the research and react to events in real time.

    Governments do not have incentives to pick firms on the basis of who will win, but on the basis of the investments that will help them in elections. Otherwise, they’d have never decided that bang inland in the middle of the Central Belt (and coincidentally close to a significant number of then-marginal constituencies) was a great place to build Europe’s largest steel mill. Similarly, the only people who predicted that the UK would have an edge in pharmaceuticals (traditionally dominated by the likes of Germany) after WWII were those canny people who bought up shares in Glaxo et al, lent to them, and so on.

    There are plenty of things that the government should do to help the economy. Industrial strategy is not one of them.

  10. Lefty’s Graph of the Day.

    I’ve dug out the Economic Optimism Index data (net of people thinking economy will improve or worsen over the following 12 months) from the Ipsos-Mori archive going back to 1978.

    Overlaid onto that is the actual GDP growth rate from the Guardian’s ONS data, with that data offset by 6 months on the time axis (because the EOI is asking people what they think will happen over the next year).

    http://oi40.tinypic.com/2yvpiix.jpg

    Lefty’s amateur analysis:

    1) Generally, the public are overly pessimistic about future performance. There has rarely been a positive EOI, yet per capita, inflation adjusted GDP rarely falls.

    2) That said, the public are pretty good at predicting when the sharp recessions are coming, with rapid drops in EOI usually presaging big GDP drops.

    3) Fascinating that the reasonably good correlations between EOI and GDP up to the early 90s evaporates from the early 90s onwards. The EOI did predict both the 08-09 collapse and the subsequent bounce/slump, but during the Great Moderation of 93-07, the public generally expected things to get worse, even though the GDP record shows that things generally got better.

    I wonder. Is this a reflection of the fact that the proceeds of GDP growth in that period went disproportionately to the top few %, whilst the mean and median folk saw relatively little material improvement?

    4) Really scary thought to tuck you into bed with. If you screw your eyes up and look at the GDP line from 1985 onwards and ignore the peaks and troughs, there’s an unmistakable general downward trend. If I were a pessimist, I could well make a case that the 2010- permaslump is nothing more than an extrapolation of that trend.

    Which kind of fits in nicely with a comment in yesterday’s Times about tensions at the heart of Labour. The writer (I forget who) claimed that EB was NuLab through and through, believing that Capitalism needed a nudge, then to be left to get on with wealth creation. Whereas EM believes that the old model of wealth creation is fundamentally flawed and must be overhauled.

    Discuss.

  11. We’re doing quite badly in terms of video games in the creative sector at least (my area of expertise given that knowing this stuff is my job).

    Back in the 90s we had quite a few big studios: Core Design (Tomb Raider, among other things), Rare (Donkey Kong Country, Goldeneye, Banjo Kazooie, Perfect Dark and Conker’s Bad Fur Day) and Codemasters, who did a load of stuff I won’t bother listing.

    Now we’re down to a skeletal Rare making Kinect Sports, Core Design’s been shut down and Codemasters have moved to mostly doing racing games. Even Rockstar (creators of Grand Theft Auto) are mostly based in America now.

    Seriously, it’s the fastest growing entertainment sector and we need investment in startups as well as programming and design education in the curriculum if we want to keep up.

  12. Rich,

    Call it “left-wing austerity”. A cuts-agenda, but with an egalitarian twist.

    Callaghan and Wilson had some interesting ideas along those lines in the 1970s e.g. cash limits, better regional allocation of resources in the NHS, and prioritising council houses in favour of problem cases rather than locals. The second two examples are definitely controversial, but they embody the kind of thinking that Miliband must do before the election, regardless of what he says before then.

  13. New article folks…18 months of data…recap of the last 12-18 months…Part 1 – UK…

    http://www.statgeek.co.uk/2013/06/18-months-statgeek-part-1-uk/

    Don’t forget to +1 / Like / Recommend etc…I need the publicity (I get about two visits a day :)

  14. Statgeek.

    I’m surprised you get 2 a day. I just got a 403 Forbidden response when I tried that link!

  15. @Lefty

    Can you give the first two numbers of your IP please? You can get it from googling “what’s my IP?”.

    I’ve been blocking some nasty IPs in the past few weeks, and the odd genuine one will get hit.

    You’re not in Russia or Ukraine (“Lefty”) are you?

  16. 31 Tovarisch. Errr….I mean mate.

  17. Should be fixed now. Sorry bout that.

  18. No worries Stat.I’ll have a gander later.

  19. I see Mike Read the DJ is UKIPs’ spokesman on Culture & Media. Do they have many other celebs involved ?

  20. R Huckle

    That’s just made my night.

    Vote UKIP and get Smashy & Nicey on Radio 1 pop pickers. None of this urban garage nonsense. And definitely no records with the word “c*m”.

  21. @Lefty @R Huckle

    “Here’s Bachman Turner Overdrive with You Aint Seen Nothing Yet…”

  22. I think there will be some more Labour sacred cows having their last moo in the next couple of years.

    But ending universal benefits for “rich people” raises the uncomfortable question – who else shouldn’t get them? I’m sure they won’t want to leave it solely to the center-right to answer that.

  23. Seems as though Labour’s plan is becoming clearer. Freeze current spending and invest in the higher-multiplier stuff like infrastructure and housing. While targeting the wealthier babyboomers.

    Brown protected those babyboomers and Labour have been rewarded by seeing them backing the Tories anyway while advocating Austerity, because of course it was Austerity for others rather than themselves. Labour may be planning to redress this anomaly…

    So it may be that in addition to the winter fuel thing we may see other things babyboomers may not like, eg mansion taxes and of course lots more QE, and housebuilding to erode their property windfalls, and they can’t easily complain as they brought it on themselves.

    The coalition have eroded universality for non-babyboomers and it makes no sense for Labour to preserve it for the wealthier babyboomers who won’t vote for them anyway. A dose of “all in it together” for a change?

    Fundamentally Labour have been presented with an electoral issue in that a healthy chunk have basically sent the message “yes, thanks for bailing out our sector of the economy, and preserving our house prices, and pensions, and benefits, but we are still gonna vote for the other party ‘cos we wanna see lots of cuts etc. for everyone else…”

    Strategically it may make sense for Labour to stop trying to keep this voting cohort happy and instead make them share in the austerity medicine they are so keen on…

  24. Of course, if any of that did happen to cross their mind, they may not be entirely clear about it…

  25. PHIL

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

    It could be that they are responding to “Austerity plus” that is, Austerity plus the prospect of the Tories losing the election, so the prospect of a slimmed down life-style under a Labour Government. A bit like the mood toward the end of WW2, with everyone tired but healthy and peace in sight.

  26. PHIL
    In fact, the more I think about it, the more the whole period of Coalition government seems like a series from “’’Allo, ‘Allo”:
    Yvette, Dawn and Claire behind the bar, EB in his long apron, examining the polish on a wine glass, and saying: “Listen carefully, because I will keep on repeating this for bloody ever…” And there is Colonel Von “Vee haf ways of making you listen to me talking” Haguentropp, in his black and silver uniform, sharing the establishment’s best horse-flesh and second best burgundy with General “Daudi” Kameroun, who is sprawled back, smoking a black Russian cigarette in a holder, with his long leather coat spread out around him, eyeing the surroundings disdainfully. “Das Buffingstein in Heidelberg vas always better than this,” he mutters to no one in particular.
    When, Claire – hearing a commotion from the wide open country fire place – rushes over to embrace, and distract the officers, as Flying Officer Edvard Millenbaum, DSO, DFC and Bar, Cross of the Metropolitan Order of the House of Gewerlichstein, (played by Ralph Fiennes) staggers, with soot-streaked face into the bar, blond hair flopping over the collar of his heavy sheepskin flying jacket. Come,, come with me,” says Yvette on the instant. “I will hide you, in ze bedroom.” She stands rather too close to him up against the darkened corner post of the ancient stairway, fingering his lapel: “You’re…you’re not really English, are you?” she says breathlessly. “I mean your face is kind of funny.” “That may be so,” he says, “but I know how to make you feel like a women.. again. When this is all over, my darling, I will come back for you.”

  27. LEFTY
    “The writer (I forget who) claimed that EB was NuLab through and through, believing that Capitalism needed a nudge, then to be left to get on with wealth creation. Whereas EM believes that the old model of wealth creation is fundamentally flawed and must be overhauled.”
    The two are not mutually inconsistent. Far from it, in a social market economy. Government doesn’t do industry, commerce, or agriculture; it does providing the regulatory and enabling mechanism for them. When it comes to the banks, both EB and EM would look for greater State intervention and control, but towards commercial equity and better distribution.

  28. Latest YouGov / The Sun results 5th June – CON 30%, LAB 39%, LD 10%, UKIP 14%; APP -37

  29. I post infrequently now for various reasons, but offer the following observations.
    Over the next 12 to 18 months the Cons will be looking to create / enhance the feel good factor among parts of the voting populace.
    I think Lab have timed the start of policy announcements right. I look forward to seeing how these announcements work through into VI.
    ………………………….
    And on a completely different subject…I recommend “Thinking, fast and slow” by Daniel Kahneman, published by Penguin Books. Amongst other things – such as insight about how people think – the book has relevance and references to perception and, inevitably, voting.

  30. Its interesting that YouGov consistently have UKIP getting no further than the mid teens. Under FPTP this would probably get that party precisely nowhere in terms of seat haul.

    Where I would think the 20+scores other companies have for UKIP would yield more than a UNS seat count would suggest as in a “tipping point” was reached in a number of seats.

    The thing is YouGov dominate the polling landscape so much I wonder whether there consistent drip-drip underscoring of UKIP (which may be only down to methodology) will eventually have the effect of convincing a large proportion of UKIP supporters that there vote is a potentially wasted one. If thats the case it may be that UKIP’s numbers melt away like snow in a spring heatwave.

    However I don’t know this will make much difference to the potential outcome of the 2015 GE because when we last saw UKIP consistently back in single figures (first half of 2012) the difference between Con and Lab is pretty much as it is today.

  31. Phil Probably been said before but the average working class seat doesn’t have 18% voting for the BNP!

  32. Is there a graph somewhere of government approval?

  33. I find the samples by social grade conducted by YG a little odd. In todays poll you have nearly 1300 people in ABC1 and nearly 700 C2DE. I am sure that YG use population statistics which show more people in the first category, but if the correct social grade is not applied, then it will affect the polling. There is such a divide in party support between the two crossbreaks.

    I wonder what work YG have done to look at this, as if the sampling is flawed, then the polling will be giving a false picture.

  34. Keith P
    You are dead right with this poser.

    ”But ending universal benefits for “rich people” raises the uncomfortable question – who else shouldn’t get them? I’m sure they won’t want to leave it solely to the center-right to answer that”

    By failing to tackle welfare spending (or the reasons behind the need for welfare spending) adequately if at all during our 13 years in power we left the field for the Tories (plus facilitators) to do the work in a way we would argue is unfair.

    A bit like in place of strife being defeated by the party leaving trade union reform to Thatcher.

    Some Blairites argue this in respect of Public Service (NHS/Education etc) reform as well in that it is better for Labour to bring in the private sector than leave to a future conservative Government to do in a way we would not find palatable.
    For this, I think Ed would find more internal opposition than he will over welfare as the free school stuff in Sweden for example demonstrates problems with marketisation of public services.

    The party does though need to find a way of modernising public services and making them less producer orientated.
    I wish I knew the answer because if we don’t the americanisation (If I can put it that way) favoured by the right will happen in stages when we get Cons (led or OM) Government.

  35. Latest YouGov / The Sun results 5th June – CON 30%, LAB 39%, LD 10%, UKIP 14%; APP -37

    -There appears to be something of a downward trend for UKIP which might explain why the Tories have managed the odd 30+

  36. I see Mike Read the DJ is UKIPs’ spokesman on Culture & Media. Do they have many other celebs involved ?

    -Do they have any celebrities involved?

  37. well they were endorsed by Des Lynam the other day….

  38. BILL PATRICK

    @”Governments do not have incentives to pick firms on the basis of who will win, but on the basis of the investments that will help them in elections.”

    Picking winner firms is long gone-and it was a Labour administration which showed what a disaster it could be.

    Identifying Industrial sectors with potential & competitive edge is somewhat different.

    The idea that the CBI have no idea what these sectors are is amusing. The economy as a sort of lottery in which industrialists & entrepreneurs wait for something good to suddenly appears out of the blue, is an interesting concept.

    Not very left wing though-how would government decide where to target support?….buy a lottery ticket each week I suppose.

  39. Over 60s showing a Labour lead in the last few YouGov Polls . ????

  40. RICH

    @”Coming over to a more Conservative position?”

    His response to all those OPs showing support for control & reform of Welfare spending.

    He had to concede.

  41. well they were endorsed by Des Lynam the other day….

    -So no celebrities then

  42. Colin/Rich,

    Sadly your comments emphasise my point as imo welfare reform should not be a conservative notion but one the left should embrace and fashion in a way more in line with our values as we need to get the right balance between rights and responsibilities.

    The vague comments on re-establishing the contributory principle could be a good starting point whilst of course we are forced for the time being to frame our policies as a reaction to Government actions and measures introduced and/or legislated for naturally lead the debate.

    He adds naughtily that the best way to control discretionary welfare spending is through Growth which the coalition has failed on hitherto and even the dead cat bounce will be below trend for another 2-3 years. Genuine point is that the macro-economic policy still has to be right and we will disagree about what this should be of course.

  43. I think a period of good weather cheers everyone up – unless it gets too hot, then we get street rioting!

    However when the winter closes in, and people have to face rising fuel bills, and begin to worry about meeting the cost of looming Christmas, reality will reassert itself.

    As the official government policy seems to be austerity, followed by more austerity if things don’t improve, I see little real cause for optimism.

  44. Meanwhile back in the westminster bubble ,it was interesting to see after the very public attack on Google over there tax arrangements to discover that Labour had advised one of there donars John Mills re his donation to Labour of £1.65 million pounds worth of shares in what is nothing short of a tax avoidance sceme.

    Nothing illegal of course just like Google, but oh dear if your going to criticise big companies at least get your own house in order no doubt they will give the shares back or will they say Mr Mills tax arrangements are his own affair much like Googles response

    I know Labour are busy adopting Tory policy’s on pensions benefit payments and spending plans but fund raising as well, only joking” up the workers”.

  45. “I think a period of good weather cheers everyone up – unless it gets too hot, then we get street rioting!”

    But there has been a consistent improvement in perception over the last year. You can’t put the entire last 12 months down to good weather.

    I’m afraid, in common with a lot of posters here, you are confusing what the public think with what you think they ought to think.

  46. It looks as if the polls are stabilising again, certainly the daily YouGov ones, and there’s no sign that increasing economic optimism, well founded or not, is influencing voting intention in any way. If the latest TNS poll is to be believed it’s only adding to the flight from the Tories and Lib Dems, not stemming it!

    So, if the UKIP bandwagon has slowed a little and Labour are maintaining an 8 to 10% lead in the polls, then it’s good political weather for Miliband to start teasing out some general policy direction on welfare and the economy. They’ll be predictable noises off stage and, dear oh dear, aren’t people like Shapps and Zahawi almost Orwellian in their cliched denunciations of any Labour announcement, but I think this is a good time for Miliband to rattle a few cages inside and outside his party. He’s got plenty of wriggle room and if he pitches his speech today correctly, combining a telling critique of current Coalition economic policy with some eye-catching suggestions on how Labour will approach welfare, then he may find an electorate prepared to listen fairly generously.

    We’re approaching an interesting stage in the electoral cycle now. In the Thatcher and Blair era we’d actually only be 11 months away from a General Election now and there’s no doubt that opinions are hardening about the Government on bellwether issues such as the economy, health, education, immigration and welfare. Things can still change, and opinions may be more favourable on some of these issues than on others, but that disapproval rating of -37 is proving very sticky, as are the fairly desultory Tory and Lib Dem VIs. A window of opportunity may be presenting itself to Miliband now and it will be interesting to see how, or if, he’s able to exploit it.

  47. JIM JAM

    THere isn’t a “trend” anymore.

    We don’t know how the new economy will settle. The pre-crash economy was loaded with flawed & unsustainable financial services growth.

    I am surprised to see such a sensible & objective commentator as you resorting to “dead cat bounce” , the moment UK Industry & Commerce starts to show some signs of confidence. I expected it of others-but not you.

  48. @Crossbat11
    ” If the latest TNS poll is to be believed it’s only adding to the flight from the Tories and Lib Dems, not stemming it!”

    Er, Lib Dems are +3 in the latest TNS, this is not exactly a ‘flight from…the Lib Dems’?!

  49. “- “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.”

    I love this paragraph :)

  50. Ed Miliband seems to be getting praise from all over this morning. Tackling worklessness without attacking the workless seems to be a popular approach.

    If he can keep on at the message that the vast majority of people want to work and that his party will give them an opportunity to do so, I think he’ll have an election-winning strategy on his hands.

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