Economic Optimism

The big leap in Liberal Democrat support isn’t the only surprise in today’s MORI poll. As I wrote in the update below, there is also a big jump in economic optimism. I thought it might be a good time to take a wider look at economic optimism.

The graph above shows four regular monthly trackers of economic optimism. GfK NOP and Ipsos MORI both ask people each month if they think the economy will get better or worse over the next 12 months – these are the net figures of those thinking better minus those thinking worse. TNS ask a similar question for the Nationwide, but asking about the next 6 months. YouGov in the Telegraph polls ask about how people think their own household will fare over the next 12 months.

As you can see from the graph, economic optimism reached it’s low point back in summer 2008. There was a big jump in economic confidence after the bail out package in the Autumn, but it slumped again as we headed into January 2009 and several high street stores went to the wall. Now it appears to be heading upwards again. No one else has recorded anything like the boost that MORI have, but so far their’s is the only April data we have, so we might yet see it reflected elsewhere.

What does this mean politically? Firstly it depends if it is matched by reality, if optimism rises, but then more bad news comes along, it poses an obvious risk to Labour. If signs of economic recovery come along to support the new optimism, then it’s harder to say. One possiblity is that increased optimism will be reflected in increased support for the incumbent, but it isn’t necessarily that straighforward. There is an argument that with the crisis passed people will be less risk adverse and have more of an appetite for change. Labour now are still in a better position than they were before the economic crisis really took hold last autumn, in my opinion part of that is Labour are more united now, but part of it is probably also that many people still trust Gordon Brown as the right man to deal with an economic crisis, begging the question of what happens if the economic crisis passes…

UPDATE: For the record, here’s the average of those four economic optimism trackers, plotted alongside the average Labour lead in the polls each month.

Still some relationship there, though not a rock solid one. The recovery in economic optimism since the start of the year hasn’t yet been reflected in any recovery in Labour’s position.

14 Responses to “Economic Optimism”

  1. I wonder if Labour’s best chance is the fear of a W recession – in other words if they can claim they have caused things to improve by their policies which were opposed by the Tories but given the internatinoal situation there is a risk of a double dip so you need ongoing Labour policies to get out of the second dip

  2. I suspect Labour’s strategy is to claim responsibility for the recovery, and criticise the Tories for opposing the policies that lead to it. Then they’ll move on to the fight the next election on the issue of how the recovery should be paid for, contrasting their proposals to tax the rich and make modest spending cuts with Tory proposals to slash investment in vital public services. Labour’s message will probably be something like “the rich created this mess so they should pay to clean it up.”

  3. Good analysis and it could be that economic confidence is a leading indicator of polling changes. If so epxect the Con lead to drop over the rest of April/May

  4. I think the recent smears have partly cancelled out the effect on reducing the Labour lead.
    Wait a bit longer and it may improve with the next few polls.
    It would be interesting to see it plotted against the LibDems and the Tories as well.
    Will be interesting to see if the Budget improves economic confidence and thus the lead even further.

  5. I put it down to the weather… wait ’til October, then it’ll be whole new world of hurt once the reality of the media mantra really starts to kick in all over the place… right now, it’s just in pockets that don’t affect everyone; and many people are still in denial.

  6. The economy will be better in 12 months time in the sense that we’ll be out of recession by then. The problem for Labour is that there’ll be 3m unemployed and taxes will be going up.

    There may even be the beginning of increasing interest/mortgage rates.

    You’ll also have millions of public sector workers waking up to much smaller pay rises. You may even have job cuts in the public sector.

    So the economy may be out of recesion in 12 months time. But it won’t feel like it is for another 2-3 years time.

  7. our economy is shredded. we need a businessman who will treat the uk economy like a businees and get us more money flowing into the economy (profit) we need a product, that we can sell, export, rather than financial services and importing everything.

  8. I wouldn’t bet on the economy being out of recession in 12 months time. It might be, but I would say there is about as good a chance it will not be.

  9. I think the UK economy will sink so low, Zimbabwe will be sending aid to us.

  10. Doubt it, Mugabe doesn’t waste his money – well, not to that extent anyway.

  11. No Neil, you are quite correct. Mugabe doesn’t waste his money, and he shares this trait will all main political parties in the uk, they waste other peoples.

  12. I think we should put Alex Ferguson in charge. He’s already shown he’s a great manager so he should be able to manage our economy okay.

    He’s also a Labour supporter so he would spare us the the disaster that would result from Tory rule.

  13. *sigh*

  14. I’m not looking forward to the next few years especially after the next general election. It will certainly not be too pleasant no matter who is in charge. Getting the current budget deficit under control and keeping enough people happy to vote for the then incumbent will be tough.