Today’s YouGov voting intentions and government approval ratings are the worst for the Conservatives since the election. The net government approval rating is zero – 40% of people approve of the government’s performance, but 40% of people disapprove. On voting intention the Conservative lead is down to 2 points, the lowest since the election campaign. Topline figures are CON 41%, LAB 39%, LDEM 12%.

Government approval has been on a slow downwards trajectory since the its peak straight after the emergency budget in June. This has been partially down to Labour voters’ hardening disapproval of the government, and partially due to falling Liberal Democrat support. The remaining Liberal Democrat voters still say they approve of the governent’s performance, but there are far fewer of them.

In voting intention, the level of Conservative support actually remains strong. Our daily polling has shown them consistently at or above 40% since the budget, significantly above the 37% support they received at the general election. Their narrowing lead in the polls is actually down to Labour increasing their support off the back of the collapse in Liberal Democrat support. Labour are consistently polling at around 37%, up 7 from their general election score, while Liberal Democrat support stands at just over half their general election vote.

The drop in government approval is to be expected, with the exception of the Blair government after 1997 (and to some extent 2001, when the government’s approval dropped, but then spiked after the attack on the Twin Towers), no British government sustains a positive approval rating for long. The Conservatives rating in the polls remains quite positive, but I’d expect that to start falling at some point once the cuts really start to bite: again, it is clearly what they expect, the Conservative strategy appears to be to take the unpopularity to start with and hope to recover once the cuts have been digested and the economy is in better shape. Right now, the interesting poll rating is that of the Liberal Democrats – the Conservatives have 5 years to get over low poll ratings… unless the coalition falls apart. To date the Lib Dems have been pretty sanguine about the collapse in support, despite stories about Charles Kennedy’s non-defection or Simon Hughes’s semi-regular soundings off, there is no obvious sign of panic.

In a separate poll, YouGov have also released voting intention figures for Holyrood constituency vote carried out for the SNP. Topline figures are CON 14%, LAB 36%, LDEM 12%, SNP 35%. Full results here

301 Responses to “Latest YouGov voting intentions”

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  1. @Anthony

    The rise in the Labour share is to be expected as they are the sole repository of the anti-govt anti-cuts protest vote. I fully expect this to continue until the CSR is actually announced. The expectation/fears of the cuts is IMO the force driving the shift in the polls.

    We have been bombarded with the cuts story day and (News)night. BBC London News are even doing a ‘cuts special’. The Spectator is doing an ‘all you need to know about the cuts, dept by dept, series’. This is all before the major announcements are made.

    In my experience when an event is discussed to death before it occurs then the actual impact is limited. A case of ‘after the Lord Mayor’s show’, which, incidentally, is three weeks later. In fact relief that the worst hasn’t happened often sets in. 40% cuts are now the public’s expectation.

    My point is the political damage may have been done by the time of the CSR. If that is the case then the peak in Lab vote will coincide with the CSR. After that we will need to see the effect of actual implementation which will be over years.

  2. Are there no regional figures from YouGov’s Scottish poll?

    Also the last question on Megrahi seems rather leading, does it not?

  3. Anthony

    Are the YouGov Daily Trackers ecshewing accuracy when it comes to support for the three main parties, particularly the Liberal Democrats?

    I only say this because non-YouGov Polls such as Comres and ICM have the Liberal Democrats between 15-18% and the Conservatives under 40% whereas YouGov seems to have the Liberal Democrats on between 12-15% and the Conservatives over 40%.

    What do you think?


    [ComRes are still weighting to actual 2010 vote, which I assume is a stopgap measure, and the post-election review article by Martin Boon of ICM implied they were looking at whether to move their Lib Dem weighting downward, so I’m not spending too much time in comparisons and working out what the differences are until all the companies have settled down. It should go without saying though that I have confidence in what YouGov are doing, since I conduct them. If I thought they should be doing it differently then they would be! – AW]

  4. Anthony , the actual number of LibDems in the sample for this Sun poll was 227 . This was weighted down to 195 – WHY ?
    The individual subsets that you had to weight upwards included 18-29 year olds and Rest of South both of which had higher LibDem figures and those groups you had to weight downwards included the 2 over 40 age groups and Scotland which had the lowest LibDem figures .
    The one set of weightings which would reduce the LibDem figure is those on social grade but that would not on it’s own override the upward movement that should have occurred in the age and regional weightings let alone reduce the LibDem figure by 32 .


    “40% cuts are now the public’s expectation. ”

    They are-and all on day 1.

    I have seen no press comment whatever, pointing out that the £113bn pa reduction in public expenditure is to be achieved over the term of the parliament. ie cumulatively.

    This will not all bite on day 1
    It will not represent 40% cuts everywhere-or even anywhere.

    It will be painfull-inevitably-but the economy will grow through that period, and it is perfectly feasible that as the public spending reductions in the later years are implemented, the economy grows, creates private sector jobs & increased tax revenues…and the whole process becomes a rebalancing of UK plc from a State supported & funded entity to a more balanced economy.

    You may be right. When Armaggedon does not transpire in September, we may see a more reflective response in the Polls.

  6. The Tories have very good reason to believe their plan will work. Let me try to explain why.

    In 1986-7
    In 1991-2
    In 1996-7
    In 2000-1
    In 2004-5
    In 2009-10

    There is generally an upward trend in the Government’s polling ratings.

    Forget about what base they may be recovering from, or indeed what base they are starting at. More importantly than that, elections concentrate the mind of the public, some inevitably returned to the fold. It happened for Major and Brown, it most certainly happened for Thatcher and Blair. It will happen again for blue. Thus, it makes perfect sense to get the pain out of the way quicker than you can say boo.

    Now from what base, and at what starting point one begins this comeback is important. Once again let me demonstrate why blue once again have it spot on. Their plan is to half the deficit in four years. One year out from an election is the general point at which a recovery begins. The 2015 budget will be a giveaway budget but not in the opportunistic sense, more in the sense that the government will in all probability be able to afford it.

    The plan is simple…. get the cuts over and done with, fix the deficit Labour create. Begin to reinvest in public services, caputre the middle ground, exit from aghan rebrand the party.

    I have practically zero doubt this will be 100% successful.

    What ifs?

    1. Iran/Kashmir/N Korea?
    2. Another unexpected global recession
    3. A pandemic illness
    4. Terrorist related events
    5. An internal coup
    6. Labour resurgence under a charasmatic leader
    7. Sleaze
    8. Europe

    I have placed those in descending order of likliehood in my view….

    David Cameron stands a very good chance of being regarded as one of most successful PMs. This is mostly because he will be measured by tackling the deficit. By focing Gordon Brown to concede to debating the blue narrative (the dreaed C word), reds mostly have themselves to blame. If an alternative (however improbable) had been floated it would have created enough doubt in the minds of the voters not to be so readily impressed when blue halve the deficit as the almost certainly will do.

    I am not sure that a new leader will be able to re-cast the narrative, mould the populace’s weltanschauung or oopen up new paradigms by which we can measure DC in time for 2015.

    In seems deficits, iraq and keeping blues nose clean will suffice.


    Yellows are finished beyond all imaginable doubt. You see the thing is, they get none of the credit for this. All they’ll have to show for it is a botched AV referendum campaign.

  7. When do people think that the Lib-Dem’s poll rating will first drop into single figures in a national You Gov poll in 2010 or 2011?

    Please give an EXACT date of publication of the poll so that we can get a winner (or if you don’t think that it will ever fall into single figures by the end of 2011 please say so). No prizes, other than lots of bragging rights! I’ll try and keep a record.

    My prediction is 9th January 2011.

  8. Phil 26/09/10

  9. Mark – that’s the effect the weighting did have, so logically the social class and newspaper weightings clearly did have a bigger downwards effect than the upwards ones, or the figures wouldn’t be as they are.

    It’s worth noting that all these things interact and you cannot view one variable in isolation and draw firm conclusions about what the effect would be. Not all young people will have been weighted up equally, not all people from each region will have weighted in the same way because those people will also have fallen into other demographic categories.

    For example, young people were weighted upwards on average and Lib Dem support was strongest there – therefore it should have helped the Lib Dems… but young people who read the Guardian, or young people from an AB social class may not have been weighted upwards, since they were being weighted down for other reasons. Young people from CDE social background, or who read the Sun or Mirror would have got much higher upweighting. If the Lib Dem supporters amongst the under 25s were disproportionately broadsheet readers or ABs, and not so much amongst CDEs and tabloid readers, then that upwards age weighting may not have helped the Lib Dems at all… and so on.

    I believe your summing up is as reasonable and fair as possible. The other side of the coin is, all this talking up of anguish suffering and the systematic devastation of the proletariat, will all seem a bit OTT when the worst does not happen.

  11. The Lib dems really were damned whatever they did.Support an unworkable,tainted government with the help of someother unworkable alliance,or throw their true beliefs in the bin for a sniff of some power.
    It would IMO been far better to support nobody and run the election again.There already seem to be splits within the Lib Dems opening up,so the next months could spell make or break time for the party

  12. @ Eoin

    I think there are two more to your list of “ifs”.

    One is the UK recession. Don’t right it off, British medium sized business is quite anxious.

    Two is the failure of cuts. The whole thing is rather complicated. I had a meeting yesterday with one of business related bodies to be abolished. They had an efficiency drive (cut) 8 months ago. It actually cost them more than the “savings”. One of the reasons – and it is true for the current comprehensive review that no money and resources are provided for having data on which the cuts could be based. Consequently, the decisions are made in noise (plus ideology, but it’s less important here). Essentially the dreaded statistical fluctuation (because of the dependency among expenditure items, a divergence in an “upstream” cut is amplified in downstream) comes into play. So, the cut figures will be “haunch” and then the diversion has to be justified – could be rather difficult politically.

  13. @ Roland

    I think you are right. Apart from some departments, I think the cuts will be single digit. If not, then it’s purely ideological and the blacklash will be tough.

  14. right – write :-(

  15. Laslzo,

    A metaphor if I may…. I come into your town and take an axe to the community centre in 2010. In 2012 a MacDonalds opens on its site. Question: In 2015 how many people still harbour resentment about the community centre?

    This metaphor is crude in that is supposed cuts will be as arbitray as that (I dont think they will) but the point of it is to show how communal conceptualisation renews itself on a seasonal basis.

    2015’s best footy player we aint heard of yet.. Ford will have some people carrier or other that will be the dogs… no doubt we’ll have new z-list celebrities and style icons… Do you remember Ruud Van Nistleroy? Or Michael Howard? Or Tony Blair?

  16. @ Eoin

    I think it will vary, but my point is a bit different.

    If they happen to be unable to make the cuts – this was my point. Not because they don’t want to, but because it is very difficult. But it could come across as incompetence. And that one is more difficult to forget than axing some project. This is what happened with falling out of the ERM – I think it was quite inevitable, but in the collective memory it is incompetence.

  17. Ahhh Laszlo,

    I understand now… Perhaps if I had read you rpost slower (multi-tasking Men cannot do it). Sorry!

    Yes I see what you mean… quick cuts cost yes that is true, which is why I have always preferred efficiencies. I know it is a stereotype but you can save a fortune through efficiciences..

    It costs about £140 to hire a artic to deliver 24 tonnes 100km. What if you booked a return load? hired you rown fleet? registered the trucks in a state with lower road tax, insurance etc.. you could operate your own trucks 24 hours instead of eight.. you could double your load utilisation by retun loads.. triple your load utilisation three fold by round the clock.. it would at least half your fuel costs and quite likely sped up delivery times due to lesss traffic on the roads at night..

    Loading bays of all the big companies work round the clock… book those nightitme slots… JIT managment has a fortune of savings in it… You could give me a more exact figure I am sure but isnt transport & distrib 13% of our economy?

    I was chatting to a consultant working with the gov. to bring down these costs… there msut surely be a lot of savings to be made..

    Please don’t think I in anyway disagree with your comments, on the contrary. However, perhaps it is my cruel Tory nature to lose patience with those who make no attempt to help themselves, but this propensity to tear the party to bits every 20 years is becoming to lemming like for sanity. I really feel the likes of Hughes are terrified of power.

  19. @ Eoin

    Plenty of savings can be made. The problem is that it is not done like this (not to mention the cost of the consultants :-) ), but on the principle that public services are unnecessary.

    There are “unforeseen” ones. Three real examples. Agency X is abolished. It has some stake in quite a few companies. The contracts have to be rewritten. Solicitor cost for which nobody budgeted anything. Or another one: Database X is too expensive to run. It happens to keep all the relevant data on which the further efficiencies can be found. But the updating of the database has been abandoned. New study is commissioned for hard cash. Third example: Public body X, an extremely important one, is reliant on information from Public body Y. The latter one is cut back and it’s now only a shell. Public body X has to make decisions without the data. The overspend is 75 million and growing (the budget of Public body Y was 15 million).

    Your distribution and warehouse example is really good – it only works if there is a complete cultural change and people involved measured on relevant performance criteria (many British companies I have come across are notoriously poor in this, although there are some absolutely shining great examples and the British distribution system overall, thanks to the motorway system, is really good). If there is no such a change, efficiencies are completely destroyed and the outcome is worse than before the “new system”.

    The key issue, I think, is that there is simply not enough time, not enough common ground and too much ideology. Global cuts are agreed and they are cascaded down, with the usual inefficient outcomes or local efficiencies measured which tend to be detrimental to the overall efficiency (NHS and your distribution example (if the warehouse is measured on sending stuff out on time, if there is a bottleneck, the input will pile up or additional resources will be demanded) are evidence).

    This is the reason why I think the cuts will be much smaller than expected and then it can be spun. The real question – will there be expenditures that will increase in spite of the intentions.

  20. Laslzo,

    there is risk associated with the argument you promulgate. We know that they are going ahead with the cuts (attempting to at least) anyway. If you talk up how unachievable you think it is, then the credit/reward will be greater, in political tersm at least, when they acheive it. Thus, I fortell that perhaps at this late stage in the red strategy, talking down the achievment of halving the cuts might yeild greater red benefit, when the time comes for blue to announce they halve halved the deficit. Thus, rather selfishless I am unwilling to countenance your ideas simple due to political expediency (I hope you forigve me).

    I will say this though… if Joe the plumber happens to catch the MArch 2014 budget, when GO says,

    1. deficit halved
    2. cuts over

    and Joe concludes “That was not as bad as I thought it would be”.

    Reds are up a creek.

  21. Do you remember Ruud Van Nistleroy
    wrote Eoin

    Yes and he scored twice for Hamburg SV at the weekend. Had he played for NL, they would have won the WC IMO. A Dutch Alan Shearer – head down and shoot low.

    There certainly is a fatalism in LD circles which used to infuriate me when I was active for them. This is not shared by the Orange bookers which is why they made the deal that Vince and Simon could never have made – they could not have held their noses for long enough.

  22. How much the “I won it, and I won it now” mentality of modern Britain affects the public’s outlook on government spending I just don’t know. Any great understanding about the opinion of left and right in an economic sense, is unlikely to be in the forefront of many minds. Does the thought that economies have to be made in personal lives if money is tight, follow through to the National economy? Or do people believe it grows on trees. The constant reading of opinion polls is more than confusing. Six weeks ago the public had bitten the bullet, now they have clearly had second thoughts. Whats changed apart from the weather?

  23. @ Eoin

    I think your assumption about Joe is correct and it is a very feasible scenario and if it’s the case, then there is a Conservative government for 15 years.

    But it will depend on your first paragraph. If there is problem it will hit twice.

    I actually think there will a budget problem – a third reduction in the deficit is the maxiumum and then the Tories have a credibility problem.

    Less importantly, a significant proportion of the British economy lives in a symbiosis with the public sector. It maybe unhealthy, but it’s the case. However, there is no real, hard data on income flows and hence the real effects of the cuts.

    Third, the budget question is not purely monetary or economic question, but behavioural. I have only anecdotal evidence of rechannelling deals from public sector to “new” private companies (set up by people fired after the emergency budget), utilisation of existing networks of taking profitable bits of public service out and pure and simple sabbotage by people who, for example, were not allowed to take voluntary redundancy because “they were too expensive”. None of these are illegal, of course.

  24. @ Roland

    “Whats changed apart from the weather?”

    I guess there is some overspending from holidays, so people are a bit more cagey. There are also more redundancies, but it’s mainly voluntary.

    Also, the tune of the media definitely changed. From the “draconian measures are needed” (which helped the coalition in the elections and after), it is now the “human story” in the cuts. This works against the government (as always in any story).

  25. Roland
    I don’t see anything has changed (Con still 41 -44 odd) and I believe that the only thing changed is that articulated by AW and Aleksandar (see first post).

    This is natural and will continue until the actual implementation is actually more or less felt by voters.

    LD type voters feel that Lab is the only means of protest at present.

  26. Laslzo,

    Have you factored in overspend 2003-10? Is there slack in the system? Ringfencing NHS might come back to bite them. Thats as far as your gonna get me on accepting it is difficult for them to halve it. Higher than expected tax yields last year wiped a chunk of it 13bn and then 5bn… year on year borrowing to july is already 4.9bn…. my bet is that they’ll do it – comfortably.

    But I accept fully, your more hands on with the nuances of implementing it…

  27. @ Eoin

    Budget borrowing in the case of the UK budget is only indirectly related to the budget deficit.

    What really could be a saviour is a strong surge, which could help with bank share prices and cutting the insurance premium on “bad” loans. That could cut the deficit by a third alone. But then it almost certainly would put up the interest rates…

    We will see. I don’t say you won’t be right…

    There are far too many factors to work with. And far too many “interests” (e.g. referring to cuts, one of our large new (1992) universities closed two humanities departments. They also happen to be disliked by the president of the university (declaration of interest: I had some friends in those departments). Now, I am quite sure it happens at a much larger and smaller scale up and down in the country that can destroy even the best intentions of the government, but it’s the government that will be responsible.

  28. Laszlo,

    Yes the liscence to cut seems to be a cover for settling scores- granted. Selling off banks at a profit, will likely happen I think. The pound has been making a solid recovery… for a sufficiently so for even you to admit that confidence has been restored to soem degree to British banking… with a multilateral approach to taxing bank profits GB has weathered any pseudo threat fro banks to float. Aside from the petty bank bashing that is sometimes suggested it does appear that GB banking is open for business….

    So it is on record… GO will achive his main targets in my view.

    The threat of inflation is cooling (I say this bearing in mind the 2.5% hike in Jan.) But even that hike will work its way through the system so its effects will be well and truly over by 2015…

  29. @ Eoin

    Well, at least one of the think tanks disagree with you on inflation (though I think they are just wrong) when predicting 8% interest rates.

    The inflation will depend on capacity utilisation. If there is access capacity in the British economy (not requiring new investment), then the inflation is a real danger, because the money pumped in the economy in quantitative easing will be inflationary. If there is a need for lots of new investment, there is no inflationary pressure from this.

    But yes, there is a good chance for GO to perform. Yet, it can all go really bad, and the chance is quite high. I still think that even the emergency budget’s effects are dangerous for the autumn. So, I suppose, I’m no the fence: I don’t think it can be done, but it can still be politically rewarding for the government.

  30. Perhaps the last ICM poll in the Guardian was premature, but the trend is clear enough now.

  31. Just to join this discussion re the economy…I’m no expert (far from it in fact) but my reading of some of the postings on this and other UKPR threads seems to suggest to me that it is beneficial for the moment to have ‘high’ inflation as this seems to mitigate the cost of the deficit that the UK is running.

    If this is correct, then what is the most benefiical level of inflation (at least for the next four to five years)?

  32. Laslzo,

    Dont doubt for amo- that I bleive just because it can be done that it is the right thing to do..

    2p on income tax and cap on interest rates and maxing Ofwats powers of intervention to stop overpricing in the energy market would have made a significant dent in halving the budget deficit. Saying that.. this ‘halving’ malarky is more an icon that a necessity. I admit I am in the Balls and Brown camp (as opposed to the Darling et al) when it comes to the deficit…. Balls was shown to have shouted ‘so what’ at Cameron’s budget response- the same thing crossed my mind. But them I am an unashamed social democrat…

  33. @Lazlo (and others who have posted on similar issue)

    Your two points are well taken- the double dip driven by a nonchalant-government induced slump in aggregate demand/ consumer confidence (the plan is to eradicate the structural deficit in 4 years flat!) ; the simple inability of the government to cut to the level they are planning to cut over the four years- we are a 21st century advanced capitalist democratic state- such a state (even the system itself) relies to a great extent on the social infrastructure and income support engendered by public and welfare services (have a look at the actual level of this type of spending even in America for example- that bastion of free enterprise). It simply may not be politically possible in a democracy (the UK is not China now or a 1970’s Latin America banana republic where what people think does / did not matter) to implement 25% cuts in practice over such a short length of time- talking about them is entirely different and hypothetical: even though just doing so has increased Labours vote by around 8% in 100 days i.e. the reaction to the reality will be worse over the ensuing 18-24 months. So your two extra reasons add to why the balance of probability must be against the ‘cuts working’ as has been argued elsewhere.

    Social psychologists have conducted research over the years on friendship and likeability. They have concluded that dislike and antagonism are always heightened when a relationship that has become troubled began positively (as opposed to a negative or a neutral beginning). IMO Cameron is in danger of being seen retrospectively as another Blair- as a major failure and very unpopular. Blair destroyed his reputation with a failed disastrous adventure overseas supposedly based on high-principle; Cameron may well destroy his reputation with a failed disastrous adventure at home supposedly based on high-principle.

    Really this deficit reduction plan should be a plan for 8 years with no anticipation of the mantra ‘good news- the cuts have worked’ having kicked in by 2014 (the mantra necessary to save the Tory party at the following election).

    Indeed, that election may still be earlier in any case. In fact that may well be the better strategy for the Conservatives: call a snap election in late 2013/ early 2014 on the new boundaries- and after the inevitable splitting away of the some/ most Lib Dems (minus most of the Orangies)- on the basis of ‘we need firm government to see this through and we have been let down by most of the LD party’.

    You’d have an election where both Lab and Cons-plus-Orangies would be circa 40%- 45% each just like in the 50’s and 60’s. Cameron and Osborne just might sneak a workable majority on that campaign message and in that political landscape: it was the rise of the LD’s (and anti Tory tactical voting) that increased the severity of their defeats in ‘97/ ‘01/ ’05 and prevented them from getting a majority in ’10. In this scenario that factor has vanished.

    With the deadline for ‘the cuts working’ (i.e. the next required election) then extended to circa 2019 the Conservatives could quietly go about cutting the deficit in the way Labour is suggesting you should right now i.e. slowly and sensibly and pragmatically. And achievably.

  34. @ Mike N

    It is correct. With the low borrowing cost, the current inflation is beneficial to the government as it devalues the debt. I don’t really have much problem with it. It can even be fuelled a bit. It’s a big question how long the savers are put up with it, but perhaps for some more time.

    Inflation if the economic growth comes from reutilising free capacity (as opposed to investment) is a problem because it would stall economic growth.

    Strangely, the UK economy is more dependent on investment than consumer spending even if the latter is about 75-78% of the GDP (after reallocating budget expenditure).

  35. A recent report suggested interest rates could reach 8% fairly soon (hence mortgage rates of 12-14%)

    It was a very respectable study, but surely not? Merv said interest rates would have to stay low for a very long time. Is there any other way to control inflation?

    If there is any truth at all in the study, then I suggest this would be one of Eoin’s “Events.”

    Eoin’s crystal ball appeared to be very accurate over the Lib share of the vote at the election. I only hope his cast iron certainty is wrong this time.

  36. Laszlo
    Thanks – I’ll resist making any further comment as I’m already out of my comfort zone.

  37. @ Eoin and Rob

    I’m quite a heretic in this (and certainly not a social democrat :-) – although I’m getting old – 20 years ago I would have taken it a criticism). Within limits (because it has to be financed) I don’t think that budget deficit is meaningful at all. It’s a residual stuff, so the key issue is the structure and size of expenditure and the structure and size of revenue. There is barely any discussion about that :-(.

    Secondly, with the massive consumer debt and the potential borrowing needs of firms, somebody has to overspend…

  38. @ Sue

    The authors of the study you refer are OK, but the report is based on very strange assumptions (essentially free automatisms without any intervention). I doubt if it is a real scenario (also the press release is more “bold” than the paper).

    There are other ways of controlling inflation and this is what the government is doing (although not with this purpose): taking out a huge chunk of the aggregate demand (cuts) and allowing the pound to appreciate.

    You probably know that the current swaps for 4 years are around 2.5% (sorry I quote from memory – multitasking, so I have no time to check it), so the 8% is rather weird.

  39. sue

    Merv said interest rates would have to stay low for a very long time. Is there any other way to control inflation?

    yes it’s called income tax, both methods take money out of the economy which slows down demand. the real difference between them is money paid in higher interest rates is never seen again

    i’m sure laszio has more sensible suggestions

  40. Laszlo – I certainly thought it was weird myself – I wondered if it was deliberately designed to press those buttons that really hurt in the 80s. The dreaded interest rate out of control.

  41. @ Mike N

    Sorry, I missed your last point about the “ideal” inflation. I have no idea, but I guess nobody has. The 2% target of the BoE and (that of ECB) seem far too low to me considering the structure of the British economy. This is all I can say. With 2% in the current situation, there would be serious problems.

    One of the issues is that in “general” the UK interest rates should be about 2% higher than the US and about 0.5-1% higher than the ECB’s. But currently we have exceptional times. It will be interesting to see if the recovery brings back these historic trends.

  42. laszlo

    why do these exceptionally low interest rates worry me. i feel in my gut that interest rates below 2% are very wrong but i don’t know why

    sorry for picking your brain but i was too lazy to go to school

  43. @ Richard in Norway

    “i’m sure laszio has more sensible suggestions”

    As you saw, I don’t. Yours is the precise one.

    @ Sue

    “I wondered if it was deliberately designed to press those buttons that really hurt in the 80s. The dreaded interest rate out of control.”

    Interesting thought. There’s no doubt that there is growing discontent with the current interest rates among the rentiers.

    But I thought it was more about confusion in their model – it was a traditional monetarist model (based on Fischer’s equation, unfortunately – so monetarist that fiscal policy was largely excluded) the model put down the entire sum of quantitative easing as inflationary factor and used the growth figures from OoBR and this was the automatic outcome. It did not consider changes in the volume of commercial lending at all in their interest rate prediction.

    But once I have time, I’ll revisit it – maybe you are right, there is a political agenda (positive or negative) here.

  44. Laszlo – Just seemed a bit of a coincidence that they came up with 14% mortgage rates from nowhere.

    Middle Class Tory Terror Zone (as the Sun might say ;) )

  45. Richard in Norway/ Sue/ Laslzo,

    Organsied crime applies a standard 4% apr rate to all loans. A work colleague of my brother is testament to that since he failed to meet his repayments and cannot walk.

    The question I have is that if organised crime a.k.a the ‘bad boys’ can charge 4% and be termed as gangsters, what do I term Santander for my fixed 5.79%?

    My Spanish is not very good……

  46. @ Richard in Norway

    I have some bad feelings about these interest rates too (even though it helps my mortgage payment and hence my holiday immensely).

    Although it helps many people (mortgage), but mortgage is less important in most Continental countries and the interest rates are low there too, so it is not a strong enough argument. The large company sector is essentially self-financing, so the low interest rates do not help them. Small and medium sized companies in the UK (but not on the Continent) have low debt and most of it is overdraft (or quasi-overdraft), so they would still pay around 8-10%, so it’s not an argument either. I can continue, but the outcome is that there is no real-economy purpose here.

    This leaves two major purpose, I think (but I’m a bit uncertain). One is the banking sector. The spread has become massive. In most Continental countries and to some extent in the UK banks have easy access to low interest central bank money if they have credit that they can securitise (a large proportion of consumer credits are like this), so the low interest rate is beneficial for the recapitalisation of banks. Secondly, with the collapse of the last bout of financialisation (e.g. subprime) and the recession with relatively low performing stock markets there is a massive amount of money seeking investment – as the offer is limited, governments can borrow cheaply and large firms can use the corporate bond market more extensively (it is the case anyway).

    It meets the politcal aim of keeping the electorate happy – and indeed there would have been many more personal insolvencies without such low mortgage rates.

    But in spite of my personal interest in the low interest rate, I agree with you, that it’s probably harmful. It created higher lending rates in the unsecured markets, it created inflationary pressures, in a perverse way, it discourages investment (cf. Japan) and in longer run, because of the massive profit opportunity, it may create further expansion of consumer debt.

    I know it’s not specific enough, but it’s really an unusual situation.

  47. Laslzo, I think you and I are alone (on UKPR) in thinking that the urgency to reduce the deficit is falsely pressured.

  48. Assuming the Lib Dem support stays at about the level it is now, it will be interesting to see what happens in the seats where the Tories and the Lib Dems are the two biggest parties. Most of whatever tactical votes the Lib Dems get from Labour supporters are probably going to go away, meaning that Labour could actually get a reasonable vote in, say, the Cotswolds.

  49. Off the current discussion thread.

    Just saw this on the ABC election site- refers to AV-in-practice……

    “I know we said we were finished for the night, but election analyst Antony Green has been inundated by emails regarding the seat of Denison. Most readers have expressed bewilderment about how Andrew Wilkie can win Denison if he finishes third.

    Antony has published this blog post explaining the reasons why.:

    Distributing Preferences in Denison

    In the last two days I have been deluged with questions about Denison. The main one is how can Andrew Wilkie win the seat if the Liberal candidate is finishing third?

    The answer is that preferential voting is not a run-off between the two leading candidates. The count is conducted by succesively excluding the lowest polling candidates in order of ascending votes at each stage of the count.

    In the case of Denison, the Candidates have finished in this order
    Jackson (Labor) 35.9%
    Simpkins (Liberal) 22.1%
    Wilkie (Independent) 21.7%
    Couser (Greens) 19.0%
    Barnes (Socialist Alliance) 1.3%

    When preferences are distributed, the first two candidates to be excluded will be Barnes and Couser. The preferences of Couser will push Wilkie ahead of Simpkins, converting the contest into one between Labor’s Jackson and Wilkie, with Wilkie benefiting heavily from Liberal prefernces.

    The formal flow of preferences will not be conducted until next week, but at this stage preliminary scrutiny has made clear that Wilkie will pass Simpkins. The Electoral Commission has now conducted an indicative throw of preferences between Labor and Wilkie that at this stage indicates that Andrew Wilkie will win Denison from the Labor Party.

    I hope this explanation clears up the confusion about why Wilkie is being declared the winner’ “

  50. Aleksandar’s first paragraph, in the first post on this thread, practicaly says it all. As reality bites, voters disillusioned with the ConDems think they have nowhere to go other than Labour.

    It is depressing that UK politics is always about the least worst – over the years this has been very bad for the country and for engagement of the voters with the political process.

    One wonders whether and if voters will turn to minor parties outside the ConDem coalition, as they did to the nationalists in the 1970s. In this context, perhaps we ought to notive the big rise in the Green vote in the recent Australian elections. Although of course circumstances in that election were rather special with Labour machine gunning their feet over a Labour split and the right being led by a climate change denier.

    It is perhpas mot specifically relevant to psephology, but the geographical situation of Australia is such that we should be very worried by the world threat constituted by the denial of many people there of scientific realities concerning the environment.

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