The relationship between the political and economic cycles has long been the stuff of political folklore. There have been many examples throughout history of nervy incumbents, mid-way through a parliament, reading the economic tea leaves for any signs of green shoots. Accordingly, the most recent announcement by the Office for National Statistics (ONS) last Friday that third quarter growth in the British economy was, at 0.8%, the highest for three years, will do much to buoy George Osborne both as the keeper of the nation’s purse strings and as the Tories’ top political strategist.
However, the Chancellor himself will know, as a keen student of political history, that increasing national prosperity is not always followed by an ample embrace of the incumbent government by a grateful electorate. Conservative electoral fortunes in the 1990s, at a time when Mr Osborne was cutting his political teeth as a political staffer at Central Office, demonstrate this only too well. Having helped the Party scrape a slender majority in 1992 in the midst of an economic recession, Mr Osborne then watched as the electorate brutally shunned the Conservatives five years later despite the start of what would be one of the longest economic expansions in the nation’s history.
So whilst this latest economic news, along with the prospect of even faster growth in 2014, will be welcomed inside HM Treasury, a growing economy by no means represents an electoral slam-dunk for the Conservatives in eighteen months’ time. A number of additional factors, such as the failure to amend the constituency boundaries; the rise of UKIP since last spring’s ‘omnishambolic’ Budget; and continuing low levels of Conservative support among Britain’s BME communities together conspire to make the road to a Conservative majority government difficult next time. Alongside these obstacles must now sit a new political development: the politics of living standards.
The politics of living standards, most recently exemplified by Ed Miliband’s promise to freeze energy bills for twenty months if elected, seeks to move beyond the headline economic figures on GDP growth, employment levels, and deficit reduction, and instead re-orient the debate towards the impact of the economy on the average person’s income. This is particularly salient given ONS figures released earlier this year which showed that real wages in the UK last year had fallen back to the level they were last at in 2003.
Not only does this approach move the political discourse away from the broader macroeconomic measures where opinion polling shows that the Conservatives lead Labour, it helps the Leader of the Opposition hammer home the message that the Conservatives are on the side of rich, vested interests, the Liberal Democrats are plain ineffective and only the Labour Party is authentically on the side of the average man and woman in the street.
Mr Cameron and Mr Osborne are alive to the dangers of such a narrative taking hold: hence the attempts by the Conservatives to develop their own retail offer to hard-pressed families. The problem is that, by engaging with these issues on Labour’s territory, it becomes increasingly difficult for the Conservatives to re-focus the political debate on the areas where they are strongest, namely deficit reduction, employment growth and increasing the UK’s competitiveness.
The battle lines for 2015 are thus starting to become clearer. On one side will be the Conservatives, urging the electorate ‘not to return the car keys to the driver who crashed the car in the first place’, with Labour reposting that an economic recovery is nearly worthless unless prosperity is more widely shared. The winner of this argument will most likely walk up Downing Street in 2015, and will likely set the standard for how the economy features in Austerity Britain for the rest of the decade.