by Stephen Tall on July 25, 2013
As late as 24th April, the fear was the UK economy might be slipping into a ‘triple dip’ recession. That was a bullet dodged. Then a month ago, on 27 June, we discovered the ‘double dip’ recession never actually happened after all. That was a bullet extracted.
Today, the Office of National Statistics has announced GDP growth increased by 0.6% in the second quarter of 2013. The smile of relief has become something more genuine.
No-one should get too carried away. The economy is still significantly smaller than it was before the crash (GDP is 3.3% lower than it was in 2008). The recovery has not been geographically evenly spread: London is booming, while the rest of the UK, especially the North of England and Midlands, are not. There is still the chance that external crises in the Eurozone or elsewhere might set us back. This is the slowest recovery from a recession in a century, longer even than in the 1930s.
What is encouraging is that growth seems to have been more evenly spread across all the different sectors which make up the economy: manufacturing, construction, production, agriculture — all grew. True, this is recovery from a low base. But it is now, most definitely, a recovery. And that’s not something anyone would have dared predict even three months ago.
How does all this affect politics? The conventional assumption is it will benefit the Coalition, and most especially the Conservatives. The arguments about whether the Coalition’s policies have hindered recovery will fade if and when growth begins to feed through into rising real household incomes in the next year or so. Labour crashed the economy, the argument will go, the Coalition has started to mend it. The Lib Dems will seek to claim our portion of credit for the ‘stronger economy’, while warning voters you can’t trust the Tories with creating a ‘fairer society’.
Probably convention is right. However, a return to strong growth (relatively speaking) may actually suit Labour. The most propitious circumstances for the Tories at the next election would be if they could point to a fragile economic backdrop, with growth teetering. Then Messrs Cameron and Osborne would play the ‘hold onto nurse for fear of something worse’ card which John Major successfully deployed in 1992. But if the economy is genuinely back on the road to recovery by 2015, then voters may feel safer turning to Labour, as happened in 1997.
Historical parallels can eclipse as much as they illuminate. In 1992, John Major’s style of government, after a decade of Mrs Thatcher, felt fresh while Neil Kinnock seemed stale. In 1997, it was Tony Blair who looked like the future after 18 years of continuous Tory rule.
In 2015, David Cameron, who by then will have been his party’s leader for a decade, will be looking to form his first majority Tory government. Which will he appear: fresh or stale? It won’t be gratitude for a recuperating economy that will win it for him; victory will depend on him showing a true hunger for a second term. The question is: has he got it in him?