A pinch of salt is always the appropriate condiment with which to digest economic forecasts. As events in Ukraine show, unexpected things happen all the time. But the changes to forecasts for GDP growth in the UK have all been upwards this year. Certainly, given these forecasts and accepting Clinton’s phrase for the moment, the Conservatives should be well in front. 2015 may be a little too early for the party to establish a decisive lead, but the omens look good for the Tories.
The problem they face is that the economy is by no means the decisive factor in elections. Clinton used the phrase to defeat George Bush Senior in 1992. But the Democrats lost in 2000, when Clinton had completed his two permitted terms, despite the fact that the American economy had performed well under his presidency. Margaret Thatcher increased her majority in 1983, even though unemployment had risen by 2m since her victory in 1979. The economic boom of the late 1980s collapsed, and house prices slumped. But John Major won unexpectedly in 1992, amid doubts about Neil Kinnock’s competence. Under chancellor Ken Clarke, the economy recovered very strongly. Between 1993 and 1997, Britain’s economy possibly experienced the best four year period for over a century. Yet Tony Blair swept to power in 1997, with the Conservatives mired in allegations of sleaze and corruption.
A narrative which people believe in is the key to electoral success, much more so than the objective economic facts. During the long period of Conservative rule from 1951 to 1964, for example, people genuinely “never had it so good” in Harold Macmillan’s famous phrase. But the Labour leader Harold Wilson was able to convince the nation that the Tories were decrepit, and what Britain needed was the “white heat of the technological revolution”.
Ed Miliband also has a narrative. It does not resonate much in London and the South East, but it is carefully constructed. Many people, especially in the rest of the UK, are frightened of the modern, globalised market economy. Its dynamism and its pace of change are unsettling. In contrast to Wilson and Blair, Miliband’s narrative is limp. It is the comforting arm around the shoulder, a reassurance that people can be protected from the outside world. It has little objective validity, as President Hollande is demonstrating so clearly in France. But this narrative is seductive. Given the massive pro-Labour bias in the constituency boundaries, Miliband may still sneak in. For the first time in years, the 2015 election will see a real clash of dramatically different narratives.
Paul Ormerod is an economist at Volterra Partners, a visiting professor at the UCL Centre for Decision Making Uncertainty, and author of Positive Linking: How Networks Can Revolutionise the World.