Issue of the week: the election and the economy
Politicians appear to think the public has given up caring about economics. That’s quite a gamble
When he was chancellor in the mid1990s, Kenneth Clarke coined a phrase that “more or less” held good with politicians for the next 20 years, said Chris Giles in the FT. “We should never forget,” said Clarke, “that good economics is good politics.” It was a useful mantra, because it was “sufficiently flexible to allow differences of approach”. But last year’s EU referendum changed everything. “The stunning success of the Leave campaign, based on a heady mixture of blind optimism and naked deceit, has encouraged politicians to ditch mainstream economics to an extent not seen in a generation.” That much was evident in the tax and spending pledges in the main parties’ manifestos, said Larry Elliott in The Guardian. “A plague on both your houses” was the considered view of the Institute for Fiscal Studies, once it had combed through the figures. The choice facing voters, according to Britain’s unofficial fiscal umpire, is between “undeliverable” Tory policies, and “unworkable” Labour ones.
It’s hardly surprising that politicians are so keen to don economic blinkers given what may lie ahead, said James Moore in The Independent. “Remember the post-brexit boom? What happened to that?” Last week, the official growth figure for the first quarter was revised down to a “positively soporific” 0.2%. Meanwhile, unsecured household debt, as the TUC notes, is set to reach a record average of £13,900 this year, just as inflation is rising. “The economy is stalling and household debt soaring and we haven’t even quit the EU yet.” Even the supposed benefits of Brexit don’t seem to be registering, said Tommy Stubbington in The Sunday Times. The plunge in sterling following the vote was supposed to boost exports. But it is so far proving “the least successful currency devaluation in history”. Britain’s trade gap actually worsened in the first quarter to -1.6%.
The downward revisions may give Remain-voting doom-mongers “something to crow about”, said Alex Brummer in the Daily Mail. But it’s way “too early to be issuing recession warnings just yet”. Even so, politicians are foolish not to “fear signs of a slowdown”, said Janan Ganesh in the FT. Party leaders have interpreted “the public anger of recent years as a cry for something more than the soulless quest for 2.5ish% annual output expansion”. But there is no evidence that voters “are ready to bear a cost” to live in “their own version of Eden”. “It’s fashionable to wave away GDP talk as an abstraction for elites” who “don’t geddit”. But those numbers “translate into wage rises, given or withheld”; and public services that are either “funded or start to creak”. Politicians forget that at their peril.