Magazine article The Spectator

We're Doing Well, So Tories Out

Magazine article The Spectator

We're Doing Well, So Tories Out

Article excerpt

IT'S not the economy, stupid. Someone, it seems, should stick a message to that effect in a prominent place on Mr Major's soapbox. For, as increasing numbers of perplexed Tories are beginning to realise, their leader can huff and puff about Britain's marvellous economic performance until his face is as blue as his rosette; the electorate couldn't care less.

It seems paradoxical. The Tories are about to lose an election -- quite possibly by a landslide - with the economy in better shape than it has been since the war. Unemployment stands at 6.2 per cent, just over half what it is in Germany, France and Italy. Inflation at 2.7 per cent is low, certainly well below its horrendous peak of 27 per cent the last time Labour was in power. Mortgage rates are at their lowest level since the 1960s. Real personal disposable income - what we keep after tax and inflation have bitten into our wages and salaries - rose 3.8 per cent last year. Retail sales and earnings are both on the way up.

Nor is this just a flattering snapshot. According to Keith Marsden in the Wall Street Journal, real gross domestic product per head has grown faster in Britain between 1980 and 1996 than in the United States, Germany, France and Italy; of the G7 economies only Japan comes out ahead. The same is true of labour productivity, and in terms of real pay Britain has out-performed even Japan. In real terms, each of us is 30 per cent better off than we were in 1980. The OECD sums up Britain's economic prospects as `the best in 30 years'. Such figures are a powerful vindication of the free-market policies which brought Mrs Thatcher to power in May 1979.

You only need to ask yourself how the economy would have done if Labour had been in power since 1979 to see the case for voting Tory. Yet Mr Major's party is around 25 percentage points behind Labour in the opinion polls, a massive gap compared with 0.4 per cent the month before the last election. The parallel already cited by a number of historians is 1906, when the Tories ended up with less than a quarter of Commons seats.

It is all very rum, especially viewed from the other side of the Atlantic. If Clinton the man whose campaign manager coined the phrase `It's the economy, stupid' could romp home on the crest of an economic wave, why is Major about to be drowned by one? Whatever happened to the feel-good factor?

Once upon a time, people like Sam Brittan used to complain about the `political business cycle', allegedly manipulated by Chancellors of the Exchequer to maximise their party's election success. (This was blamed for the `stop-go' pattern of economic performance.) Ken Clarke has been playing strictly by the rules of this game; he has even managed to persuade the Bank of England to keep interest rates down, despite multiplying symptoms of inflation, but in vain.

I have seen three possible economic explanations for the failure of the feelgood factor offered by commentators in the past weeks. The first blames the increase in job insecurity and inequality under the Tories. The second blames the tax increases imposed when Norman Lamont was Chancellor. Number three - the most popular -- blames the very thing to which we owe a good deal of the recent economic recovery: the departure of sterling from ERM which, it is argued, destroyed the government's reputation for economic competence. I would add a fourth option: the middle classes like inflation more than they say they do, and have been missing it. …

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