“It’s not the economy, stupid, it’s the narrative!”

The improvement in the economy has seen a narrowing of the gap in the opinion polls between the Conservatives and Labour. In the key marginal seat of Bury North, a Tory gain in 2010 by just 2,200 votes, they recently took a council seat from Labour. Bill Clinton famously said about elections “It’s the economy, stupid!” So, if the consensus economic forecasts are to be believed, is David Cameron home and dry in 2015?

A pinch of salt is always the appropriate condiment with which to digest economic forecasts. As the events in the 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, by 2016, on the forecasts, and going along with Clinton’s phrase for the moment, the Conservatives should be well in front. 2015 may be a little too early for them to establish a decisive lead, but the omens look good for the Tories.

The problem they face is that the economy is often 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. Mrs Thatcher increased her majority in 1983, even though unemployment had risen by 2 million since her victory in 1979. The economic boom of the late 1980s collapsed, and house prices slumped. But John Major won unexpectedly in 1992, amidst doubts about Neil Kinnock’s competence. Under Chancellor Ken Clarke, the economy recovered very strongly. The 1993-97 was possibly the best four year period in British economic history for over a century. Yet Tony Blair swept to power in 1997, with the Conservatives mired in allegations of sleaze and corruption.

A narrative in which people believe is the key to electoral success, much more so than the objective economic facts. During the long period of Conservative rule from 1951-64, 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 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’s and Blair’s, 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

As published in City AM on Wednesday 26th March

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