Show caption Ted Heath, the then Tory PM, went to the country in February 1974, asking the central question: who governed Britain? The answer, not him. Labour’s Harold Wilson won power. Photograph: Frank Tewkesbury/Getty Images Economics viewpoint The flat UK economy still points to a Boris Johnson election victory Larry Elliott Ted Heath’s 1974 election gamble offers a bad precedent for the PM. Heath lost, but the economy makes it Johnson’s to lose Sun 8 Sep 2019 11.34 BST Share on Facebook

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A flatlining economy. A political system gripped by inertia. A series of weak governments unable to get anything done. This used to be Italy. Now it is Britain.

Last week, when Boris Johnson was stymied by his lack of a parliamentary majority and Amber Rudd was planning her resignation from the cabinet, Italy was putting together a new coalition designed to prevent the hard right from taking control. It speaks volumes when Italy is giving Britain lessons in stability.

Sooner or later an election will be held in an attempt to break Britain’s political impasse and – judging by the state of the economy – the government should get a drubbing. For Boris Johnson, this could be the equivalent of February 1974 when Ted Heath went to the country on a “who governs Britain” ticket with Britain hobbled by the three-day week. For those who think that an election will clear the air, this is not a good precedent. There was no clear winner in February 1974.

Should an election this year be delayed until November, news will be in of how the economy fared in the third quarter of 2019. Gross domestic product contracted in the second quarter and it is touch and go whether there will be a return to growth in the period from July to September.

In the first three working days of each month, surveys of manufacturing, construction and services are published. These are not official figures but they provide a pointer to how the private sector is faring. The surveys released last week showed manufacturing and construction going backwards and services barely growing.

This is not entirely surprising. A paralysis is gripping businesses and – to a lesser extent – consumers. Until they know how Brexit is going to play out, businesses are going to mothball investment plans and households will be tempted to save rather than spend. Delaying Brexit extends the time in purgatory.

All in all, this looks like a rotten time for Boris Johnson to be fighting an election. In terms of wages and productivity, Britain has been through a lost decade. The recovery from the financial crisis – such as it’s been – has been the function of debt-driven consumption and low-skill employment.

In theory, it should be a cake walk for Labour. The Tory party divisions over Europe are far more serious than they were under John Major in the 1990s, and when Tony Blair won the first of his landslides in 1997 the economy was booming rather than stagnating. Provided Labour doesn’t allow the election to be dominated by Brexit and instead focuses on fixing the symptoms of a failed economic model: austerity, wages, job insecurity and a long-term failure to invest, victory is there for the taking.

In practice, Labour is haunted by the sense it won’t be that easy, which it almost certainly won’t. One weekend opinion poll put the Conservatives 14 points ahead of Labour, and this after Johnson suffered a series of parliamentary defeats, removed the whip from 21 Conservative MPs, faced the humiliation of having his brother resign as a minister, and had the week rounded off by Rudd’s resignation bombshell.

Worryingly for Jeremy Corbyn, the Conservatives have won in the past when the economy is in a lot worse shape than it is currently. Britain had been through a painful recession in the run-up to the 1992 election, with 3 million people on the dole and record home repossessions, but Major won because he convinced enough voters that life would be even tougher under Neil Kinnock.

Johnson has a better story to tell than Major did and is better placed than when Theresa May fought the 2017 election. Two years ago, prices were rising much faster than wages because the post-referendum fall in the pound was making imports dearer. That has now switched around: the lowest unemployment since the mid-1970s is putting upward pressure on wages and leading to increases – albeit modest – in living standards. In the upcoming poll, expect the Tories to cherry pick the best bits of their economic record, ignoring the food banks, the cuts in welfare and the proliferation of zero-hours contracts.

Last week’s spending announcement did not by any means make good the cuts imposed over the past decade but it was the biggest increase in departmental budgets in 15 years. Just as significantly, it deprives Corbyn of the clear-cut narrative that proved effective in 2017: Tory austerity versus Labour investment in the state.

Corbyn’s other great success in 2017 was to neutralise Brexit as a factor in the election. By saying that Labour would abide by the result of the referendum, he managed to hold on to most of the seats Labour was defending in leave-voting parts of Britain while at the same time making gains in remain-voting areas. Quite a lot of voters took a shine to Corbyn and rather liked Labour’s manifesto, which was both radical and unthreatening. May’s ineptitude as a campaigner was an added bonus.

To win an overall majority Labour would need to win more than 60 seats as well as holding on to the ones it currently holds. Given that most of the key battles will be in leave-voting seats in England and Wales, this looks like a tall order.

Two years ago, when May lost her overall majority, it really was a matter of “it’s the economy, stupid”. But, this – as witnessed by Harold Wilson’s victory when Britain was booming in 1964 – is not always the case.