The economy points to a two term Tory government

richard j

Quite possible but not factoring in more mistakes and the consequences from disater team Brown.

mark c

lets not forget debt repayment, national and personal, giving little manouvering room so the recovery inevitably will be cautious. consumers in particular will falter where the unmeasured side to inflation is the one thats digging deepest into thier pocket.

Patrick, London

Very important also to factor in the electoral changes an incoming Tory administration could effect.

English votes for English business, undoing Labour constituency gerrymandering, party finance rules, debiasing the BBC, etc, etc could all have a massive impact on Labour's ability to fight and win subsequent elections.

I think this might be worth an article in its own right as the party in power has all the cards (incl freedom to call an election when it wants). When you lose power you lose all those other factors too.

Max

It's a sobering thought that while UK plc's revenue is more than six times that of the worlds largest companies, we employ people with no managerial experience to run it.

Can you imagine Microsoft sharholders accepting a history professor as CEO, or Exxon Mobil appointing a scottish lawyer as Vice President of Finance?

Max
http://theerrorlog.blogspot.com

Tony Makara

The Bank of England can't cut rates because it will weaken our currency and add to the soaring cost of imports. During the last year alone the cost of imports rose 10.2%, with so much food imported from the Eurozone the last thing Brown needs is voter visible high street inflation. This would spell disaster when it comes to public sector wage settlements, a large public sector could easily bring the country to a halt. Gordon Brown is trapped in a stagflationary economy with no room for manouvre.

GIN

I think this is underestimating just how bad the economy could become over the next couple of years. Something tells me by 2010 the economy could be in a much worse position than the treasury projections indicate. My guess is the first Tory term will have one hell of a mess to deal with and recovery may take until the middle of the next decade to start kicking in. Whether the Tories get a second term will depend on how well they convey the lessage that everyones pain has been caused by Labour's economic mismanagement. There will of course come a time when Cameron can no longer blame the previous administration, but it may be enough to see him through the first term and a second general election victory.

Fergus Pickering

I'm not quite sure that people with managerial experience, like the top guys at Northern Rock and Bradford & Bingley or the various crooks imprisoned in the US are QUITE what we require. Mrs Thatcher's ghost perhaps?

mart

Fraser, welcome back.

Would you kindly post links for point one and two, please? Some of the rest of us were away from the news the last few days as well...

Also it would have been interesting to see a Tory policy dimension to the above article.

They are obviously biding their time before declaring policies, not least because Labour are shameless in simply stealing them.

But is it not already time we were hearing a coherent critique of statist approaches and tax-and-spend economics from the Tories? (If they believe this, of course).

Labour was savvy with the media in the 90s and adopted "narratives" including associating the Tories with the phrase "boom and bust".

We need a sensible alternative "narrative" in the media from the Conservatives that explains why big state gives bad results, and how small state is the right way forward. (If they believe this, of course... did I say that before?).

Keep up the good work...

THX1138

Could the Tories be better off losing the next election? Maybe not better for the country but maybe better Tory party in the long term.

I believe that the main divers in economy are really outside the control of the UK Government they can tinker at the edges but they can't control the credit crunch, high commodity prices for oil& gas which drives the high prices for other commodities food & raw materials in general all of this is going to get worse over the next few years.

Read the article in this months National Geographic about "peak oil" looks like we could be getting close very sober reading

http://ngm.nationalgeographic.com/2008/06/world-oil/roberts-text

So if anyone thinks that petrol prices are going down they are wrong and with a the economy getting worse & the general tax take down no way is either government going to reduce the tax burden on the motorist which seems to be the major gripe of the Clarkson classes & their cheer leaders in the press.

The incumbent Government Labour or Tory is going to get the blame for the economic woes wouldn't it be better if it finished labour off for a generation. Dave is young he can wait.

TGF UKIP

Fraser, while all the rest of the press centre exclusively on residential when covering the property market, you are dead right in mentioning that the falls in commercial property are significantly larger and they are accelerating.

In the years up to and through 2006, commercial investment property, particularly pubs and retail, was selling like hot cakes off absurdly low yields with the banks falling over themselves to lend to the sector at some pretty fancy loan/valuation rates. Not only will there already be large negative equity out there but most of the purchases will have been done in the expectation of upward rent reviews to finance the bank loans. In this retail and pub operating climate there is nil chance of rent increases - a situation which is unlike to change for the next few years at least.

The 1974 banking crisis was caused by overextended commercial property lending. Expect more banking pain this time round.

Hysteria

I am not convinced this time around it is all about the economy (sure it's important) - but there is a wider political issue around the role/size of the state and a realsation that centralism doesn't work.

(Eventually people will "get" this and the EU will unravel)

That said , the Tories need to get out with a few key messages..

1 - the economy left by Ken Clark has been royally screwed - we need to get back to paying only what we earn - both personally and nationally - this will take pain, and require two parliaments.

2 - houses are for living in - they are not some kind of ATM

3 - the state is too big - some sectors need to stand on their own feet based on revenue generated by them in their market - in other words, reduce state (aka your money) funding

4 - remind people (again and again) there is no such thing as state money - all money used by HMG is OUR MONEY !

5 - drive accountability to the lowest reasonable level - elected police chiefs being but one example.

6 - EU Referendum !

Fraser Nelson

Great to be back. Mart, if you google nationwide figures last week to get tethat gives the 11% annualised figure. The link to HM Treasury consensus gives unemployment figure for point 2 but remember this is HMT's own definition.

THX, remember that our economy has never been less reliant on oil in the postwar era than it is today. brown likes to say "its not as bad as it was in the 70s" - of course not because we had deindustrialisation in between. I actually reckon that it will bottom out in 2010 but its such a fluid situation the outlook changes almost monthly.

TGF, glad we're agreed - isn't it an incredible figure? Commercial down 25% on an annualised basis (if you take the last 6 months anyway) think how this will affect construction - and what this says about business confidence.

Hysteria, the economy is a lot more boring but I really do think it matters more than the ongoing saga of Brown being crap. I also have a column in the News of the World and people there are intensly interested in the outlook for them and their families. One really does have to be quite rich not to regard this economic mess as a major storm cloud hurtling through the sky.

Hysteria

Thaks Fraser - but aren't crapness and the economy are inextricably intertwined (geesh !).

let people decide where and how they spend their money, and stop pretending that the state can affect very much.

THX1138

Fraser glad your back safe & sound- I think your wrong to say that we have never been less reliant on oil prices. Oil drives everything (sorry) obviously transport all we hear about is soaring petrol prices but it has a powerful effect on commodity prices in general especially food production the manufacturer of fertilisers is very oil intensive as is the transportation of the food around the world. An important reason for the food RPI going through the roof is the cost of oil.

Oil at a possible $180/200 a barrel & gas prices doubling we generate 30% of our electricity after the dash for gas let alone heat our homes & places of work energy prices still have a very powerful driver on the UK economy

For these reasons:

The BofE will inevitably be forced to raise interest rates to reign in inflation caused by the rise of everything due to oil & gas prices rising

For the consumer heating & electricity bills up, petrol up, mortgages up & food prices up.

For the manufacturer energy bills up; raw materials up; transportation costs up & interest payments up

For Retail & service industries reduced consumer demand because we are spending a greater amount of are income servicing debt & heating our homes; driving our cars & feeding our kids

I think your 2010 prediction is optimistic & nothing but a guess;

Read Jim Rogers in your own magazine

http://www.spectator.co.uk/print/the-magazine/business/552581/a-masterclass-with-the-adventure-capitalist.thtml

I think he might know a thing or two more about commodity prices than you I hope so as I have just invested in his fund.

If you think that massive rises in the basic fuel isn't going to have a huge effect on the UK economy just wait & see who gets the blame.

No doubt we will hear Boy George bleating on about commodity prices outside his control etc etc. Better to loose the next election & let Labour take the hit

Marcus Cotswell

It strikes me as a very strange form of economic determinism to say that the figures - which are of themselves somehat vague and arbitrary - point to particular decisions being made by a certain number of people in a certain number of constituencies. It strikes me as a case of monkeys, typewriters and Shakespeare - if enough verbally incontinent commentators make enough half-baked predictions based on insufficient information, then someone, somewhere, will be right.