Why should Labour keep Gordon Brown as their leader? If Labour come third behind the LibDems at the Euro elections, this question is certain to be raised in public by someone. I hear that the Dear Leader has prepared an answer: green shoots. Seriously. Look, he will say, the economy is on the turn. And when those green shoots come, people will thank him for leading us through the storm. No Brown, no gratitude. So why chuck him out, just when things are on the turn?
This is why today’s house price data from Nationwide has political significance: it will buttress Brown’s claim that he should stay to take credit for the recovery. True enough, houses are on the turn:
HOUSE PRICES, 1992-2009
And more broadly, economic sentiment is on the turn too – which is usually a precursor of GDP:
But it will be a brave, or rash, Prime Minister who points to these statistical upticks and says: green shoots. John Major thought the same – he instead had what he later called a “voteless recovery”. Also unemployment is both the most important metric, and the last one to recover – lagging GDP by between six to nine months. So if the economy is turning now, it means employment will turn bang on the general election ideally positioning the Tories to claim credit. But I very much doubt that the economy will bottom out soon – and when it does, I imagine we will bounce along the bottom for some time. Here’s the UK economy now, versus previous downturns – while every recession is different, they’re not that different. Something tells me this graph isn’t going to change shape into a V.
But what’s important in the next few weeks is whether Brown can plausibly make the case to his Cabinet – not his country – that things may be about to get better. (All graphs from Citi)
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