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Should David Cameron change course over the UK budget?


The United Kingdom is closer to May 2015 than it is to May 2010, which is to say that it’s closer to the next general election than to the previous one.United Kingdom Flag Icon

With the announcement of the 2013 budget coming later this month, likely to be very controversial if it features, as expected, ever more aggressive expenditure cuts, what does UK prime minister David Cameron have to show for his government’s efforts?

The prevailing conventional wisdom today is that Cameron and his chancellor of the exchequer George Osborne (pictured above) have pushed blindly forward with budget cuts at the sake of economic growth by reducing government expenditures at a time when the global economic slump — and an even deeper economic malaise on continental Europe — have left the UK economy battered.  If you look at British GDP growth during the Cameron years (see below — the Labour government years are red, the Cameron years blue), it’s hard to deny that it’s sputtering:



One way to look at the chart above is that following the 2008 global financial panic, the United Kingdom was recovering just fine under the leadership of Labour prime minister Gordon Brown, and that the election of the Tory-led coalition and its resulting budget cuts have taken the steam out of what was a modest, if steady, economic recovery.  Those cuts have hastened further financial insecurity in the United Kingdom, critics charge, and you need look no further than Moody’s downgrade of the UK’s credit rating last month from from ‘AAA’ to ‘AA+’ for the first time since 1978.

An equally compelling response is that British revenues were always bound to fall, given the outsized effect of banking profits on the UK economy, and that meant that expenditure corrections were inevitable in order to bring the budget out from double-digit deficit.  In any event, 13 years of Labour government left the budget with plenty of fat to trim from welfare spending.  Despite the downgraded credit rating, the 10-year British debt features a relatively low yield of around 2% (a little lower than France’s and a bit higher than Germany’s), and we talk about the United Kingdom in the same way we talk about the Netherlands, Belgium and Germany — not the way we talk about Iceland, Ireland, Spain, Italy or Greece.  Given the large role the finance plays in the British economy, it wasn’t preordained that the United Kingdom would be more like France than, say, Ireland.

Nonetheless, polls show Cameron’s Conservative Party well behind the Labour Party in advance of the next election by around 10%, making Labour under the leadership of Ed Miliband and shadow chancellor Ed Balls, a Brown protégé, implausibly more popular than at any time since before former prime minister Tony Blair’s popularity tanked over the Iraq war.  Despite Cameron’s ‘modernization’ campaign, which notched its first notable triumph with the recognition of same-sex marriage in February, over the howls of some of his more old-fashioned Tory colleagues, he remains deeply unpopular.

Meanwhile, the upstart and nakedly anti-Europe United Kingdom Independence Party — Cameron famously once called them a bunch of ‘fruitcases, loonies and closet racists’ — has grown to the point that it now outpolls Cameron’s governing coalition partners, the Liberal Democratic Party. UKIP even edged out the Tories in a recent by-election in Eastleigh, and Cameron has relented to calls for the first-ever referendum on the continued UK membership in the European Union (though, targeted as it is for 2017, it assumes that Cameron will actually be in power after the next election).

Nervous Tory backbenchers, already wary of local elections in May and European elections in 2014, are already starting to sound the alarms of a leadership challenge against Cameron, though it’s nothing (yet) like the kind of constant embattlement that plagued former Labour prime minister Gordon Brown.

Former Conservative prime minister Margaret Thatcher faced an even more dire midterm slump in the early 1980s and still managed to win the 1983 general election handily, but if the current Labour lead settles or even widens, political gravity could well paralyze the government in 2013 and 2014 in the same way as Brown’s last years in government or former Tory prime minister John Major’s.

It’s worth pausing to note what the Cameron-led coalition government has and has not done.

Continue reading Should David Cameron change course over the UK budget?

Labour leads, as Clegg and the Lib Dems struggle during UK convention season

As conference season gets underway in the United Kingdom, the Labour Party, under relatively new leader Ed Miliband, now leads the Conservative Party by a 41% to 31% advantage in the latest Guardian/ICM poll, with the Liberal Democrats trailing at 14%.

Labour, which performed generally better than expected in the last election in May 2010 (which was supposed to have been a complete landslide for the Tories), hold 254 seats in the House of Commons to 304 seats for the Tories and 57 seats for the Lib Dems.  Although the next election is not expected until 2015, and the current Tory-Lib Dem coalition shows no signs of fracturing, despite some strains, Labour would be set to return to government.  That’s the best poll performance for Labour since well before the era of former prime minister Gordon Brown.

The support comes largely from the drop in support for the Lib Dems, who won 22% in the 2010 election and have watched support crumble as the junior partner of UK prime minister David Cameron’s government.  Just last week, Lib Dem leader and deputy prime minister Nick Clegg (pictured aboverecorded an apology for violating its 2010 pledge not to raise tuition fees — the Tory/Lib Dem coalition has voted to lift the cap on tuition fees to £9,000.

The move, which came in advance of this week’s annual Lib Dem conference, has dominated political discussion — Clegg’s video has even gone viral:

As we approach the expected 2015 election, if Lib Dem support remains subdued, the calls for a new leader will only become louder.  This week’s favorite is Vince Cable, who has been the business secretary in the coalition cabinet since 2010.  That’s perhaps ironic, given that Cable is just as pregnant with support for the central Tory program of budget cuts as Clegg.  Nonetheless, the Guardian/ICM poll showed that the Cable-led Lib Dems would increase their support to 19% from 14%.

Throughout the conference, Cable and Clegg have both emphasized that the Lib Dems will run in the next election as a separate party, not jointly with the Tories or in favor of any particular coalition.

All things considered, today’s polls are of limited utility nearly 30 months before the next election.  Furthermore, I still think — despite a strong performance by shadow chancellor Ed Balls and an increasingly sure footing for Ed Miliband — that the polls are a reflection less of Miliband’s stellar leadership than of the collapse of the Lib Dems under Clegg and the tepid reviews of Cameron’s Tories, given the austerity program that chancellor David Osborne is pushing forward with, even with the UK mired in a double-dip recession.  So there’s much time for the economy to turn around, and if so, Cameron and Clegg will both in better shape going into an election expected in 2015, and Miliband still seems like (and remains closer to) Neil Kinnock, the perennial loser of the 1980s and 1990s British politics than to Tony Blair, who delivered three consecutive Labour routs.

The left has savaged Clegg because he refused to apologize for the actual hike in tuition fees (and not just for breaking the pledge), but the more damning criticism is that by offering up such a mealy-mouthed apology and by refusing to stand up to the Tories on not just student fees, but the direction of the economy, Clegg sounds like just another politician.  Given that Clegg’s ascent into government came largely from his freshness and the appeal of a new approach to government (Cleggmania!), that is perhaps the most dangerous aspect for Clegg’s leadership.  Continue reading Labour leads, as Clegg and the Lib Dems struggle during UK convention season