It’s always the same when I meet Labour MPs, union officials, ministers, other party apparatchiks. They all think the economy will endure a rapid, shallow dip and then recover.
How can I put this politely?
They are almost certainly wrong. Or, at the least, fantastically over-optimistic. At all levels of government. To quote a piece by Jackie Ashley in last weekend’s Guardian: “He (Gordon Brown) still believes the economy will turn round in time. He’s been playing a long game all his life.”
Unfortunately, no one knows quite how long this economic game (let’s call it ‘amateur downhill off-piste’) will last.
With credible estimates of falling retail sales (see today’s 23 per cent collapse in M&S share price), rising unemployment, expensive mortgages, inflationary pressures, squeezed public finances, it is looking unlikely to be quickly. The prime minister has two years – by which time the next general election has to happen.
Did I mention falling house prices? (The share price of Taylor Wimpey, the largest housebuilder, fell by about 50 per cent today). They are a lead indicator of rising unemployment; not the other way around, as some try to pretend.
Experts now predict a 25 per cent house price fall, more or less, with the brunt of the correction taking place over….you guessed it….two years.
An election in May 2010 could take place against the gloomiest economic backdrop since 1993. If not decades earlier. There is a theory that the public trust Gordon when times are difficult. That may have been the case a year ago. But today?