Conventional political wisdom suggests that the relationship between a recession and a government’s electoral fortunes is a linear one. Arden Strategies has had a look across the past seven decades to see how true that is.
The Bank of England tell us we are heading into the longest recession in our history, longer than the Great Recession and the Covid Recession combined. As the Bank presented their gloomy forecasts – the fastest rises in prices for forty years, doubling of unemployment, falling incomes – they simultaneously hiked interest rates with the largest increase since the 1980s.
Dig deeper into the challenging headline figures and the politics look as grim as the economics. Even leaving aside all other cost of living pressures, on mortgage costs alone – more than five million families will see their monthly payments rise between now and the next General Election. For two million families, the increase in housing costs will devour more than 10% of their income.
Surely no incumbent Prime Minister can win an election under those turbulent economic storm clouds? As Mark Twain observed “History never repeats itself, but it does often rhyme”, so what does history’s rhythm suggest may be the outcome of the politics of this recession?
The UK has experienced a recession, defined as six months of negative economic growth, at least once in every decade since the 1950s. Each of those have been followed by elections where a sitting government has had to plot a strategy path to their unlikely re-election. Undoubtedly, while recessionary suffering makes it more difficult to win, past experiences suggest the link between economic downturn and electoral defeat is not as certain as many instinctively assume.
In 1959, and again in 1983, incumbent Conservative Prime Ministers managed to turn around the economy and escape from under the electoral consequences of recessions that had occurred earlier in their decade. However, with Sunak’s recession currently projected to extend halfway into 2024, he may only have at most a few months for a recovery and gratitude to take root. By contrast in 1959 Harold MacMillan had three years after the end of his recession before successfully defeating Labour’s former PM Clement Attlee. And in 1983 Margaret Thatcher had two years of improving economic conditions before defeating Michael Foot. Barring an economic miracle concertinaing the 2023-24 recession, then the Conservatives may find they simply don’t have enough time to turn politics around.
Even if Sunak had longer, a return to growth is no guarantee of a return to power. In 1964 Alex Douglas-Home delayed in that hope but found himself losing to a youthful Wilson’s vision of technological progress and social justice. Callaghan too also found a turnaround in the economy after the 1975 recession was not enough to offset a wider narrative of national decline fostered by the successive crises of the mid-seventies.
So, time is not the only factor Mr Sunak will have in mind. Perhaps the Prime Minister might take heart from John Major’s triumph three decades ago. The first year of his premiership was spent in negative growth but he promised a fresh start with a new Conservative leader against a Labour opposition which hadn’t yet completed its renewal from its troubled recent legacy. In a precedent that Sunak will hope he can rhyme, Major won his unheralded 1992 victory.
In fact, in the elections following seven post-War recessions the incumbent Prime Minister had a better chance of clinging to power than conventional wisdom dictates. Three post-recession incumbents managed to remain as the biggest party in Parliament and the fates of two successfully tracked the improving economy by increasing their number of seats.
The electoral outcomes from the British political economy depend on multiple variables of which economic growth is but one of the most consequential. Because of this, governments and oppositions across the decades have weathered recessions and the eventual recoveries armed with significantly differing strategies. Navigating the politics of this recession and every previous downturn relies on factors such as how far the respective leaders’ empathy quotients. Their ability to appeal to those suffering from economic pressures, the capability to share a story that seizes the voters and overcomes the pessimism of the moment without indulging in what we would now call ‘boosterism’. For Oppositions of both parties, they must thoughtfully tread the line between offering meaningful change without becoming a material risk, which the voters worry is a greater worry than more of the same.
In conclusion, UK governments can and do win post-recession elections. The ominous problem for the Conservatives is that a 2024 election may take place in such close proximity to when the Bank predicts we may at last be emerging from the Long Recession.