Economic challenges decide – DW – 04/07/2024

Opinion polls in the UK point to a clear conclusion: the overall result is almost universal. The demise of the Conservative Party In power. After 14 years in opposition, Labour looks set to return to government with a large majority.

Polling data suggests that frustration with the state of the economy is the main reason. According to the Pew Research Center, only 22% of likely voters think the UK economy is in good shape.

This is not good news for a party that has had a decade and a half to impose its economic vision on the country. However, the government is holding up some fairly positive economic data in recent months as a reason it can still be trusted to run the world’s sixth-largest economy.

The UK economy emerged from recession in the first quarter of 2024, with better-than-expected growth of 0.6 per cent. Inflation also fell to the Bank of England’s 2 per cent target for the first time in three years, boosting expectations that the central bank will cut key interest rates later this summer.

Andrew Goodwin, of Oxford University’s School of Economics, says there are signs of economic recovery. “In the context of the last two years, the economy has performed reasonably well,” he told DW. “There is sustained growth, but not at the pace you would normally see in the early stages of a recovery.”

Voter anxiety

However, Goodwin says, “Economic policy doesn’t tend to attract a lot of voters, and parties have largely focused on other issues.” So economic policy wasn’t a big topic of discussion during the election campaign, even though “cost of living pressures and underfunding of public services are two major factors in voters’ desire for change,” he says.

Creon Butler, head of global economics and finance at Chatham House, believes that the economic climate is a motivating factor for voters, particularly inflation. He stresses that funding for public services is a very important issue for voters.

How do the two major parties differ?

Although both sides argue over various issues, including how to boost productivity and growth, gross domestic productMany commentators have pointed out that their economic policies are not very different.

However, Creon Butler believes the prospect of a Labour government after 14 years of Conservative government means there could be a fundamental economic shift. “It’s important not to underestimate the fact that the overall approach will be very different because the philosophy is different,” he says.

According to him, Labour differs fundamentally from the Conservatives in three areas of economic policy: the role of the public sector, regulation, and attitudes towards European Union.

In relations with the EU, the impact of a Labour government is likely to be felt more quickly, although Labour leader Keir Starmer has avoided talking about it. Brexit Since taking office, the Conservatives have tried to portray Labour’s victory as “bad for Brexit”.

Butler says Labour has less “weight” than the Conservatives when it comes to the EU, and that while they do not necessarily want to reopen negotiations on, say, rejoining the customs union, they would be willing to develop friendlier and more productive EU-UK relations than they have been in recent years.

However, he stresses that whoever wins the election, the long-term impact of leaving the EU will still be significant. Various studies have shown that UK GDP today is between 2 and 3 per cent lower than it would have been had Brexit not happened.

(ZZ/Sand)