Affluence, Austerity and Electoral Change in Britain by Paul Whiteley & Harold D. Clarke & David Sanders

Author:Paul Whiteley & Harold D. Clarke & David Sanders [Whiteley, Paul]
Language: eng
Format: azw3
Publisher: Cambridge University Press
Published: 2013-09-29T16:00:00+00:00

The political economy of recession

As illustrated above in Figure 5.1, the sometimes vigorous growth, which had characterized the British economy since New Labour came to power in 1997, evaporated after the Northern Rock crisis in autumn 2007. Economic activity slowed markedly and by the second quarter of 2008, the recession had arrived. Over the next four quarters, the economy contracted, before beginning to grow very slowly in the run-up to the 2010 election. Thereafter, the economy continued to sputter, registering negative growth for the last quarter of 2010 and falling back into recession at the end of 2011.

Mounting joblessness accompanied the downturn in economic activity, with unemployment moving sharply upwards in the latter part of 2008. Two months before the 2010 election unemployment stood at 8.0 per cent and again, the situation did not improve afterwards. Indeed, jobless figures remained stubbornly high, reaching fully 8.4 per cent in November 2011 before declining modestly in summer 2012. Traditionally unemployment is one of the last economic indicators to be affected by the onset of a recession and it is usually the slowest to recover (Reinhart and Rogoff, 2009). Five years after Northern Rock hard times continued.

The British public were well aware of their misery. Indeed, the CMS monthly survey data indicate that retrospective and prospective evaluations of the national economy quickly crashed shortly after the Northern Rock crisis, reaching a nadir around the time of the failure of Lehman Brothers in September 2008 and then rebounding in the months before the 2010 election (see Figure 5.8, Panel A). Emotional reactions to national economic conditions followed the same trajectory. Soon after the election and the installation of the new Conservative–Liberal Democrat Coalition Government, public pessimism about the economy returned, with pervasive negativity characterizing the entire period since the Coalition took power. People's reactions to their personal financial situation were similarly bleak – Figure 5.8 Panel B shows that reactions to personal economic circumstances exhibited exactly the same dismal dynamic as did reactions to the national economy.

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