Labour’s recovery position

To assert that the next general election will be about living standards is now a commonplace in Westminster, even a cliche. Say it and people nod along. But precisely what this means – the progress the public thinks is possible, the purchase they believe political parties have on the main policy issues – remains rather hazy.

Some in Labour will confidently tell you that the Ronald Reagan challenge – are you better off than at the last election? – will be the killer question to swing the 2015 outcome. If it were that simple, Labour would be home and dry: real wages are likely to have fallen by up to 10% by the end of the parliament; “better off with Labour” would be the inevitable campaign slogan.

But a far likelier prospect is that living standards will be a scabrous problem for all parties. Stubborn inflation, soaring rents and weak wages are not easily remedied. Many voters are likely to twin bitter resentment towards the coalition about their declining fortunes with an underlying conviction that the last Labour government is at least as much to blame. And, more fundamentally, when it comes to polling day they are as likely to opt for whoever is best placed to improve matters as they are to undertake a closely calibrated assessment of who is most responsible for the past.

More than five years since any sort of reliable growth, and a full decade since wages started to stagnate, it’s no surprise that, according to a new study by YouGov for the Resolution Foundation, we are living through an era of diminished expectations. It brings home the depths of our economic pessimism, revealing that two-thirds of us think a full recovery will take four to 10 years, while 15% say it will take even longer; and it chimes with Ipsos Mori’s recent finding that just 12% of Britons think our economic situation is “good” – compared with 73% of Swedes, 64% of Germans and 65% of Canadians.

If, as many expect, the economy gradually grinds forward, then by 2015 the focus is likely to be less on whether there is a recovery, and more on how robust it is and, crucially, who benefits. Securing a link between economic growth and shared gain has long been the golden promise that has legitimised market economies: growth is supposed to brighten the prospects of the vast majority. Over the last generation, that belief has been shattered in the US; the UK experience is less acute, but the proposition is certainly shakier now than it has been for many years.

So it is important that half the public still thinks periods of growth should lead to steadily rising living standards (although 35% demur). This matters politically, because restoring the link between growth and gain is precisely the electoral terrain on which Ed Miliband has pitched his tent. If a gloomy public had already closed its mind to this possibility, then he’d be camping on the wrong ground. It matters economically, too. Pro-growth proposals – prioritising capital investment, a major house-building programme, new transport capacity and planning reform – all bring trade-offs and tensions. If more people lose faith that growth will work for them, then popular consent will become harder to secure.

Despite the fog of pessimism that has cloaked the country, it would be wrong to conclude that there is a mood of fatalism about whether politics can make a difference. Securing a general rise in wages across the economy is a herculean task: that more than half of the public believes government could bring this about is revealing. Widespread frustration with politics shouldn’t be conflated with the idea that the public believes the state to be impotent.

Party leaders are gearing up to face an electorate that is downbeat, angry and minded to respond scornfully to airy promises on the economy. But it’s also a public that doesn’t want more of the same. Whoever wins in 2015 will need to generate credible optimism that future growth will feed through into household budgets while confronting the fiscal challenges of the decade ahead. A tall order, but surely not an impossible one.

This post originally appeared on The Guardian’s Comment is Free