Will the UK's shrinking economy spoil Cameron's EU speech?

Any political high from Cameron's EU speech could be shortlived if figures released on Friday show that the UK economy shrunk in the final quarter of 2012.

In the absence of any unforseen hitches, David Cameron will finally deliver his long-delayed speech on Britain's relationship with the EU this week. It won't be today, the day of Barack Obama's second inauguration, or tomorrow, when thousands of French and German politicians and diplomats will gather in Berlin to celebrate the 50th anniversary of the signing of the Elysée Treaty (also known as the Treaty of Friendship) between the two countries, or at the end of the week, when Cameron travels to Davos for the 2013 World Economic Forum, leaving Wednesday as the most likely date for the address.

When Cameron gives his speech, promising that a Conservative government would seek to repatriate powers from Brussels before holding a referendum on the outcome (offering voters a choice between what Cameron calls a "new settlement" and withdrawal), he will hope, among other things, for a bounce in the polls. The last time that the Tories enjoyed a sustained lead over Labour was in December 2011 after Cameron's EU "veto". With reports of Conservative MPs reacquiring their taste for regicide, the PM is keen to show that there are things he can do to improve his party's dismal chances of victory at the next election.

But his speech risks being overshadowed by the other big event of the week: the release of the first estimate of UK quarter four GDP on Friday. After growth of 0.9 per cent in the third quarter, artifically inflated by the inclusion of the Olympic ticket sales and the bounce-back from the extra bank holiday in June, forecasters almost universally expect a negative figure. The government's own forecaster, the Office for Budget Responsibility, predicts that the economy shrunk by 0.1 per cent, while the National Institute of Economic and Social Research expects a contraction of 0.3 per cent.

A contraction in quarter four wouldn't represent an unprecedented "triple-dip recession" (that would require two successive quarters of negative growth), it would make it significantly harder for Cameron to claim that the economy is "healing" and embolden Labour to go on the attack. If the economy is shown to have shrunk in Q4, four of the last five quarters will have been negative.

We know from the pre-released extracts of Cameron's speech that the Prime Minister intends to bemoan the EU's "crisis of competitiveness". But if the UK economy, which has performed worse than almost any other in Europe, is shown to have shrunk again, his lecture could soon look ill-advised.

David Cameron is expected to deliver his speech on Britain's relationship with the EU on Wednesday. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Who will win in Stoke-on-Trent?

Labour are the favourites, but they could fall victim to a shock in the Midlands constituency.  

The resignation of Tristram Hunt as MP for Stoke-on-Central has triggered a by-election in the safe Labour seat of Stoke on Trent Central. That had Westminster speculating about the possibility of a victory for Ukip, which only intensified once Paul Nuttall, the party’s leader, was installed as the candidate.

If Nuttall’s message that the Labour Party has lost touch with its small-town and post-industrial heartlands is going to pay dividends at the ballot box, there can hardly be a better set of circumstances than this: the sitting MP has quit to take up a well-paid job in London, and although  the overwhelming majority of Labour MPs voted to block Brexit, the well-advertised divisions in that party over the vote should help Ukip.

But Labour started with a solid lead – it is always more useful to talk about percentages, not raw vote totals – of 16 points in 2015, with the two parties of the right effectively tied in second and third place. Just 33 votes separated Ukip in second from the third-placed Conservatives.

There was a possible – but narrow – path to victory for Ukip that involved swallowing up the Conservative vote, while Labour shed votes in three directions: to the Liberal Democrats, to Ukip, and to abstention.

But as I wrote at the start of the contest, Ukip were, in my view, overwritten in their chances of winning the seat. We talk a lot about Labour’s problem appealing to “aspirational” voters in Westminster, but less covered, and equally important, is Ukip’s aspiration problem.

For some people, a vote for Ukip is effectively a declaration that you live in a dump. You can have an interesting debate about whether it was particularly sympathetic of Ken Clarke to brand that party’s voters as “elderly male people who have had disappointing lives”, but that view is not just confined to pro-European Conservatives. A great number of people, in Stoke and elsewhere, who are sympathetic to Ukip’s positions on immigration, international development and the European Union also think that voting Ukip is for losers.

That always made making inroads into the Conservative vote harder than it looks. At the risk of looking very, very foolish in six days time, I found it difficult to imagine why Tory voters in Hanley would take the risk of voting Ukip. As I wrote when Nuttall announced his candidacy, the Conservatives were, in my view, a bigger threat to Labour than Ukip.

Under Theresa May, almost every move the party has made has been designed around making inroads into the Ukip vote and that part of the Labour vote that is sympathetic to Ukip. If the polls are to be believed, she’s succeeding nationally, though even on current polling, the Conservatives wouldn’t have enough to take Stoke on Trent Central.

Now Theresa May has made a visit to the constituency. Well, seeing as the government has a comfortable majority in the House of Commons, it’s not as if the Prime Minister needs to find time to visit the seat, particularly when there is another, easier battle down the road in the shape of the West Midlands mayoral election.

But one thing is certain: the Conservatives wouldn’t be sending May down if they thought that they were going to do worse than they did in 2015.

Parties can be wrong of course. The Conservatives knew that they had found a vulnerable spot in the last election as far as a Labour deal with the SNP was concerned. They thought that vulnerable spot was worth 15 to 20 seats. They gained 27 from the Liberal Democrats and a further eight from Labour.  Labour knew they would underperform public expectations and thought they’d end up with around 260 to 280 seats. They ended up with 232.

Nevertheless, Theresa May wouldn’t be coming down to Stoke if CCHQ thought that four days later, her party was going to finish fourth. And if the Conservatives don’t collapse, anyone betting on Ukip is liable to lose their shirt. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.