Callum Price is Director of Communications at the Institute of Economic Affairs, and a former Government special adviser.
As voters head to the ballot box today, they will not be voting for overarching national strategies to fix our economy, such is the nature of local and devolved elections.
However, it is safe to assume that economics will play a factor in how voters choose where to put their X. We at the Institute of Economic Affairs, with the help of Freshwater Strategy, asked thousands of Brits about what they thought about the economy and their response was clear: not good.
Since 2008 the economy has averaged a pitiful 1.5 per cent growth a year, half of the rate from the preceding fifteen years, while real earnings haven’t been much better. If pre-crisis trends had continued post-crisis, per capita GDP would have been over £10,000 higher today.
And people are feeling it. 65 per cent of voters rate the economy as poor, while 67 per cent say it is going in the wrong direction. When we asked them to flesh out their thoughts in focus groups, people didn’t hold back. ‘The country is going downhill so fast’ said one; ‘why is everything getting more expensive when my pay isn’t going up?’ asked another.
Most pertinently, 87 per cent said that the government should focus more on economic growth, while only 9 per cent said the UK is already wealthy enough. This represents an important victory over the ‘de-growth’ voices. People are not happy to stop where we are, to pull up the drawbridge and focus on other priorities. They want growth, and they want it now.
But because it has been lacking in the UK for so long, in any tangible sense, there is some confusion about what growth actually means in practice, and who benefits most. A third of respondents (32 per cent) said they don’t know the meaning of ‘GDP’. When asked who they think will benefit from growth, voters are more likely to say ‘the government’ and ‘large corporations’ (both 81 per cent) than ‘me personally’ (52 per cent).
The problem was summed up by one young focus group participant who said “I don’t think I’ve ever seen real economic growth to know what it actually feels like or looks like”.
But here’s the key for our politicians, both those seeking votes today and those who will be looking with increasingly worried glances towards 2029: the underlying support for growth is there, and it only grows when you communicate what it means for real people, their families, and their future.
Rather than touting the benefits of GDP growth in the abstract, politicians should be talking about what growth can do for families and their children’s futures, how it can deliver freedom for people to live their lives as they choose, and how it will help support investment into public services like the NHS and schools. Do that, and the platform for growth grows.
What’s more, it grows exponentially when you tell people just how poor the UK is when compared internationally. While Brits are, across the board, down on the economy, they still vastly overestimate our standing in the world. A majority of Brits wrongly believe that the average person in the UK is as rich, or richer, than those in Singapore, Germany, Australia, and much of Western Europe, when the opposite is true. When asked to rank the UK in a list of US states on GDP per capita, on average they put us 7th. Below the super-rich states, but at the top end.
The truth is, of course, that the UK ranks last, behind every single US state, on GDP per capita. When told this, 27 per cent of respondents said they felt shocked, with a further 15 per cent expressing disappointment or embarrassment. This creates a burning platform for change – “it suggests that there needs to be change in the UK because we can’t be fifty-first, there’s no way” said one focus group participant.
The good news is, not only is there a platform for growth, but contrary to commons assumptions, people are open to a range of ways to get it. We found plenty of support for free market reforms to deliver it, including reducing energy costs (77 per cent), cutting taxes on workers (72 per cent) and businesses (66 per cent), and easing planning restrictions (59 per cent).
However, ask why the British economy has stagnated in recent years, and people are just as likely to reach for statist explanations (like a lack of government investment – 77 per cent ) as they are market-first narratives (like too much red tape – 74 per cent). There is a clear lack of understanding and agreement as to exactly what has gone wrong.
From the fog a sound political strategy begins to appear, one that could deliver a mandate for the right growth plan. First, politicians need to set the narrative for what has gone wrong and why. Stop crowing about ‘the fastest growth in the G7’ at 1.6 per cent and start being honest that this isn’t good enough. Then set out the right solutions to fix it. Luckily, at the IEA we are planning to do most of the leg work here – so watch this space.
The final job for the politicians though, is to set the tone and take the public with them. To lead the way, sell their plans in terms of what they will mean for real people in their everyday lives, and how they will make Britain a beacon of prosperity on the world stage once again.
Get it right, and there are electoral gains to be had.