Economy squeaks out of recession - election consequences?

So it is official, the economy just squeaked out of recession in the final quarter of 2009 growing by 0.1% according to the official figures released today. Of course that is good news although the UK is the last country in the G20 to do so.

Mike Smithson asked this morning whether it could make a difference to the date of the election. His reasoning is that as we are now in recovery the narrative from Labour will be that they steered us out of recession *and* managed to keep unemployment low. The most likely date for the next election is May 6th (to coincide with local elections in some parts of the country) but the economic figures for the current quarter are due out on April 23rd. If we were to find that we had dipped back into negative growth in the first quarter of 2010 just days before a general election that would be devastating to Labour and their electoral prospects.

It could happen. The end of the 15% VAT rate is likely to have boosted economic activity towards the end of 2009 and the restoration of the 17.5% rate at the start of 2010 could have the opposite effect. The growth last quarter is only 0.1% against an overall drop of 6% since the start of the recession. It therefore would not take much to tip us back into negative territory.

During the period just before "The election that never was" in autumn 2007, Ed Balls made the comment that the bigger risk at that stage was not going to the electorate. His basic point was that things were likely to get worse for Labour electorally and the position then might be a high water mark although he did not say it in those terms (and he was spot on). We are now potentially in a similar position again. Although Labour is much further behind now than it was in 2007 it could again be as good as it gets for them. In fact the end of the recession could give them a little electoral fillip although we won't know that for 2 or 3 weeks.

There are other reasons why an earlier election would make sense for Labour. It would mean Brown would not need to go before the Iraq inquiry until after the election. It would mean Labour did not have to have a budget as well and given the negative response to the PBR in December this could be another headache for them were they to have to do it.

In fact the more I think about it, the more it would seem that a truly brave Prime Minister would come back from Northern Ireland this afternoon and go straight to see the Queen to ask for a dissolution of parliament. He would catch his opponents on the hop and would be hoping to ride the wave of increased optimism in the economy that this morning's news could bring. He may even get some kudos for seizing the initiative and going a few months before he had to.

Of course up until now, Gordon Brown has not shown that he has that sort of courage.

Will he surprise us all?

Did Lib Dem MP Mike Hancock save us from 5 more years of Gordon Brown in 2007?

There is a fascinating story on the FT blogs by Alex Barker today. In it he explains how Lib Dem MP Mike Hancock sometimes accidentally gets e-mails which are actually meant for Matt Hancock, Shadow Chancellor George Obsorne's chief of staff.

The story is that in the autumn of 2007, he received information about the Tory plan to raise the inheritance tax rates just days before the Tory conference. Of course had this information leaked out then Labour would have been in a position to pre-empt the announcement and spoil Osborne's announcement.

Mike sent the e-mail onto its rightful recipient and did not breathe a word to anyone allowing Osborne to make the announcement and get his poll bounce for the Tories off the back of it. This was widely credited with scaring Gordon Brown off from having an early election and the rest is history. Alex spoke to Mike about this and he confirmed that he did know the political value of the e-mail but insisted that it was private and mistakes can be made. "I did only what I expect others to do to me." he stated.

I think it is plausible that had Mike leaked this information, we could already be 2 years into a Gordon Brown led elected administration. Cameron could easily have been ousted as yet another failed Tory leader and the map of British politics could now look very, very different.