The economic news continues to impress, inflation has today fallen to 0.3% the lowest level since the introduction of the measure of Consumer Price Inflation (CPI), the economic growth forecast for 2015 has been raised by the Bank of England to 2.9% from 2.5% only three months ago, unemployment continues to fall and wages are finally starting to increase in real terms.
We should of course recognise that with inflation falling primarily due to the halving of the oil price this is giving a stimulus to the widening of the gap between CPI and the rise in average earnings and as is usual the politicians on the government side have been keen to seize on this and point to their “long term plan” paying off.
I am not sure that George Osborne or David Cameron or any other government minister can legitimately claim any credit for the fall in the price of crude oil, welcome thought that is!
I think it is important to mention that part of the fall in the price of oil has been the reluctance of the biggest producers, primarily Saudi Arabia to limit production, combined with a slowdown in the economies of many of the emerging states and in China in particular, the consequence of which has seen prices fall from circa $110 as recently as last July / August to as little as $45 in under six months, although it has risen in recent weeks back to nearer $60.
I think our politicians should be mindful that if some of the newer oil producers, in particular the Shale Gas operations that have grown exponentially in the US, are forced out of business, and many potentially will be with the oil price at under $70, once this capacity is taken off line or eradicated the laws of supply and demand will dictate that the price rises, and potentially very quickly much in the same way as it fell.
With the fall in the price of oil and other energy costs (although many of these can be indirectly attributed to the fall in the oil price also) and food costs, the net effect of this is that the Bank of England is forecasting a rise in real post take home household incomes of 3.5% which should make everyone feel that little bit better off.
Is the improving economics not only of the country as a whole but of individuals likely to have a material impact on the outcome of the General Election? We are now only eighty days or so away from polling day and the opinion polls look in general to be neck and neck.
Some point to a small Labour lead and others a Conservative one, but nearly all seem to show UKIP support ahead of the Lib Dems and several show support for the Green party at or around the same as that for the Lib Dems which looks ominous for Mr Clegg and Co?
We need to be mindful that polls have been wrong in the past and perhaps the best and most recent example of this was last year’s Scottish referendum which seemed to suggest a very close race right up until polling day, but ultimately the gap was 10 points in favour of remaining as part of the Union, and therefore making something of a mockery of the polls in the lead up to the vote.
Not surprisingly Labour has so far focused their campaign around the NHS and the Tories on the relative health of the economy under their stewardship. The Liberal Democrats appear to be positioning themselves as a party once again ready to work in coalition but potentially with either side and in doing so being the voice of reason and reigning in the political excesses of both the main parties for the benefit of the National good.
I am sure the next few weeks will have more twists and turns as politics is never straightforward and that potentially other external events not envisaged may play a part in shaping voter opinion and behaviour.