How Theresa May must thank her lucky stars for Jeremy Corbyn. Is there a political leader anywhere who does not envy her made-to-measure bogeyman, the mere flash of bearded scarecrow with the Vladimir Lenin cap turning her Brexit rebellious backbenchers into jibbering loyalists, falling over themselves to pay tribute to her brilliant Brexit negotiating skills?
Few administrations have survived on the end of such a fragile thread. And fewer still have proved themselves more at the utter mercy of events than this one. But it is the spectre of Mr Corbyn that keeps Mrs May in office; the prospect of his revanchist Marxist Shadow Chancellor John McDonnell piling up taxes, borrowing and the national debt; the data-confused Diane Abbott as Home Secretary: the Prime Minister barely has to open the cupboard door to expose all this – a mere kitten-heel tap on the door has so far sufficed to bring her dissident Remainers to order.
The Conservatives are counting on this vision of a Corbyn Labour Apocalypse to persist into voter panic at an election.
The full Monty of a Corbyn-McDonnell-SNP coalition will then snap into focus. And certainly the Corbynistas are doing little to moderate the image of a back-to-the-70s Socialist Worker government.
A baffling, giant mind map displayed by the Shadow Chancellor last week of his proposed new Strategic Investment Authority was compared to the power grid of the Central Electricity Generating Board circa 1947: an approach to economic management lost in an impenetrable bureaucratic feedback loop.
As if this was not enough, now comes a Labour proposal to “rebalance the UK” by moving certain functions of the Bank of England from the City of London to Birmingham. Andy Burnham, Manchester’s Labour Mayor, may have something to say about that. And perhaps we should not rule out an all-comers competition like that for the UK City of Culture. Marketing campaigns, prestigious new offices, ancillary back-up, endless travelling of officials between London and the new regional centre would soon undermine any economic rationale. Political vanity would triumph. So much for the fearful spectre. But there may be a different mood altogether among voters when battle is joined in an election campaign.
The problem here is that much of political argument today is degraded – the public has little trust in grim warnings of decline and disaster should the other lot get in. This sort of politics did not wash in Scotland, it certainly backfired in the EU referendum. And it did not work for Theresa May in the June election.
Scottish politics is all too familiar with the politics of ‘Project Fear’. This was dusted down and refreshed by former chancellor George Osborne and the Treasury in last year’s EU referendum.
Here he claimed that a vote to leave would trigger an emergency Budget, tax rises of £4,000 for every family, induce a recession, a stock market crash and a slump in house prices. Banks would flee the City of London. Half a million people would be put out of work and government debt would balloon.
The reality? Yes, the pace of economic growth has slowed. But instead of recession, the economy has continued to grow. Manufacturing output is up 18 per cent in the last year, unemployment, even taking account of the recent slowdown, is at its lowest since the 1970s – this despite continued annual net immigration. Numbers in work are at all-time records.
And employers are still hiring: the latest Labour Force Survey figures out this week showed job vacancies at 798,000, up by 45,000 on a year ago.
In Scotland, the annual employment rate has risen by 1.7 percentage points, joint-second with the South East, while we have also displayed the second highest annual increase in workforce jobs, by 109,000. House prices in Scotland are up 2.3 per cent on a year ago and the cumulative volume of sales for Scotland for the financial year to date – from April to August 2017 – was up 11.3 per cent on the same period last year. Finally, the stock market didn’t collapse. It brushed new highs this year, with the FTSE 100 rising eight per cent to over 7,500 compared to its level 12 months ago. And government borrowing is at the lowest level for ten years.
So how much credibility would now be placed in a Conservative ‘Project Fear’ onslaught in an election? An all-too-likely legacy of previous such campaigns is that voters simply don’t trust a word of them.
Economists and politicians can earnestly warn that a Corbyn-McDonnell spending spree would add an extra £350 billion to government debt, with an additional £5 billion a year in interest payments. Business investment plans would be cancelled
and capital would take flight. Disaster would surely follow. And the likely public reaction? “Yada yada yada – we’ve heard it all before.”
The problem here is not just one of politicians over-egging the pudding. Confidence in official forecasts has also sharply declined – a problem that may come to the fore in Scotland over the next few days as the Scottish budget and Scottish Fiscal Commission (SFC) forecasts take centre stage.
Now economic forecasts have always been at the mercy of events. But more recently heightened political volatility – here and overseas – can smash through the “all other things being equal” assumptions that underline forecasts on growth, interest rates and inflation.
The work of forecasters is rendered vulnerable, no matter the amount of diligent research and exhaustive intellectual effort put into them – whether by the Bank of England, the Office for Budget Responsibility or our own SFC.
Mark Carney, the Bank of England’s governor, has been repeatedly wrong-footed on his forecasts of interest rate movements. Now his utterances on a fall-back in the rate of inflation while the oil price rise has risen 40 per cent since the summer to more than $60 a barrel are looking too sanguine.
Uncertainty over the course of Brexit negotiations over the next 12 months now confronts all attempts at economic forecasting, especially when such forecasts of modest growth – between one and two per cent – are chased down not simply within a long-standing margin of error, but to the number after a decimal point.
Forecast accuracy at such a fractional level is impossible to achieve other than by luck.
And what credence would voters – let alone business planners – place upon them? Yet when these are hyped into full-on media events, bear traps are set for Finance Secretary Derek Mackay and Susan Rice at the SFC.
Despite this – perhaps even because of it – politicians have a compelling temptation to turn a low-growth outlook into something other than what the facts support – rather like spinning last week’s Brexit agreement fudge cake as a triumph for the Prime Minister.
Our politics is already suffering a dangerous plunge in public credibility and trust.
Now it looks set for an even more polarised and angry exchange in 2018 as scepticism deepens. And for the moment, the UK Government itself hangs by virtue of this fragile thread.