If the economy was helping the government in 2001 and 2005 to win re-election, the opposite is the case in 2010. Stock markets are the easiest measure of social mood and confidence, and May 6th, today finds the London stock market in free fall. In the last two weeks it has fallen from 5800 to 5350, and its direction is heading down.
The bear market rally which began in March 2009 was the fastest stock market climb in history taking shares up by over 70% to the 5800 peak. At the stock market fell to its lows, the Conservative lead was at its highest, at one point being called as over 50% by one pollster.
But if lowering stock markets signal falling support for Gordon Brown, and a decline in social mood, then this election is taking place against a significant fall. It might make a difference. People are worried by all the goings-on in Greece and can see that high debt is becoming the primary issue worldwide. Britain is in no place to gloat, and it is being suggested by many leading commentators (including me!) that our borrowing could be far higher than Brown and Darling are admitting.
Niall Ferguson for example is demanding that the IMF be called in straight away to substantiate the amount that Brown is claiming we are borrowing. It seems likely that he has been up to his old tricks in arranging off-balance sheet financing, but in secret this time.
The fall into stock market decline is very recent though. Sterling is not collapsing, and for now all the attention is going onto the falling Euro. But things might be just bad enough to ensure that voters kick out the government this time around. A small Conservative majority would make a huge difference to confidence right round. It wouldn’t turn the markets back up again, and there will be financial blood toil tears and sweat to come whoever is in power. But we could look forward to a better future in five years time.
This time it is well worth voting Conservative. By 2015, things could be starting to get better. They could yet get a whole lot worse if we don’t get a grip. Brown simply has to go.
UPDATE – FTSE 100 Futures are at 5100 this evening. If that goes firm in the morning, the market will be down 12% in two weeks. The US markets were down 8% on the day at 3pm today, but recovered to down 4%. It’s getting mighty bearish.