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Russell Lynch: The election’s arrived in the nick of time for Theresa May

Russell Lynch
Russell Lynch: Theresa May isn’t set on dispatching an over-mighty dictator — rather crushing a feeble opponent: REUTERS

Shakespeare's Brutus put it best in Julius Caesar more than 400 years ago when the noble senator declared that “there is a tide in the affairs of men, Which taken at the flood, leads on to fortune”.

Theresa May isn’t set on dispatching an over-mighty dictator — rather crushing a feeble opponent — but the PM would doubtless appreciate the sentiment. In politics, like most things, the timing is all and she won’t get a better chance to cement her position for another five years.

That logic was endorsed by financial markets this week as the pound rose higher.

As noted here recently, sterling was already looking oversold with bets against the currency at a record level, despite an economy which refuses to bow down before predictions of doom. May’s move means less influence for hardcore Brexiteer MPs on her own backbenches, and five years for Brexit and a transition deal without the 2020 poll hanging over her. So much the better for the economy, and hence sterling.

But despite the denials May will surely also have been tempted by the fact that in economic terms, this could be as good as it gets for the UK for several years.

Shadow chancellor John McDonnell may be as likely to step over the threshold of 11 Downing Street as I am, but there was something in his comments yesterday: “The Government has seen that the economy at the moment is going to turn. We are seeing inflation increasing, we are seeing wages stagnate and we are seeing people in heavy debt as a result of that.”

Even the most ardent Eurosceptic will struggle to argue that the UK will keep up its current growth lick in the second half of the year. Growth figures next week will almost certainly show a slower pace between January and March than in the previous quarter, while steadily rising inflation later this year adds to the pressure on household budgets.

Dole queues may still be at a 12-year low and employment at the highest since records began in 1971 — facts you’ll be hearing a lot of in the next seven weeks — but insipid wages mean UK workers aren’t feeling the love. Markit’s latest household finances index signals the sharpest fall in available cash to spend for nearly three years, and consumers are feeling the pinch.

That’s clearly shown from the graph from Capital Economics which shows a steady decline in the GfK consumer confidence index since its recent peak in 2015. Usually the incumbent government’s poll lead falls in broad sympathy with waning consumer confidence, but more recently the lines are shooting off in different directions in a break with the pattern of the past 20 years.

The consultant has a similar chart showing the sitting government’s poll lead rocketing even as house prices falter; another trend-buster. May must be the first sitting PM in history to increase her poll lead in the face of flagging confidence and falling house prices.

It all adds up to as damning a condemnation of Labour leader Jeremy Corbyn’s credentials with the electorate as you can get. May must be counting her blessings to be up against a candidate of such staggeringly low standing with the voters, because under a viable alternative PM, she’d be in trouble.

Even so, the timing of the poll shows she’s still taking no chances; picking her spot before inflation heads towards 3% and tightens the screw.

The Bank of England, meanwhile, has been sounding warnings about rising credit growth, and restrictions here could be another damper on the economy later this year. By then, though, May could be ensconced in No 10 with a three-figure majority and five years to steer Britain on its historic path out of the EU.

Her opponent’s political fortunes, by contrast, look destined to be “bound in shallows and in miseries”.