What does the election mean for the UK economy?
CGTN Europe interviewed Vicky Pryce, International economist and business consultant
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00:00Vicky Price is an international economist and business consultant.
00:04Vicky, what's your reading of these figures and the landscape for the UK general election?
00:12There is definitely some improvement in the underlying growth of the UK economy, but you're absolutely right.
00:18The retail sales figures came in as a bit of a shock. The consumer is still quite careful.
00:24They are, of course, not going out shopping when the weather is bad and we had an awful lot of rain.
00:30That tends to happen, so it affects figures. They're not seasonally adjusted, which means that they can go up and down very significantly,
00:37depending on what's happening outside. But it's also interesting that online sales,
00:42although they represented a much bigger percentage of the retail spending that happened in the last month, they still fell.
00:49So it's not as if people just sat there and bought things, but they probably were booking the holidays instead to go to a place where it doesn't rain very much.
00:57But it is quite an important part of the economy. And the fact that didn't do very well is a concern about what may be happening in this quarter.
01:04And it's really quite interesting because you mentioned the fact that forecasts have been revised upwards, which is good news, I think, for the incumbent government.
01:14In other words, you know, they can claim that things are improving. But we had the IMF up its forecast.
01:19We had pretty good growth in the first quarter of point six percent.
01:23But if retail sales don't pick up as we had hoped they might do,
01:29then perhaps the second quarter isn't going to be as good as as perhaps people have been hoping would be the case.
01:36Different voters vote for different things. That goes without saying.
01:40But generally speaking, how important is the economy when voters go to the polls?
01:47It's quite significant. But of course, there are two things about this.
01:50There is no doubt that real wages going up mean that people feel a little bit more confident.
01:54We've seen consumer confidence improve. We've seen minimum wages going up quite significantly.
02:00So people's pockets will be having a little bit more money in them.
02:03So I think that's positive. It improves how they may be feeling.
02:07But there is an interesting conundrum about this. If you look at the previous elections,
02:12if things go well, then people are more prepared to risk it and go for a different party.
02:17So it's not always the case that the economy doing well is going to help the government that's in place right now.
02:25So at present, of course, what is happening is that the opinion polls are telling us that people are not very happy with what's been going on for some time now.
02:34And and therefore they might vote for a change.
02:37And nevertheless, there is no doubt again that the Conservatives and Labour are focusing very much their entire campaigns on the economy.
02:48So it will be important whether people have so far taken enough notice or not.
02:53The next six weeks, it's going to be all about that.
02:56Let's talk about the day after then. Whoever wins the UK election, will voters really see much difference,
03:02whether it's a Labour or Conservative administration in power afterwards?
03:07Isn't the economic inheritance the same?
03:12Yes, unfortunately, Labour isn't going to have, if they do get elected, an awful lot of room for manoeuvre because the fiscal side is pretty bad.
03:20Yes, of course, one is borrowing a bit less now than was the case before.
03:24But there is still a big issue of needing to continue to borrow.
03:27And then, of course, debt, which is still going up.
03:30So if you follow the fiscal rules, we have debt to GDP ratio of about 100 percent just under it.
03:36The fiscal rules say it should be coming down over the next five years.
03:39There is not enough headroom to do anything much.
03:42So the Labour Party has already been talking about taxing various bits a bit more and redistributing.
03:48But in reality, they're not going to raise a lot of money.
03:51So there is concern that public services, whose quality has been declining for quite some time, may not get the boost they need.
03:59So it is not going to be, I think, a fantastic period during which any government can say right now we can do an awful lot about the economy and boosting growth because their ability to do so is going to be quite limited.
04:13Vicky, we'll talk much more in the coming weeks during the campaign.
04:15For the moment, thank you very much.
04:16Vicky Price, The International Economist.