A soaring pound. Shares rising to record levels on the stock exchange. With the threat of a Labour government removed, it was a familiar story in the City once details of the exit poll were released. The last time the Conservatives won four elections in a row was 1992, and there were echoes of John Major’s unexpected victory as election night unfolded.
For a start, on neither occasion did the Tories have much of an economic record to defend. Britain is not in recession – as it was in the run-up to the 1992 election – but it has come pretty close to it. Growth has stalled in the past three months. Factory output is down. Business investment has fallen.
Unsurprisingly, then, the Conservatives had little to say on the economy other than things would be a lot worse under Jeremy Corbyn and miraculously better once the UK had left the EU. The spurious Tory claim that John McDonnell would cost every taxpayer £2,400 was straight out of the 1992 playbook and the “Labour’s Tax Bombshell” campaign.
Napoleon once said it was a mistake to interrupt your enemy when he was making a mistake, and that appeared to be the approach adopted by Dominic Cummings over the past six weeks. Labour’s scattergun approach – which at times seemed to involve an expensive spending pledge a day – made it more rather than less difficult for Labour to overcome a perennial problem: its struggle to be seen as economically credible.
That said, the Tories have their own problems. The first is that the ideological climate is much less benign for parties of the right than it was in the early 1990s, when the end of the Cold War symbolised the triumph of free market economics. That era came to an end in 2008 with the near collapse of the global financial system, and the prolonged squeeze on wages and living standards that followed helping to shift the UK leftwards on the economy.
Boris Johnson now has to deliver for voters in his newly won seats in Wales, the Midlands and the north. He is unlikely to do so with an agenda of labour market deregulation and spending cuts.
The economy will almost certainly get a short-term boost, as it did briefly in the aftermath of the 1992 election. Some of the investment that has been mothballed for the past couple of years due to Brexit uncertainty will be given the go-ahead. A stronger pound will make imports cheaper and so stimulate consumer spending.
But it remains to be seen how long the bounce will last. Businesses are likely to remain cautious about capital spending until they know the shape of Britain’s future trade deal with the European Union. Those on the left in despair at Labour’s fourth successive loss can take some comfort from the fact that the mood was similar in April 1992. Within five months the Major government had been overwhelmed by a crisis – the departure of the pound from the European Exchange Rate Mechanism on Black Wednesday – from which it never recovered.