Labour losing ground on the economy — but can it rely on supporters' fragile optimism?

Calum Weir examines public pessimism on the UK economy and decreasing trust in Labour to handle it ahead of the Budget

It won’t surprise you to hear that public views of the economy are grim. 19% think the economy will get better in the next 12 months, 49% think it will get worse. Last year, June 2023, it was slightly worse still: 15% said the economy would get better and 58% said it would get worse.

It also won’t surprise you to hear that we have seen a marked drop in Labour’s standing on the economy. After Rachel Reeves gave her statement in July, Labour was more trusted than the Conservatives on all five of the economic indicators that we test. Currently, they retain the lead on three, but have lost it on two of the most important ones: on “improving your financial situation” (trailing the Tories by 1% after leading by 6%), and running the economy (also trailing by 1% after leading by 9%).

However, how much of this is tied to a wobbly economy and how much is tied to the government itself? A general rule of polling is that people who voted for the government tend to think the economy is doing better than people who didn’t. If we compare the views of Labour voters now with a Tory equivalent (from a June 2023 poll of people who were planning to vote Conservative) then this gives us an idea of whether Labour really are in trouble this early on.

In that June poll, people planning to vote Conservative were pessimistic about the UK economy: 29% said they thought things would get better but 39% thought things would get worse, a net score of -10. Those that wanted to put their vote in for the Conservative party, were not necessarily doing so in a state of optimism.

By comparison, people who voted Labour back in July still expect things to get better: 38% said they thought the economy would improve in the next 12 months while 30% think it will get worse, a net of +8.

What does this tell us? While Labour’s honeymoon appeared to last about a week, there is still a shaky belief amongst those who voted for them that things will improve.

One explanation for this is that Labour are behind on the economy overall, but are scoring relatively well on funding for public services (+13%) and spending government money efficiently (+4%). Labour may well be wagering a weaker narrative on the economy overall, but keeping their strengths where they can: Public services like the NHS are always incredibly front-of-mind for voters, and is a core part of why Labour was elected.

Whether you think that this is a sign of faith in Labour, or one last line of defence waiting to be broken, it does represent an area where Labour has kept some degree of confidence amongst its voters.

There’s a final catch though: this is not personal optimism. In both 2023 and now, we also asked if people thought their personal finances were likely to get better in the next 12 months. In 2023, those that said they’d to vote for the Conservatives marginally thought their personal finances would get worse (23% better, 24% worse, -1 net). In 2024, for those who voted Labour in the last election, it is even deeper as 24% think it will get better and 28% think it will get worse (net -4).

Given that people are usually more optimistic about their personal situation than the national one, how this resolves itself will mean fortune or ruin for the Starmer government’s polling chances.  

Also seen originally in PoliticsHome.