Conservative incompetence, Labour responsibility and the feelgood factor: why the economy failed to save the Conservatives in 1997

Abstract

Two successive British general elections appear to have contradicted the conventional wisdom that the economy plays a determining role in election outcomes. It would nonetheless be premature to dismiss the electoral significance of economic factors in Britain altogether. The “subjective economy”—voters' economic perceptions—made an important contribution to the Conservative victory in 1992. The paper shows that the subjective economy continued to be important through to May 1997. Crucially, however, economic influences were strongly moderated and supplemented by political factors. The Exchange Rate Mechanism crisis of September 1992 crystalised a number of important doubts that voters already entertained about the Conservatives as competent economic managers. The Conservatives' loss of their longstanding reputation for competence in the immediate wake of the crisis opened up an electoral space which allowed politics to affect voters' electoral preferences on a scale not encountered since 1979. The Conservatives' failure to manage the aftermath of the ERM crisis inflicted serious and sustained damage on their electoral fortunes. Labour's political renewal under Tony Blair rendered the breach irreparable. Without the “feelgood factor” working in its favour, however, the Tory performance in May 1997 would have been even weaker than it actually was.