LONDON — Consumer confidence, the index that measures how
ordinary British people feel about their personal financial
situation, has again dipped below the level associated
with their government’s ability to retain a majority in the House
The decline is significant because it was one of very few
economic indicators that correctly predicted Prime Minister
Theresa May would lose seats in the June 8 snap election. The
prediction was made by Pantheon Macroeconomics analyst Samuel
Tombs as far back as May 19, weeks before the election, and
during a period when everyone else — including all the opinion
polls — expected a landslide victory for the Conservative party.
Here, for context, is Tombs’ expectation of what the GfK Consumer
Confidence measure said about the Tories’ chances in the election
back in May:
Note that the crucial level is -10. If an election occurs when
confidence is below the -10 line, the majority of the previous
government is reduced or overturned, history says.
And now, here is where confidence sits at its last measure, taken
Tombs published the more recent chart in a note on new car
registrations in the UK, which are also in decline. Car
registrations tend to track consumer confidence. We’ve added some
red notation to make it easier to see the crucial line that
threatens sitting governments.
Obviously, the problem for the Conservatives is that with
confidence in decline — and with Jeremy Corbyn’s Labour party
riding high — staging another election would be extremely
dangerous. The index says May would probably be toppled outright.
That sets up an interesting dynamic for May’s would-be leadership
rivals inside the party, such as Foreign Secretary Boris Johnson,
and offers some ironic comfort to May.
If a challenger were to force a new leadership vote inside the
party and succeed in replacing May, the GfK index suggests that
person would then likely lose the next election (assuming the new
leader called one in hopes of legitimising their place as the new
prime minister). In other words, toppling May in a coup
might hand the winner a poison chalice.
The index also flashes a warning that May ought to not to be
tempted to call another election anytime soon. That strategy was
successfully pursued by Labour prime minister Harold Wilson in
1974, who “won” a general election in February of that year
without a majority, but called another election and gained a
small working majority the following October.
As far as Corbyn is concerned, the index means the next
election cannot come soon enough.