With a Labour victory looking increasingly probable, John Major’s pitch to voters in 1997 was simple. Britain had come a long way, the then prime minister said in his foreword to his party’s manifesto. “We must be sure that we do not throw away what we have gained, or lose the opportunities we have earned.” Sound familiar? It should, because it is exactly the same argument Rishi Sunak is deploying as he seeks to defy the opinion polls and win a fifth successive general election victory for the Conservatives. The timing of July’s snap election was triggered by Sunak’s sense that he could persuade voters it would be unwise to entrust the economy to Labour. In 1997 there was far more evidence that the economy had “turned the corner”, yet that did not prevent Major from leading his party to a landslide defeat. What was more, he left it to the last possible moment – May 1997 – to hold the election rather than go early. Like Sunak, Major was facing a mood among the public that it was time for a change. Like Sunak, Major had to contend with voter unhappiness about the run-down state of the public sector. Like Sunak, Major also had to contend with egregious examples of sleazy behaviour from his own MPs that tarnished his party’s reputation. Yet in terms of the economy there is no real comparison. In 2024, the UK has posted one quarter of 0.6% growth, which followed a mini-recession in the second half of 2023. In 1997, the economy had been growing for more than five years and in each quarter of 1997 grew by 1% or more. That growth was broadly based. Manufacturing output was strong and in early 1997 the balance of payments was in the black. House prices had been through a protracted slump in the early 1990s and had only recently started to recover. A sustained period of expansion also meant the public finances were a lot healthier than they are today, with debt as a share of national income just under 37% – its current level is close to 100%. Inflation was edging up to about 3% but the public’s last experience of severe cost of living problems had been at the very start of the decade.
Ed Balls, who was Gordon Brown’s special adviser in 1997, says: “The fiscal position today is much tougher and the underlying growth potential of the economy is much weaker. At the time of the 1997 election, real wages were growing and people perceived themselves to be better off, but much to the frustration of John Major and Ken Clarke, that didn’t translate into support for the Conservatives.” Globally, things looked different as well. The late 1990s marked the high-point for the post-cold war model of globalisation during which the arrival of cheap goods from China increased the real spending power of western consumers and also resulted in weaker inflationary pressure. Neither China nor Russia were seen as geopolitical threats, which meant governments could run down defence budgets and re-allocate the savings to health, education and welfare. “It was a very different environment,” says Gerard Lyons, the chief economic strategist at Netwealth. “Today we have slower growth domestically, slower growth globally, there is less room for fiscal manoeuvre and governments are raising defence spending. There is no peace dividend.” In 1997, preparations were well under way in the EU for the launch of the single currency – a project the UK had decided not to join. The accession of former Warsaw pact countries to the bloc – which led to an increase in the number of workers from eastern and central Europe – was still some years in the future. Net migration in the UK was below 100,000 in 1997 and was not an issue at the election. While the nature of Britain’s relationship with the EU was a matter for political debate, there was no sense that within 20 years the UK would vote for Brexit. There are three possible explanations for why Major lost so heavily in 1997 despite an economy that was – by today’s standards – doing well. The first is that voters saw no reason to give the Conservatives credit for a recovery that happened despite the government’s economic strategy and not because of it. Major was committed to the pound’s membership of the European exchange rate mechanism right up to the moment when speculators led by George Soros forced a U-turn on Black Wednesday in September 1992. The fall in interest rates and the depreciation of sterling that followed created the conditions for much stronger growth. The second explanation is that people were content enough with the state of the economy and their own finances by 1997 to consider a vote for Labour a risk-free option. The opposite had been the case in 1992, when the economy was doing poorly and the Tories played on fears that taxes and mortgage rates might be higher under their rivals. The third explanation is that there are times when the rule that the state of the economy decides elections doesn’t always apply – and that May 1997 was one of them.
But whatever the reason, the portents for Sunak are not good. The economy’s recovery is weaker than it was in 1997 and the memories of the cost of living crisis are much fresher in voters’ minds. Polls suggest that although there is less enthusiasm for Keir Starmer as prime minister than there was for Tony Blair, there is no fear of a Labour government. Not much, in other words, to give Tory candidates any real hope that the polls might be wrong.