Rewriting history

A standard piece of conventional political wisdom is that Black (or Golden) Wednesday when Britain was forced out of the ERM destroyed the Conservative Party's chances of re-election for some fifteen years. This view has been challenged in a new book by former Tory chairman Norman Fowler.

He believes that the Conservative party could have recovered from the ERM debacle just as Labour recovered from devaluation of the pound in 1967. He argues that it was what followed - the endless infighting and the 'back to basics' sleaze scandals that finally did for the Conservatives.

I'm not sure that I buy into the Fowler thesis. The three post-war devaluations did see the Government that undertook them voted out of office (even though Labour struggled on from 1950 to 1951). The events of 1992 cost the Conservatives one of their ace cards, a superior reputation for economic competence which had endured until then.

The analogy with the current situation is undermined by the fact that the Conservatives were defeated in 1997 when the economy was recovering. It now looks increasingly likely if the current downturn is going to be over by the time of the next election.

The relentless rise of commodity prices, above all oil, is hitting the electorate hard in the pockets. Just as in the 1970s, stagflation - higher inflation and faltering growth - seems to have set in, albeit on a lower scale. The oil price seems to factor in any bad news and discount any good tidings. The housing market has taken a big knock and negative equity is back.

What this does suggest that Labour's woes are deeper than a failure of leadership by Gordon Brown. No new leader is going to be able to turn back the tide in the global economy.

I don't think that the news that Boris Johnson has had to get rid of his deputy mayor, the second aide to go, will hurt the Conservatives that much. It doesn't inspire much confidence in his abilities as mayor, but the electorate may well see Bozza as separate from the Conservative Party.