Earlier this month, Prime Minister Boris Johnson stated that the UK has a ‘long, long way to go’ before the economy improves. Nevertheless, economists have forecast that the country is set for record breaking economic growth during the third quarter of the year. In our latest polling in Great Britain, Redfield & Wilton Strategies explored public opinion about the future of the UK economy.
A strong plurality (46%) of the British public are pessimistic about the future of the UK economy. However, despite the fact the UK has since entered into its first recession in over a decade, there has been no discernible change in the proportion of respondents who are pessimistic compared to mid-July, when 48% of respondents held this view. Currently, 28% of respondents are confident of the future of the UK economy, while a further 23% are neither confident nor pessimistic.
Those who voted Conservative in 2019 are more likely to be optimistic, with a slight plurality (40%) saying they are confident about the future of the UK economy, compared to 37% who are pessimistic. In contrast, 51% of Labour voters are pessimistic, while only a quarter (25%) are confident.
Before the coronavirus pandemic, the Government was expected to borrow about £55bn for the entire fiscal year but ended up borrowing £128bn in the first three months of the crisis alone. There will be tough choices to be made in the coming months as to how to pay the deficit back. The plurality (36%) of respondents consider that the UK Government should raise taxes as part of its economic recovery and deficit management strategy after the coronavirus crisis. Around a fifth (19%) would instead favour cuts to public spending, while a slightly greater proportion (22%) would support the Government borrowing more money.
The Government may be concerned about political backlash if they decide to raise taxes, given that the Conservative Party’s 2019 manifesto asserted that “we will not raise the rate of income tax, VAT or National Insurance”. Nevertheless, a clear plurality (37%) of 2019 Conservative supporters are in favour of tax rises. It is possible that the unexpected circumstances in the pandemic could lead to the public being more lenient to the Conservatives if they were to break their manifesto pledge of not raising taxes.
The Institute for Fiscal Studies has reported that tax rises are inevitable at some point during the economic recovery, which is a view shared by the British public: an overwhelming majority (67%) think they will soon have to pay more in taxes. Only 6% do not believe they will have to pay more in the taxes in the coming months.
In early July, 71% of respondents said it was likely they will soon have to pay more in taxes, indicating that public opinion about the likelihood of future tax rises has remained relatively stable throughout the summer.
During lockdown, 730,000 Brits lost their jobs despite the relative success of the Coronavirus Job Retention Scheme. At this stage, as the furlough scheme winds down, 76% of respondents believe that it is likely that the unemployment rate will be higher than 4% by the end of 2020. The proportion of respondents who consider that unemployment will be higher by the end of the year has declined gradually (but very slightly) over a series of polls: 82% in late April, 80% in early May, and 78% in mid-June.
Respondents are more optimistic about unemployment levels than they were earlier in the coronavirus crisis. In this week’s poll, a plurality (40%) consider that unemployment will be in the range of 5-10% at the end of this year. In contrast, the plurality of respondents in our polling in April (40%), May (41%), and June (42%) believed that unemployment levels by the end of 2020 would reach between 10-15%.
UK Government debt recently rose above £2 trillion for the first time due to the heavy spending leveraged to support the economy during the coronavirus crisis. Nevertheless, half (50%) of respondents believe that the Government is spending about the right amount to support the economy. Around a fifth (18%) think the Government is spending too little to support the economy, while just 15% believe the Government is spending too much. Overall, clear pluralities, or majorities, from all age groups and regions of the country support the current Government’s spending levels.
While the public is in favour of the current level of Government spending, a plurality (39%) also consider that the furlough scheme has spent too much Government money. At this stage, 9.6 million jobs have been furloughed at a total cost of £35.4bn, and the scheme is due to continue until the end of October. Less than a third (31%) disagree that the furlough scheme has spent too much Government money, while 24% neither agree nor disagree and 6% don’t know. It is clear that respondents are increasingly wary of the costs of the scheme in the long term: in July, our research found that the public believed furlough had been worth the expense.
A strong plurality (47%) of Conservative voters from 2019 agree that the furlough scheme has spent too much Government money in contrast to a slight plurality (38%) of 2019 Labour voters who disagree. Notably, a Conservative Chancellor’s flagship economic policy is seen as better value for money among opposition voters, which may be a key reason why a strong plurality (46%) of 2019 Labour voters believe Rishi Sunak would be a better Prime Minister than Boris Johnson.
Despite support for the Government’s current level of spending, a plurality (42%) say they would be unwilling to pay more taxes in order to fund the Government’s programs for reactivating the UK economy after the crisis. Nevertheless, 37% would be willing to pay more taxes. Around a fifth (21%) don’t know if they would be willing to pay more taxes. Men are notably more likely (44%) to be willing to pay more taxes than women (30%).
Older people aged 55-64 (46%) and 65 or above (53%) are significantly more willing to pay greater taxes than younger people aged 18-24 (21%), 25-34 (29%) and 35-44 (28%). The willingness of older people to pay more taxes may be due to their greater levels of disposable income. Therefore, as the Government considers increasing taxes on older people to raise state spending in certain sectors, it seems that such a policy approach would be broadly accepted by the impacted demographic groups.
In regard to personal finances, a slight plurality (42%) of respondents are spending less than they did before the coronavirus pandemic. However, a similar proportion (40%) are spending about the same as before, while 13% are spending more than they did before the crisis. Ultimately, a majority of respondents say they are spending about the same or more than they did before the pandemic hit.
Among those who say they are spending less than they were prior to the coronavirus pandemic, a majority (55%) have reduced their spending due to financial concerns. Nevertheless, 44% have reduced their spending due to “other reasons,” which may include limited opportunities for expenditure on social activities. It remains to be seen whether the Eat Out to Help Out scheme, which has so far provided 64 million discounted meals, will permanently encourage people to begin to return to normal spending levels.
Ultimately, the public remains generally pessimistic about the future of the UK economy, despite experts predicting an improvement. Nevertheless, respondents are slightly more optimistic about the future levels of unemployment in the country than they were at an earlier stage of the coronavirus crisis. A plurality of Brits believe tax rises should be utilised to support the country’s economic recovery, and tax rises are expected by most respondents. Although the public support the current level of Government spending, they also consider that too much money has been spent on the furlough scheme. As the Coronavirus Job Retention Scheme winds down at the end of October and the true impact of the crisis on unemployment levels becomes apparent, we will continue to monitor the public’s view on whether the Government has successfully steered the UK economy through the pandemic.
