Economy could hit the government’s lead in the polls

Although we estimate that the 0.2% q/q contraction in GDP in Q2 was followed by a 0.4% q/q rise in Q3, it is clear that the economy is spluttering rather than firing on all cylinders. We think that GDP will rise by just 0.2% q/q in Q4. Seeing as the performance of the economy has been an important factor influencing general elections in the past, it could yet undermine the government’s lead in the polls. After all, households are hardly full of glee. And the low level of consumer confidence in October is typically consistent with the government being about 15 percentage points behind in the polls rather than 15 points ahead.