Are elections bad for our economy?

Could general elections be bad for the economy? Our writer thinks so...

Updated: 
State Opening of Parliament 2014

If the endless trickle of political fliers through your door, the increasing fury at PMQs and the lack of any real action in parliament hasn't been enough to remind you, there's an election on the way.

Although the three biggest parties have yet to fully launch their manifestos, electioneering begins in earnest on Wednesday. That's when the chancellor George Osborne will stand up and deliver his final Budget of the current parliament. Since there will be less than two weeks before the dissolution of parliament takes place (Monday 30 March, if you're counting the days like me), his speech will mostly be firing the starting gun for the Conservative election campaign.

And I'm concerned that this isn't a very sensible way to run a country...

Sweeteners gone sour

Pretty much every chancellor uses their final Budget to sweet-talk the electorate. The existing government wants voters to feel that they have personally benefitted from its decisions, so that they will reward them with another five-year term.

And you only have to look to the past to see that this can spell bad news for the country's long-term economic wellbeing.

For example, in 2004 then-chancellor Gordon Brown increased the nation's borrowing in order to fund giveaways like increased maternity leave, scrapping an increase in fuel duty and more money for local authorities. All those things were crowd-pleasers and they certainly did a lot of good, but this wasn't a financially neutral Budget, it increased our spending and contributed to today's deficit.

Or look to 2009, when Alistair Darling's Pre-Budget Report contained misery such as public sector pay caps, warnings about the length of the recession and a rise in National Insurance contributions. Yet Darling still managed to increase the state pension, ensuring that elderly people - who are far more likely to actually vote that any other section of society – felt pretty good about the plans.

It's not my intention to argue against any of those specific decisions; it's hard to argue against more money for pensioners and more time off for new mums. But I would argue that neither chancellor would have promised such giveaways if they weren't desperate for votes, and that this kind of short-termism is no way to decide economic policy.

Pre-election sweeteners

Oh it's true that Osborne says there will be no gimmicky giveaways or pre-election hand-outs, but most analysts expect something in the red box designed to kick start the Conservative election campaign. After all, this is a man who has aspirations to lead the country; he isn't going to let what could be his final Budget go out with a whimper rather than a bang.

And just as with Brown and Darling's decisions, it doesn't mean the chancellor can't make valuable pledges and promises - leaked information suggests that this Budget will include sweeteners such as tax cuts, funding for children's mental health services and a serious investment into development outside of London and the south-east. There are good arguments for all those things.

He's also reformed pensions and is about to go a step further and give five million more people the right to sell their existing annuities for a lump sum.

But a chancellor on the rocks of an election isn't necessarily going to make the calmest or best decisions about how to captain the ship of the UK economy. Giveaways must be paid for – and this government has a history of slashing welfare payments to the poorest in order to balance the books. That makes me very nervous about Wednesday's speech.

No, not an end to democracy

Of course, I am not arguing that we should stop holding elections or even that we should give our politicians longer parliaments. It doesn't seem likely that less democratic oversight would encourage our leaders to spend our money more effectively.

But when our current chancellor, or the politician who wants to be the next chancellor, makes promises that we will be better off if we just give them the power, it's time to step back.

We need to question whether they can deliver on those promises without cutting something else we also care about. We need to question whether they can deliver on those promises if they have to form a coalition, which is increasingly likely. But mostly, we have to question whether delivering on those promises is actually in the country's best interests.

What do you think? Are elections bad for our economy? Have your say using the comments below.

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