Gordon Brown has made significant inroads into the Conservatives' lead on the back of his handling of the economic crisis, a new poll for The Independent on Sunday reveals today.
The Prime Minister has cut David Cameron's advantage to nine percentage points, reducing it to single digits for the first time since March and signalling that the "Brown bounce" could become sustained as the recession deepens.
The ComRes poll also shows voters are not yet convinced that the Tory leader could handle the near-collapse of Britain's banking system, with a substantial disapproval rating of 56 per cent for Mr Cameron's economic skills. Just 25 per cent believe he would have handled it better than Mr Brown.
The survey suggests that the public believe Mr Brown's claim to be the "rock of stability" at a time of growing uncertainty in the markets and in the "real economy" of jobs, food and fuel prices, and property.
It shows that the Tories now have a "soft" lead over Labour that exposes perceived weakness on the economy for Mr Cameron and George Osborne. The Conservatives are on 40 per cent, up one, Labour are on 31 per cent, up four, and the Lib Dems are on 16 per cent, down five. In an election this would translate to an 18-seat majority for Mr Cameron. If the lead were cut by one more point, it would leave him with a majority of just one, while a seven-point margin would leave the parties in hung parliament territory.
Strategists believe the Prime Minister has a narrow window of opportunity to turn around Labour fortunes after months of dire ratings. Unemployment is predicted to rise to two million before Christmas and Mr Brown could face a collapse in support as voters feel the effects of a recession.
There is some comfort for the Tories as the poll reinforces the sense that Mr Brown is winning the economic war but will still lose the election. Just 37 per cent agree his handling of the banking crisis means Labour has a good chance of winning the next election, while 54 per cent disagree.
Nearly six out of 10 voters – 58 per cent – believe it was wrong that taxpayers' money should be used to bail out banks, against 37 per cent.
In a worrying development for the retail sector, where profits are already down, 62 per cent said they would scale back Christmas spending to save money. When applied to all UK adults, this is the equivalent of 28.5 million people tightening their belts.
Yet in a sign of a renewed bullishness within Downing Street, one of Mr Brown's closest allies said yesterday that Labour could "absolutely" win the next general election.
Douglas Alexander, who with Peter Mandelson and Alastair Campbell will co-ordinate Labour's election campaign, said he expected Mr Brown to be leader "long after" polling day. He quashed speculation emerging in Westminster last week that Mr Brown would call a snap election before December to capitalise on the bounce.
Tory strategists had feared that the party's lead – which stretched beyond 20 points this summer – would be narrowed to single figures as Mr Brown asserted his authority over the crisis in the financial markets. Mr Cameron launched a fightback last week with a speech ending a political truce on the economy, accusing Mr Brown of a "complete and utter failure".
The shadow Chancellor, Mr Osborne, continues the rally today by calling on the Government to freeze VAT on small businesses for six months to give firms breathing space.
The poll was taken on Wednesday and Thursday, in the aftermath of Mr Brown's £37bn rescue of three British banks. Remarkably, the boost for Labour also coincided with the release of figures showing unemployment rising at a rate not seen since the early 1990s. It now stands at 1.72 million. The Tories enjoyed a 22-point ComRes lead in July, while other polls put it as high as 28 points last month.
Mr Osborne will announce more plans to help UK firms when he attends a small business summit tomorrow. The Conservatives said many small businesses had seen their overdrafts withdrawn or interest rates raised above 15 per cent over the past few months and that some could be forced out of business by their next VAT bill.
Under the Conservatives' scheme, which the party said was revenue-neutral, small businesses would be able to defer their VAT bills for up to six months. Any deferred tax would be charged at 7.5 per cent, the usual HM Revenue and Customs interest rate for late payments. It would mean a typical enterprise with 50 employees and revenue of £5m would be able to defer a quarterly VAT bill of £90,000.
Mr Osborne said: "It was right to rescue the banks, because everyone depends on them, but now we need to rescue the real economy – and stop jobs being lost and families suffering unnecessarily."
How the PM has used dire events to his advantage
Scottish independence Mr Brown said the bailout of two of Scotland's biggest banks would have been impossible under independence. Alex Salmond said Scotland was part of an "arc of prosperity" with Iceland, but the collapse of that country's banking system showed how vulnerable small countries can be. Now Labour could win next month's Glenrothes by-election.
Immigration minister Phil Woolas suggested a limit should be imposed on migration as a result of the crisis. The comments were not disowned by No 10, suggesting the PM approved them in order to test the water.
Mr Brown used the falling oil price to put pressure on petrol retailers to cut the cost of fuel. He issued a veiled threat to retailers that they would face new competition rules if they did not obey.
Government plans were defeated in the Lords last week and Mr Brown ordered Home Secretary Jacqui Smith not to force the issue back. The humiliation of the U-turn was buried during the banking crisis.Reuse content