Happy Days for beleaguered Brown could mean a March poll

Thumbs up and “ayyyyyyyy!” was the message from Number 10 today.

Yes, Henry “the Fonz” Winkler chose today’s day of madness to drop in on Downing Street to help launch a campaign to improve public attitudes to kids with special educational needs (Ed Balls calls it the “My Way” campaign (!)).

The irony here is that despite everything, Gordon Brown may well be on the verge of some relatively Happy Days, at least for himself.

There’s a big date circled in the Number 10 calendar, and it’s also circled by George Osborne’s closest aides. Tuesday 26 January 2010. On that day, we will get official confirmation that the recession is over.

Estimates of growth in the last three months of 2009 range from 0.5 per cent to a thumping 0.8 per cent (on the back of new survey numbers today), which is consistent with the toppish budget forecasts.

Capital Economics currently anticipates that UK growth in Q4 2009 will exceed the Euro-area, Germany and France. For good measure, the shock negative Q3 numbers could even be revised further towards growth.

So in Gordon Brown’s wildest dreams he might head off to the Davos World Economic Forum with the end of the recession, a recession that lasted the same time as the other world recessions, and growth exceeding that in many other G7 countries.

He will claim that this supports his economic approach over the past two years. Unemployment has increased by far less than would have been expected given the drop in the economy in 2009, and there are some measures that are beginning to actually fall. Repossessions are undoubtedly tens of thousands below where mortgage lenders had predicted a year ago.

Then he might be able to throw in the fruits of bank bonus season. As I warned in August, the bankers giving themselves multimillion bonuses after benefiting from public support, just months before an election, was a car crash waiting to happen.

Well, contrary to expectations, the bonus tax may well end up being a rousing exchequer success. Well-informed voices in the City and in Whitehall feel that in February it will become apparent that the bonus tax will raise somewhere between £2bn and £5bn for the Treasury coffers rather than £500m.

Now, there is obviously still the deficit to deal with, and even if the PM can claim some successes, it’s still debatable whether the taxpayers’ money thrown at unemployment and the banking system has really been value for money.

Does all of that give the prime minister the 2 or 3 percentage points poll boost that turn a 10-point poll deficit into hung parliament territory? Any more Conservative stutters such as the gaffe on tax breaks for marriage and it’s certainly feasible.

There are respectable arguments about the precariousness of a Brown bounce in the economy this month. An awful lot of taxpayers’ money and government borrowing has gone into six months of house price rises, fewer-than-expected jobless and repossessions. Was that really all value for money?

If there is a relapse in the economy this year, part of it will be payback for the “fake growth” brought about by the likes of the end of the VAT stimulus in December.

So the economics might help provide some insight into a likely election date, if not who you should win your vote. What is certain is that on 23 April, we get the Q1 2010 number. Economists feel that there is a risk that the economy might double dip at that point (Capital Economics is forecasting 0.2/0.3 per cent).

Would Mr Brown really want to risk going to the polls with the country in negative growth? Would he really want the economy to be formally returning towards recession a fortnight before an election?

And from February Britain will have to restart finding real buyers for the mountains of government debt, rather than the fake buyers at the Bank of England

I can’t see the economic news getting any better, before June, than it will appear to be at the end of this month. Late Jan/early Feb is an economic sweetspot of strong growth, stronger growth than other major economies, stabilising unemployment, yet before the real tests of the government debt markets.

So I say the economics point to a 25 March election, and there are some important Tory strategists who are planning on this basis.