The strength of the UK’s economic recovery looks likely to be the single most important factor in determining the scale of any Conservative victory in next year’s elections. The latest data suggest things are moving in Gordon Brown’s favour. Wednesday’s unemployment figures confirmed that the labour market is stabilising sooner than expected. Joblessness was unchanged at 7.8 per cent of the workforce in the third quarter. If this is sustained, fears that the total would surpass the politically delicate 3m mark before next May’s election deadline will rapidly fade.

This relatively mild rise in unemployment during the longest and deepest post-war recession has two explanations. First, increased wage flexibility has seen employees willing to accept across-the-board pay cuts in order to limit reductions in headcount. Second, employers who share the government’s assumption that the slowdown will be short-lived have hoarded labour. While surveys of employment intentions give no hint of large workforce reductions in the pipeline, that might change if demand turns out to be weaker than expected. The Bank of England’s inflation report gave no answers. The benefits to be gained from fiscal expansion and monetary easing, combined with the likely eventual boost to exports from the 25 per cent trade weighted fall in sterling since the start of the crisis, have yet to be fully felt. But constraints on the supply of bank credit and continued consumer deleveraging are powerful offsetting factors.