Why both Theresa May and Jeremy Corbyn should pray that they lose this election (by a whisker)

It may only crystallise at the distance of some years, and is certainly rarely contemplated at the time, but some general elections are ones where you’d have been better off losing. They do stand out.

John Major’s unexpected victory in 1992 is one such example. Soon after the Tories’ historic fourth successive win the pound crashed out of the European Exchange Rate mechanism (ERM). It was a massive shock. When it happened, against pledge after pledge from Major about his iron determination to keep sterling linked to the Deutschmark, the Conservatives’ reputation for economic competence was shredded with it and his Chancellor, Norman Lamont, resigned to become an embittered figure on the back benches.

In 1997, the Tories fell to their lowest support since the Great Reform Act of 1832. They seemed finished.

Arguably, too, 1970 – another Tory surprise, in that case for Ted Heath – was such an election where a sunny polling day was followed, after a few short years, by dark evenings of power cuts, the three-day week, mass unemployment and galloping inflation. Humiliation awaited in 1974.

Then again, 2010 – where the Conservatives and Liberal Democrats together inherited a financial crisis – turned out quite well for the bigger of the two parties. Were it not for his rash decision to offer a European referendum, David Cameron might now be well on his way to become one of Britain’s longer-serving premiers, with a glowing reputation and legacy. But that really is another story.

The Brexit talks, Brexit itself, and whatever follows from it, will obviously dominate the life of the next government, whoever wins this Thursday. It will be a miserable time for all concerned.

We are only now glimpsing that benighted short- to medium-term future for the economy. The data suggest a slowing in the property market, a steep change in the inflation rate, jobs growth declining and industrial and consumer confidence starting to subside. Such effects tend to feed on one another. Even if Brexit eventually does lead to higher growth and a more dynamic economy – and neither party has a very convincing plan for that – the process itself will be, as they say in North Korea, an arduous march.

Whether it is Jeremy Corbyn or Theresa May who is smiling on the doorstep of Number 10, they will not be happy and contented for very long. For circumstances mostly beyond their control will push Britain towards recession, lower living standards and – most terrifyingly of all for a politician – a house price crash. You wonder why anyone would want to actually preside over all that for the next four or five years, with the inevitable pummelling that awaits you at the general election after this one. Brexit has the power to destroy a political party.

How will Brexit do this? First, look at inflation. It is obviously the biggest single visible consequence of what happened when the country voted for Brexit a year ago. An immediate devaluation of sterling, by about 15 per cent, inevitably leads to higher prices and lower margins for retailers and importers. Of course there have been countervailing benefits for exporters, but the crucial point is that the buying power of wages has been significantly eroded.

Further falls in sterling may be reliably expected as the talks grind relentlessly through to their unsatisfactory conclusion. May is deluded if she thinks that she can keep these proceedings secret, and every leak about some new disaster for a particular sector of the UK economy will bring fresh declines in the national currency. Generally the news flow will be negative, because the UK can’t negotiate new trade deals until we leave the EU; the bad news is necessarily front-loaded.

The saving grace on inflation is that, thus far, it has not ignited a wage price spiral of the kind that we’ve seen in the past – a truly insidious development, which would take only strong action by the Bank of England to break it through punitive interest rates and monetary contraction. The Bank has shown massive reluctance to restrain inflation lately, because of the much greater damage from a slump, but it may not be able to hold off forever.

Nor will the Brexit process be kind to investment and, thus, levels of productivity. Productivity is the biggest single factor pushing the value of output per worker, and thus wages, higher. It is impossible to be precise about this, but we know the old saw that uncertainty is bad for investment decisions, and we also know that much of the investment in the UK, especially in high profile sectors such as automotive, aerospace, pharmaceuticals and finance is reliant on access to the single market. The massive public sector investment programmes envisaged by all parties, in principle so laudable, will only partly make up the shortfall in private sector investment; in a worst-case scenario we might end up with Japanese-style “bridges to nowhere”, and the best roads and railways in Europe but with less traffic on them as the economy tanks.

To resurrect an idea last heard in the 1970s, Brexit will also be bad for the “social wage”. This was the term used to describe people’s non-wage income, encompassing not only social security benefits but also an imputed value that can be attached to provision of schools, hospitals, libraries, parks and so on.

Given that the economy will be under intense pressure, the promises made in the manifestos of all the parties will be meaningless if the funds cannot be raised via taxation or borrowing. Brexit will continue to make this much harder than it was. In any case, attempts by government to borrow much more lavishly will push interest rates up faster and higher than they would otherwise be, choking off both planned public sector investment and “crowding out”, to some extent, private sector investment.

The net effect of all that will be to see further cuts in public spending, and a tattier, less reliable, poorer provision of public goods. That means bigger school classes, more derelict ex-libraries and lengthening NHS waiting lists, whoever wins on Thursday night. Cherished ambitions such as free school breakfasts will be abandoned or postponed. Brexit means no breakfast for many children.

Unemployment in the public sector, as in the private sector, may begin a slow but inexorable rise. Increases in the “living wage”, the new minimum wage, will inevitably cost jobs as it works its way through to levels that hit profitability (and, ironically, especially in the labour-intensive social care sector, which is already receiving so much attention during this election campaign).

Nothing destroys confidence more than the fear of losing your job – except actually losing it. We’ve become far too used to the idea of effectively full employment being a natural state of affairs. History tells us it is anything but, and that governments can only do so much to secure it. Brexit means lower growth and fewer jobs, especially if wages are pushed artificially higher and unions win more power through legislation – promised by both Labour and, more vaguely, by the Tories.

Which brings us neatly to house prices. So long disconnected from reality, let alone the underlying facts of the British economy, the next five years could quite conceivably see a slow-motion collapse in property values.

This mechanism is quite straightforward to understand: if wages aren’t rising, and if interest rates make mortgages more expensive, that will necessarily have some impact. Much more damaging, if intangible, is what happens when the magical ingredient “confidence” starts to evaporate. If the British housing market, at least in London and the South East, has resembled a bubble in recent times then maybe that’s precisely what it is. Once prices stop increasing then the bubble will eventually pop, or at least deflate, with a distressingly defiant raspberry sound attached to it.

The “housing crisis” is being discussed, understandably, as a great problem of affordability; yet a house price recession would soon solve that, at least in the sense that houses and flats would become more easily affordable. But, note, only if you feel confident enough about the prospects for the real estate market and your own ability to hang on to a job.

By the British general election of 2021 or 2022, whoever has been in charge for the previous few years will be blamed for the unfolding mess – even though they may not have been entirely responsible for it. (After all, Corbyn and May both campaigned for Remain, albeit with subdued enthusiasm.) Their parties will be punished at the polls, and their successors too.

The economic revival that could come with Brexit, with the UK plugged into fast-growing economies to the east and able to gear itself to regain lost competitiveness, will not arrive until the late 2020s. So if I were May or Corbyn I’d be saying a silent prayer for an honourable, narrow defeat on Thursday, and look forward to a landslide when the other lot get hammered at the election following. Who in their right mind wants to lead Britain on its arduous march to Brexit?