LEADING ARTICLE:The elusive feelgood factor

It should be a good week for Kenneth Clarke, the Chancellor. It began with him flexing his political muscles in the face of the Tory right by restating the case for a single European currency. He followed that with a robust performance in the House of Commons yesterday, selling his economic record like a born-again estate agent. The week should end with him presiding over the third interest rate cut in four months, tangible evidence of the Bank of England's acceptance that the Government will meet its inflation targets.

The British economy, which is likely to grow by close to 3 per cent this year, is in better health than its French and German competitors. They are beset by downturns so serious that they may be unable to meet the Maastricht criteria for joining the European Monetary Union.

That is not all. The housing market is showing signs of life. Prices are rising again for the first time for a year. Intense competition among lenders has driven the cost of a home loan to its lowest level for 30 years. Later this year as several building societies become publicly quoted companies, millions of customers will get large cash windfalls. Many are already cashing in their Tessas. Let the good times roll.

The economy's strength will help to relieve the pressure on the Conservatives as John Major plays fingertip politics: that is, hanging on to power by his fingertips. Young voters, in full-time work and without large debts, will feel more comfortable. Yet most people will not feel secure enough to revise their expectations of the future. The rewards that a government can reap from an upturn have dwindled. The main reason is the spreading threat of job insecurity.

At first sight, this is difficult to believe. The number of redundancies has fallen from 391,000 in 1991 to 220,000 last year. But those overall figures do not tell the politically significant story: the middle classes are being hit increasingly hard. According to the Labour Force Survey, redundancies in manufacturing have fallen sharply. For instance, redundancies among craftsmen halved to 35,000 between 1992 and last year. Yet among professionals, managers and administrators, the redundancy rate stayed almost constant at between 45,000 and 50,000 a year.

Job insecurity is becoming so widespread - 8.7 million people have had a spell of unemployment since 1992 - that middle-class professionals, once so cosy in their closed shops, are starting to articulate fears that used to be the preserve of manual workers. The political consequences of this are hard to predict. That there will be political consequences is inevitable.

The trade unions seem powerless, stuck in the past: they will not be the vehicle for new protest. Worthy suggestions that Britain should adopt a German-style training system are beside the point: the economy is moving too fast for that.

More potent could be the emergence in Britain of the kind of anti-downsizing, anti-shareholder, anti-big corporation populism championed in the US by the presidential hopeful Pat Buchanan. That there may be a constituency for this was shown yesterday by Dale Campbell-Savours, the Labour backbencher, with his motion opposing the closure of the Campbell Soups factory in his constituency. It has won more cross-party support than any previous motion. Yet ultimately, protectionist populism leads nowhere. People may feel angry, but they want answers. How will they learn new skills? How will they be helped to look for a job? What aid will they be given to cover their mortgage?

The Labour Party is attempting to address those questions in a new way through its idea of a stakeholder economy. The Conservatives, so used to addressing the consumer and the shareholder, have yet to begin to address the modern worker.