Do you know what I mean when I say that there are times when one sees a newspaper article, or at least its headline, and one knows that one does not have to read it in order to roughly know what it is going to say. So it was yesterday when the FT provided the following: “The return of the ‘British disease’”. The piece is headed with the by-line “The editorial board” and begins:
“In the 1970s, the UK was known as the “sick man of Europe”. Today it seems to be the sick man of the developed world. The IMF forecast this week that Britain would be the only leading economy to shrink this year. Its gloomy outlook was published, by coincidence, on the third anniversary of the UK’s exit from the EU. The Brexit deal is by no means the only reason for Britain’s underperformance, but it is a factor. Finding ways to soften its impact needs to be part of a broader strategy to rekindle growth. The IMF may be overly pessimistic. But the UK is undoubtedly lagging behind its peers as it suffers the worst of two economic worlds. As in the US, its shrunken post-pandemic workforce has left it with a labour market squeeze. And, like the rest of Europe, Britain is exposed to sky-high energy prices. The disastrous “mini” Budget of Liz Truss’s short premiership led to a rise in borrowing costs which has eased but is still affecting families and businesses.”
The old post-hippy cry, the one that is supposed to describe the emergence of youth culture, and is much loved by baby boomers is: “If you can remember the 60s, you weren’t there”. Yeah, man, groovy. Fact is of course that most of what we today think of as that age of love and music and smoking joints did in fact not occur in the ‘60s but in the ‘70s. The age of innocence might have died along with Sharon Tate at the hands of Charles Manson in August 1969 – a month later the Beatles broke up – but the jeans and tie-died T-shirts and the coalescence around the anti-Vietnam movement are decidedly 1970s. There was plenty that made the 70s worthy although in most people’s memories it was all strikes, strife and, as a university student, being called upon every weekend to go on a protest march for or against something or other. And of course, there were the flared trousers.
That said, the key event of the 1970s also did in fact not take place until 1984 and that was the epic year-long strike by the coal miners which pitched Margaret Thatcher – elected Prime Minister in 1979 – against the NUM and its imperious leader Arthur Scargill. That strike played out like a civil war to an extent that when Thatcher died in 2013, the sub-editor at the International Financing Review who was in fact a dyed in the wool Marxist and who handled my daily pieces tweeted “Ding, dong, the witch is dead”.
The 1970s were not a fun time although the difference to today is remarkable. The strikes which are ongoing in this country are more or less entirely concentrated in the public sector or, as in the case of the railways, in a government licensed public service. It should not be forgotten, by the way, that except for the short four years between 1970 and 1974 during which Ted Heath was PM, the country had been run by Labour governments under Harold Wilson, who had already been PM from 1964 to 1970, and Jim Callaghan, the latter of whom was in Number 10 throughout the famed Winter of Discontent.
But has the “British disease” returned or might it maybe never have gone away? Might Brexit have, by limiting the free movement of labour and by having excluded vast swathes of EU workers at both the skilled and unskilled end of the value chain, done nothing other than to expose something that had always been there but hidden from view? The wording of the FT piece worries me. It talks of a new strategies being required in order to rekindle growth. This is redolent of Harold Wilson who in 1963 gave his legendary party conference speech in Scarborough in which he pronounced “In all our plans for the future, we are re-defining and we are re-stating our Socialism in terms of the scientific revolution. But that revolution cannot become a reality unless we are prepared to make far-reaching changes in economic and social attitudes which permeate our whole system of society. The Britain that is going to be forged in the white heat of this revolution will be no place for restrictive practices or for outdated methods on either side of industry.”
It would be hard to argue that it was not until over 20 years later and under the hated Thatcher that “restrictive practices or… outdated methods” were finally brought to heel. At the end of the day, the key measure of future growth is in workforce productivity. Not only did the UK, along with the US, record the highest level of withdrawals of workers from the labour force in the aftermath of the pandemic but I also read somewhere – and of course I believe everything I read – that we also have the highest numbers of people working from home. In February 2020, that’s when the pandemic formally took hold, only 5.7% of the UK’s workforce reported working from home. The most current figure is most probably in the mid-40s.
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There are few surveys which report a fall in productivity in WFH – those interviewed who love it are barely going to suggest that they achieve less – although I was not alone in observing in early 2020 that workers went into lockdown riding on the momentum of work in progress but that in time that would come to an end and that, as experienced people left the workforce, they would not have been able to pass their skills onto others whom they only saw spasmodically, if at all. In other words, the much-vaunted improvement in productivity would eventually and inevitably begin to fade.
I can’t remember how long ago it is that trading floors went paperless but in a totally screen-based work environment the location becomes secondary. Government agencies, however, still send out all kinds of stuff in print – HM Government surely remains the last really big user of the Royal Mail – and expect it back, signed and dated. But what happens to all those forms if and when the officials to whom the have been addressed are not in the office at which they arrive remains one of the great contemporary mysteries. I digress.
Every now and then one trips of Nouriel Roubini, the most bearish of economists and the one who might as well wander up and down Wall Street as a sandwich man carrying boards bearing the inscription “The End is Nigh”. Roubini’s bugbear is debt and the manner in which it has consistently and progressively increased since the last really great economic crisis in the 1970s. His contention is that the ammunition at the hands of the monetary authorities, which should have been held in reserve for crises, was puffed away during periods of growth and that the arsenal is now depleted. There is something innately Keynesian in that view.
Brexit was supposed to open opportunities for the ambitious – it was Gordon Brown who as Prime Minster coined the phrase “British jobs for British people” which would be fine if British people actually showed up to take the work on offer.
I am also intrigued by the FT’s line: “The disastrous “mini” Budget of Liz Truss’s short premiership led to a rise in borrowing costs which has eased but is still affecting families and businesses.” Truss was Prime Minster for all of 49 days. Her Chancellor of choice Kwasi Kwarteng only made it to 38 days. The so-called “mini” budget was without doubt a fiasco but any increase in the cost of money once the initial earth quake had subsided has nothing to do with Truss. I disliked her long before she had thrown het hat into the ring to replace Boris as leader of the Conservative party – of which I am, by the way and despite many people’s incorrect impression, not a member – but even I must stand up for her when it comes to casting her as the scapegoat. Not one iota of the budget was ever implemented and although global markets took fright at her ill-considered plans, the worst that can be held against them is that those markets were perplexed that such cloud-cuckoo-land thinking can even take root within the upper echelons of the British political classes.
I was yesterday speaking to a partner in one of the country’s larger wealth management firms. He is deeply concerned but in his own words gets paid to highlight not the cloud but the silver lining. He would no doubt take Roubini’s position that the socio-economic edifice is stretched to breaking point and that there is now a lack of flex in the system which might enable the authorities to counter another possible crisis. Roubini is not shy in comparing and contrasting, not equating, the current environment to that of the 1970s and wonders where alternative solutions might be found. He might just as well don a tail and horns for his frank usage of the term “stagflation”, a word which was all over the media and ever-present in research papers until it actually began to show signs of emerging.
And finally to King Charles and his decision to take tea with Ursula von der Leyen when she was passing through on her way to finalise the Windsor Framework. Is it a political faux-pas by the sovereign to show solidarity with our closest neighbours and to be mildly pleased that one of the most pernicious issues to trouble our relationship since the signing of the Withdrawal Agreement seems to have found something of a workable solution? The media have since Mexit found lots of cheap copy in criticising everything and anything connected to “the firm”. When he doesn’t, he’s chastised for being disinterested, distant and aloof. When he does, he’s wrong too. We all knew that Her Majesty would be a hard act to follow. In my humble opinion he has so far done rather well at putting on his own shoes, rather than trying to fill hers. God save the King.
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