“There seems to be something wrong with our bloody ships today,” said Vice Admiral David Beatty as his ships exploded around him at the height of the Battle of Jutland in May 1916. We are not yet at the stage where banks are going down like dominoes but there is enough spume flying around to make investors flee the sector and to make policymakers increasingly nervous.
In recent days both Chancellor Scholz of Germany and President Biden of the United States have tried to make calming and reassuring noises about the banking sector. It is never a good sign for a sector when senior politicians feel they have to make reassuring noises about it.
President Biden insists that the issues affecting banks in the US are different to the ones affecting the sector in Europe. He may be right. He may not be. There is no reason to be confident he really knows, and confidence is the key. Chancellor Scholz was radiating everything but confidence when he tried to talk up Deutsche Bank’s prospects over the weekend.
Having successfully brokered the deal that saved the UK branch of the California tech bank SVB, the Prime Minister, Rishi Sunak, has observed a studious silence on the increasingly dark cloud hanging over the banks. As a former banker himself, however, the seriousness of another banking crisis will not have eluded him. There is very little sympathy for the banks and voters would not take well having to stand surety for the sector once again. London’s, and therefore the UK’s, reliance on the finance sector leaves the domestic economy especially vulnerable to such concern.
Michael Gove’s comments over the weekend that the UK economy has suffered material harm as a result of both the pandemic and the war in Ukraine is a frank admission of the challenge facing the economy. Gove is among the most able and fluent politicians of his generation. He will know too, though unwilling to say it, that Brexit has taken a toll too on Britain’s economy. The OBR estimates the economy is 4% smaller than it would have been had Britain remained a member of the European Union. Brexit is a fact but politics being what it is, no senior politician or major political party is willing to discuss the toll being outside of the world’s biggest market is taking on the economy. It is the fact that dares not speak its name. Britain’s current political debate is therefore taking place in a sort of Alice in Wonderland state of denial about what is really going on with the economy and the policy initiatives needed to reverse the damage. The current policy consensus across Westminster that taxes need to continue to increase, public spending needs to continue to grow, and that government borrowing at current levels is sustainable while the economy shrinks is obviously a direction the country needs to be moved away from as quickly as possible.
At some point the political habit of asking what we voters want and then serving it up to us is going to have to give way to our political masters setting out the challenges and the opportunities we face, outlining their policies of how to address them and then seek to persuade us to support them. It’s an old fashioned approach to politics of course, and one President Macron is struggling with over in France as he seeks to persuade the French of the need to work a year or two longer before they receive their pension. But in the end pandering needs to give way to principle, the pollster needs to take a seat behind principle, and British politics needs to return to being a clash of competing ideas and to stop being a contest about who can coin the snappiest soundbite.
Such a change in practice and habit will take political leadership of a high order. The House of Commons Library, an invaluable source of independent political and policy research, has published a fascinating paper on election statistics for every election from 1918-2022. It charts the changing face of those we send to Parliament to represent us. Among its many findings several facts stand out. The number of working class people we elect has reduced to zero. The number of professional people, barristers, teachers, and the like, elected has decreased over time, while the number of people with political experience or close connection has increased dramatically. The political parties are now moving at pace to select their candidates for the next General Election. It is already apparent that the number of people being selected for all parties as candidates who have served or are serving as local councillors is significant. Serving as a local councillor is a fine and important thing to do, but it is in no way a qualification for service at Westminster. Being an MP and being a councillor are quite different roles. Neither is it healthy for local residents to have a representative who has at least one eye focussed on “moving up”. We need many more people with a broad and varied experience of life in Parliament and far fewer “professional politicians”. Maybe then we would have the people with the confidence and wisdom to escape reliance on the triangulators and lead us with the ambition and confidence we need?
The Coronation, just six weeks away, offers a rare opportunity to reset the national narrative. It will be a splendid occasion. We will not see pomp and pageantry on the scale of 1953. What we will see is the solemn service of Coronation and the accompanying celebrations suited for our own time. Who will be the national leader who frames the moment, seizes the national conversation and sets the path for the new reign?
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