Is Britain on a downward spiral to stagnation or can it build on successes, tackle the big issues and so emerge the stronger? Some are pessimistic.
“Britain is becoming Italy – corrupt, moribund and weighed down with debt”, so says a headline of a business section article in the Sunday Telegraph of 16 January. The article bemoaned a range of problems besetting the UK, ranging from “energy markets”, “economic stagnation” and “eye-watering public debt” to “incompetent, disingenuous government”. The writer, Jeremy Warner, confesses to exaggeration to make an argument. Points to him for admitting it, but so often in the pandemic years has exaggeration – which can of course be false information – been used to make a point and so mislead.
Many journalists give depressingly negative impressions of aspects of UK life, and the many challenges being faced. That is easy to do. It should be remembered that many of these challenges are not local but universal, certainly in the democratic world, to large degree consequential on the pandemic and the bounce-back, and in part due to bad strategic planning and myopia in the past before the pandemic. Crisis management, rather than long term strategies and planning, are a Western malaise and a short-termist feature of Democracy that has been allowed, through weakness, to entrench itself. In a recent speech, Tony Blair is reported to envision a declining UK in all respects as seen in the 1970s, unless some possibly painful plans are adopted. Persuading the electorate to take some pain for long-term benefit will require strong and charismatic leadership.
Perhaps, in an effort to give hope, it is worth pointing out some facts which provide a background of some success in the UK as the problems of the future gather attention and the prime focus on Covid, it is hoped, fades.
ECONOMIC RECOVERY: mid-January saw reports of official statistics showing that the size of the UK economy, measured by GDP, had passed pre-pandemic levels in November 2021. Anti-Omicron measures may cause a wobble, but bounce-back is real. This is far earlier than the likes of the OECD and IMF were predicting not long ago which was that the UK would enter 2022 behind that level and perhaps not recover until 2023. UK growth, albeit its decline during Covid had been greater, is now at a higher rate than any major economy, and the UK’s recovery can be considered stronger than Germany’s.
TECHNOLOGY INVESTMENT: The UK is way ahead of any European country in private investment being made in technology. It is widely thought that Artificial Intelligence and the technology sector generally (whether in digital, biotech, energy or other sectors) and associated industries will drive future economic success, as well as solve the most critical problems such as carbon reduction. In 2021, venture capital investment in the UK was about 35 billion euro, considerably more than that in Germany and France combined. The Independent reports that the UK is the most advanced major economy in the world in communications technology, and fourth overall behind Iceland, Denmark and South Korea. That Google is investing in buying for $1 billion a West End development and expanding its UK workforce some 50% to 10,000 is testament to objective belief in the UK as a digital hub.
FOREIGN INVESTMENT SUCCESS: For a country such as the UK to succeed economically it needs foreign direct investment (FDI). The Department for International Trade recorded that analysis by the UN Conference for Trade and Development confirmed the UK as a leading country for FDI in 2020, with total FDI stock of $2.1 trillion, second only to the USA. This is despite the pandemic, despite the considerable damage done to the nation’s finances in many respects and despite, according to many economic commentators who seem to be wishing the UK to fail, the UK being at risk of becoming a basket case economically.
EMPLOYMENT SUCCESS: It was widely predicted that following the end of the furlough scheme, by which so many businesses were saved, unemployment would spike up significantly. It did no such thing. Comparisons of levels of unemployment are made more difficult by pandemic effects, such as hundreds of thousands of people deciding not to return to work at all. However, by any measure, with unemployment at about 4.2%, slightly above pre-pandemic levels, and with job vacancies at record highs, the UK’s measures to protect employment give cause for celebration. There is an issue around people having the right skills in the right locations to meet the vacancies, but businesses and Government need to work together to solve that as soon as possible. With a labour shortage, perhaps wages will rise and combat rising living costs, overall perhaps a good thing, but inflation could be the price.
ANTI-PANDEMIC MEASURES ARE A SUCCESS STORY: The pandemic has caused considerable suffering in the UK and similarly in all Western democracies. Covid has not gone away, and all countries have made mistakes. Maybe lockdowns are a mistake. Without doubt however, the UK leads the way in its success with its vaccination strategy and programmes. Bold decisions to minimise restrictions have proved correct, even though it would have been easy just to bow to sage safety first and some exaggerated modelling which some media grabbed with both hands, hungry for doom, and to keep people under house arrest for longer periods: a policy advocated by Government political opponents. Vaccination, therapeutics and testing capability are now a success.
The UK’s ability to make the right calls on the tough decisions, accepting balanced risk, has put the country in a position perhaps better than most countries in Europe as regards Covid and the recovery, and in its ability to address big challenges. Some in the UK, such as the Times editorial, challenge whether now is the right time to relax restrictions so broadly while infection rates remain high, and it may be reasonable to ask that question. The UK infection rates are exaggerated compared to many countries because, for example, in the UK the amount of testing is a multiple of that of many other countries. If hospitalisations seem high, it is notable that some 40% are people in hospital “with”, not “because of”, Covid. With a populace champing for freedom, it is also reasonable to allow individual people and businesses to take responsibility as to precautions that suit them on balance. Erring on the side of freedom is perhaps overdue. Would it not be a mistake to go through life obsessed with “keeping safe”? Is it not time too that governments stopped the untrue justification for authoritarianism that it is their job to keep all people safe at all times? From enemies abroad yes, but not all life’s risks.
CONFRONTING ELEPHANTS
Having established that some successes at least give cause for belief in the UK, of course there are major challenges and problems which have to be faced; plans to address them are required and serious and sustained action, short and long term, are needed to meet them. This would always have been the case, but the pandemic has caused changes in the environment, exposed weaknesses and sapped resources and problems have ballooned as a result. Inflation has been a stranger to the UK for many years, but now there is a risk of inflation rates which will seriously diminish people’s wealth and the spending power of wages. The combination of the rises in energy costs, and of distribution, as well as supply shortages, both of materials and labour, in Western democracies, are adversely impacting standards of living. Tax rises announced to help fund the NHS and social care could add to pressure. Wages perhaps need to rise considerably in some sectors.
Add the need to continue measures to combat climate change for example, which may exacerbate short term financial damage, and some compromises need to be made. Domestic issues such as the elephant in the room that is the NHS must be talked about and addressed. So many commentators, including most recently Tony Blair, echo the need to mend the performance of the NHS and its funding structures. The NHS simply absorbs all money pumped into it and cries for more. Some call for Government to release the shackles on entrepreneurialism, reduce taxes to bring in more revenue and inspire people to work to keep more of their earnings. Unleashing the private sector and productivity are essentials. Education and training so that people have the skills to maximise technology, let alone survive in a complex modern world, require serious attention. Others want big state, believing the state knows best and can ensure greater fairness and equality. As well as the UK, every Western democracy faces massive domestic decisions, with extreme opposite positions clashing to prevent compromise and cooperation.
These and many other bullets to be bitten and elephants to be confronted sit against a backdrop of malevolent nations, dominated by autocrats, seeking to disrupt democracies every step of the way. Russia threatens war in the Ukraine. They and China and others, such as Iran and North Korea, create instability as a matter of course. Cyber-attacks, sponsored by national governments, are everyday occurrences. The unforeseeable mega events, black swans, are bound to occur, just as Covid caught the world napping, to ensure all plans will be knocked off course and have to recover. What’s new?
LEADERSHIP MUST CARRY WITH IT A UNIFIED PEOPLE
Calm heads are needed. Leaders who make decisions and drivers who implement them are needed. In the UK tales of a stagnating UK need to be leavened by the opportunities which successes represent, so that balanced assessments and choices are made. If there must be pain, there must also be long term gain for the UK as a whole. Always the most innocent and weakest must be at front of minds. Is it not an historic norm that, after transformational events like war or pandemics, people manage to endure some adversity, and do not expect a bed of roses to be provided to them? Rather, leadership’s job is to empower people to rise to the challenge in unity. Holy cows will need to be slain. Ultimately is it not the case that people in the UK will accept plans which make sense and are honestly explained? Will they not then pull mostly in the same direction, if some greater good and prosperity can be persuasively presented?
Before the pandemic, perhaps there was already established to some extent a culture of blame for misfortune and an expectation that somebody else, normally government, would bail people out. The pandemic may have reinforced that irresponsible expectation as government did incur huge debt and was the only recourse available to solve pandemic issues, medical and economic. That culture perhaps needs reversal.
