A global downturn looks likely, yet it's being totally ignored in the UK election
For all the marked policy differences between the different parties in the UK election, they share a common blindspot. They all seem to assume that the UK is the sole determiner of its economic fate. There is nothing in the party manifestos about how they would respond to the very real threat of another major downturn.
The IMF is predicting that this year will have been the worst for the global economy since 2009, and sees little room for improvement next year. Moody’s, the credit ratings agency, is similarly bearish, saying that “recession risks are building” thanks in particular to the US-China trade war. Or there’s the UN’s trade and development arm, which sees a 2020 recession as a “clear and present danger”.
Others, such as Goldman Sachs, are being more optimistic, but the silence from the UK’s political parties is still remarkable – not to mention the media. Whether it’s the Conservatives with their plan to “get Brexit done” or Labour’s “time for real change”, the whole political establishment seems to be singing from the same hymn sheet. They seem to believe they can pursue their various agendas as if the global economy will remain stable and growing.
In previous elections, we have seen both the Left and Right use recessions for political gain. Indeed, in the later years of the 20th century, British politics was largely defined by how the Conservatives and Labour took political advantage of economic crises.
Starting in 1979, Margaret Thatcher used the effects of global economic stagnation to call for nothing short of a free-market economic revolution. Less than 20 years later, Tony Blair drew on the poor economic performance of the reigning Tory government, which had been linked to the recession of the early 1990s, to demand a “third way” for British politics – albeit the rhetoric turned out to be more dramatic than what New Labour did in office.
When the 2007-08 financial crisis loomed large over British politics, the Conservatives used it as an opportunity to promote economic austerity. Right at the start of the party’s 2010 election manifesto, David Cameron’s message said:
Today the challenges facing Britain are immense. Our economy is overwhelmed by debt, our social fabric is frayed and our political system has betrayed the people. But these problems can be overcome if we pull together and work together. If we remember that we are all in this together.
The results of austerity turned out to be seismic, of course: it increased UK inequality and poverty, which in turn catalysed the Brexit victory and a genuinely progressive movement for social democracy in the Labour party. This makes it all the more surprising that politicians are paying such little attention to the prospect of an economic downturn of similar proportions – particularly with the Bank of England base rate already too low to leave much room to stimulate demand.
The recovery trap
Politicians should be learning the critical lessons for how their predecessors addressed the previous global crash. Directly after the events of 2007-08, political leaders and commentators from across the ideological spectrum were saying a “paradigm shift” was urgently required. This would have involved moving the economic orthodoxy away from efficient markets and deregulation towards something that paid more attention to overall debt levels and inequality.
In the proceeding decade, however, the policies of those in power have been more about rescuing the status quo than recrafting a broken economic system. Uncovered documents revealed, for instance, that much of Barack Obama’s incoming administration in 2008 was suggested by an executive at Citibank. This perhaps helps to explain why the bailouts were focused on saving Wall Street rather than Main Street, while the likes of the UK followed suit.
Either way, this response typifies how economic crises tend to promote an understandable but dangerous focus on “recovery”. These are built on widespread desires to return to a golden age of stability, nostalgically embracing the past. In the UK in 2010, for instance, Labour’s proposals sought to return the country to its recently lost economic prosperity, while the Conservatives harkened back even further to a time of common sacrifice rooted in the national unity of World War II.
The problem with a crisis narrative is that it is inherently conservative – focused on saving the current order rather than radically improving it. In the midst of the 2019 UK election, the same issues are bubbling just under the surface. Yet the parties are turning a blind eye to economic realities and looking backwards at the same time.
They want to return us to an age when the UK controlled its own economic destiny through renewing the nation’s sovereignty: the Conservatives promising to make the UK free and independent to negotiate its own trade deals, or Labour promising to build 21st century socialism in one country.
In truth, both ideas are fantasies in an interconnected global economy. The same could be said of calls from the likes of the Lib Dems to simply remain in the EU, thereby continuing to support a status quo that serves the few at the expense of the many. Perhaps all these approaches are about trying to create a sense of control in a globalised world and international market that feels increasingly uncontrollable.
All the same, the parties should be honest with the British people and prepare them for how little power any single nation has within a competitive and often extremely predatory international marketplace.
At the very least, politicians should be debating how best the country can prepare for a potential economic downturn. As I have argued elsewhere, a truly transformational set of policy proposals would be outlining innovative ways to work with other governments and social movements to try and turn such downturns into a thing of the past. Instead, the electorate are being offered something comforting but ultimately delusional. Much of it will probably matter very little in another economic crisis. It is very strange to watch this prospect being completely ignored during the election.