There is a Solution to this Economic Shambles

Do you remember a bygone era when a new appointee, be they a prime minister or football manager, would be given time to get their feet under the table before their employers started to plan their exit? The UK is in a state of full-blown economic turmoil and, following a package inflating the burgeoning balances of energy companies and a mini-budget inflating the burgeoning balances of wealthy people, which was not customarily subjected to independent scrutiny before presentation, many Conservative MPs are already conspiring against Liz Truss.

However, when you capsize an economy with a significant transfer of wealth via tax cuts to rich people using “KamiKwasi” measures which sends the pound plummeting to historically low levels as already unassailable government borrowing spirals to an all-time high and the Bank of England intervenes because there is a “material risk to financial stability”, you can understand why letters of no confidence are making their way to Sir Graham Brady. Yesterday, speaking to Laura Kuenssberg, Ms Truss said: “I accept we should have laid the ground better.”

This article appeared in the print edition of the Evening Telegraph on 03/10/2022

But it is not great on the other side either. In June, I co-chaired a discussion in Dundee with The Courier columnist and podcaster Jim Spence. During the discussion, Jim lamented the lack of intellectual rigour in modern Scottish and UK politics. Watching only a few excerpts of the Labour conference last week reminded me of his remarks. As the Conservative Party lurches from calamity to catastrophe in search of cataclysm, Labour is drunk on the fumes of their own hubris having assumed current polling is somehow proportionate to their level of competence.

Rather than set out an alternative prospectus at their UK conference last week, Deputy Leader Angela Rayner epitomised this illiteracy with a speech full of slurs and soundbites while the backyard bonfire spiralled out of control and into the neighbourhood. Since 1940, we have levitated between Labour and Conservative governments every half dozen or dozen years and any future election hinges not upon the attractiveness of our opposition but the ugliness of our government. YouGov indicates an election tomorrow would return a Labour majority of 346.  

Can you recall the last point in UK history when a leader carefully and studiously led the country out from a period of political and economic maelstrom in any way resonant to the one we are currently in and into a kind of social equilibrium? I certainly could not recall any such leadership at any point during my lifetime and, therefore, consulted my extensive political library last week. In doing so, I happened upon the second Earl of Liverpool – Robert Banks Jenkinson – the third-longest serving UK Prime Minister between June 1812 and April 1827.

Liverpool oversaw the successful end of the Napoleonic Wars and led Britain into a period of peace. His cautious economic reforms brought an end to a nine-year-recession directly caused by the wars and he set the nation’s future economic course. So successful was his leadership that the UK did not fall into another recession until 30 years after he left office – the last time we had three decades without a recession. Sir Peter Riddell wrote: “Liverpool was neither charismatic nor inspiring [but] showed personal and financial integrity unusual for the time.”

What evades me about our current economic system is we have a government borrowing money to fund growth and a central bank buying bonds from itself it will later sell, presumably also to itself, to restore order. All these economic inflections are funded by debt – as much of an oxymoron as that so obviously is – and, as long as a buyer is subject to a lender, the house of cards must eventually come down. It may sound old-fashioned but we really could so with some fiscal responsibility – spending only what we have – to bring some order to this shop.

How conservative of me!

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