Waking up to the morning of June 23, 2016 was the moment that changed our lives as the UK voted to leave the EU. The vote sent shockwaves through the political system and left an establishment unable to solve the crisis at hand, yet, through the messy uncertainty of Brexit, an element of our lives stood through. The British economy remained resilient trough the conundrums as the nation continued to attract investment, and employment and wage growth reached record highs. As Brexit approaches its endgame (yet again), it is worth noting what is on offer for our economy beyond the daunting B-word and what is at stake as we head to the polling booths for another general election.
Following their 2010 victory, The Conservatives enacted a series of austerity measures to balance the budget and ballooning deficit and, while it may seem unhelpful for an economy recovering from its worst recession in a century, the case for austerity was strong. Economies struggled across Europe as debt levels soared while, on the other hand, Britain recovered quickly from the crises in spite of lower government expenditure. Record levels of investment poured into the country through the first half of the decade and employment reached all-time highs as the government lowered taxes and withdrew from the economy. That’s not to say all was rosy as the unpopular austerity measures came at a human cost. Public services were stretched to the limit as the National Health Service, schools and infrastructure across the country saw falling standards and struggled with dwindling supplies and manpower.
Arguably, extra fiscal headroom after years of austerity and record low levels of interest rates need to be used to invest into the over-stretched public infrastructure, schools and hospitals across the country, particularly in the north of England. While the new Conservative leadership has to some extent been able to build their policies around these sound economic rationales, there are several misguided lights at the herald of the party. They have ripped up their fiscal rulebook, which does not necessarily bode well with voters who have suffered through years of austerity and made lousy promises on tax-cuts which will be almost impossible to pay for. The investment into public services falls far short of what voters want and what an economy losing its largest trading partner may need. While the Conservative Party have promised an extra 50,000 nurses in the NHS, policies such as these do not get into the heart of the problem. An unwillingness to spend on priorities like infrastructure and obsession with tax-cuts where not needed has turned now into the official Tory Mantra.
Far from the ‘Social Democratic’ agendas, Corbyn’s plans are far further left than Britain or indeed Europe has seen since the end of the Cold War. The Financial Time noted, “The tragedy of Mr. Corbyn’s Labour party, like so many populist movements, is that it does identify areas that genuinely need fixing” but reading through the article, one realises, Labour’s solutions to the problems are incomplete at best and costly mistakes at worst. The ‘n-word’ has time and time again been regarded as the solution to the railways and water and has now been extended to include energy companies and broadband. Again, these are key problem areas that need fixing but nationalisation as a solution is as bad as the problem itself. Benefits of privatisation include falling prices due to greater competition, greater efficiency and more consumer variety. There is a case for reregulation and investment, particularly for the railways but extending nationalisation to include broadband and energy is a manner of scaring businesses into submission, drying out investment and reducing efficiency and customer service in these areas. Broadband in the UK has been improving and prices have been falling as the barriers to entry have been cut, so nationalisation of broadband providers would push Britain backwards.
Claiming themselves to be ‘the new party of business’ ahead of the general election, the Liberal Democrat’s centrist policies on improving infrastructure with a 130 billion pounds investment and skills training have won approvals from the City of London and industries across the country. The right-wing of the party have managed to keep nationalisation fears at bay to attract investment whilst the left has ensured greater employee representation on the boards. The Liberal Democrats have swayed towards overhauling business rates to shift the fortunes of the high streets and pledges ranging from the electrification of the railways to enticing businesses to greater research and development spending. Branded now as the ‘anti-Brexit party’, the odds for Liberal Democratic victory, in this general election, are negligible but it is interesting to note is the moderating influence they could have as Kingmakers in a hung parliament and whether those voting Conservative as a safe bet against hard-left Labour have another, better alternative.