‘Boosterism’, as practised by recent UK governments, has gone from gently ‘bigging-up’ the nation to a degree of exaggeration so overinflated that it is tantamount to falsehood. Nowhere is this more evident than in how the Conservatives have talked up the performance of the UK economy. As a dramatic economic storm is about to hit the UK, the hollowness of Tory boasting is about to be found out.
A history of Conservative boosterism
In 2011 when he was chancellor, George Osborne stated: “The positive news is that the British economy is continuing to grow and is creating jobs. And it is positive news too that at a time of real international stability we are a safe haven in the storm.” As a description of a period of exceptionally low economic growth, this is a blatant early example of boosterism.
More recently (October 2021), Boris Johnson was interviewed by the BBC about the economy, including concerns regarding fuel shortages, gaps on supermarket shelves, rising inflation and slowing economic growth. The prime minister insisted he was “not worried”.
As reported by CNN, Johnson had gone on to make “bold but narrow claims” about the strength of the UK economy. Specifically, he pointed out the United Kingdom was at that date the “fastest-growing” of the G7 grouping of the world’s most advanced economies”. This claim was briefly factually correct. The UK economy had collapsed more deeply than all other economies in the G7 and on the rebound was indeed pre-set to grow more quickly (think bungee jumping – if your bungee is longer than your neighbour’s you will drop deeper and come back faster; your faster recovery reflects the depth of your fall). Earlier this year the International Monetary Fund gave its estimates for economic growth across the G7, the UK was predicted to perform the worst. Again – boosterism obscuring reality.
The reality of the UK’s economic performance
Nations become wealthier by increasing their productivity, that is, increasing output per worker hour. Taking international comparisons over a 15-year period, the UK performance has been truly awful.
The global financial crisis of 2007 onwards adversely impacted productivity growth in all nations and growth fell below the long-run trend line. By 2015 this had left a ‘productivity gap’ – output per worker hour was lower in all G7 countries in 2015 than would have been the case if pre-downturn trends had continued since 2007. However, we may note that the UK’s productivity gap of nearly 18 percentage points was the largest in the G7 and is double the average of 9 percentage points across the rest of the G7. In short, productivity had recovered much faster in the other six members of the G7.
Post-pandemic recovery in the UK has been slow. Output per hour worked in Quarter 1 (Jan to Mar) 2022 was 1.7% higher than the average level in 2019, prior to the coronavirus pandemic. Since 1945 the average annual long-term increase in productivity in the UK had been between 2% and 2.5%. Here we see growth of just 1.7% over a three-year period.
The UK’s international trade record: appalling
How does the UK economy compare in matters of international trade? How is our balance of payments?
Here the record is frankly appalling. In just the first quarter of 2022 the deficit on current account was £51,673 bn. Records show a history of deficits, worsening since the Conservatives took over the helm of the economy in 2010.
We have managed to pay our way only by selling off UK assets. As Larry Elliott wrote in The Guardian in 2016, “Foreign investors have to be willing to allow Britain to live beyond its means. Thus far they have been prepared to do so but they could pull the plug at any time”. As a nation we have become dependent on “the kindness of strangers”.
It is beautifully ironic that so many UK utilities such as water, energy and the railways were privatised under Thatcher only to be purchased by foreign governments. Jim Armitage, writing in The Independent in 2014, reported “In the past two years alone, overseas taxpayers have taken dividends totalling nearly £1bn from companies which make their profits from UK households and passengers”. Armitage’s research found that at that time 20 UK national train lines were run or owned by foreign state-owned or controlled companies.
“Take care of employment and the budget will take care of itself”, wrote the great economist John Maynard Keynes. So perhaps we need not fixate too much on the government’s budget deficit and the state of the national debt. Nevertheless, we find UK general government gross debt (the national debt) was £2,365.4bn at the end of Quarter 1 (Jan to Mar) 2022, equivalent to 99.6% of gross domestic product (GDP). At the same point UK general government deficit (or net borrowing) was £15.8bn in Quarter 1 of 2022 – equivalent to 2.6% of GDP. These are not good figures.
The ‘good economy’
What would a good, strong economy – an economy in no need of hollow boosterism – actually look like?
First it would be a sustainable economy looking to achieve growth only where the state of the planet is not prejudiced (what are the Tories doing about net zero – apart from complaining about it?).
It would be a fair economy with no wide dispersion of income and wealth. Social scientists Wilkinson and Pickett make a powerful case for more equal societies being healthier, happier ones, but over the years Conservatives have made the UK less equal and more divided.
Taxation would be progressive, targeting negatives such as pollution rather than positives such as employment.
The economy would be broad-based (i.e., not so heavily dependent on financial services as is the case with the UK today) and more balanced regionally.
Public attitudes to taxation would not be negative but would see the benefit of having a healthy balance between private consumption and public provision, as US Supreme Court Justice, Oliver Wendell Holmes contends, “Taxation is the price we pay for civilisation”. Hence, we could fund a decent welfare and NHS safety net.
The labour market would be more equally balanced, with workers seen as co-partners with entrepreneurs in the creation of sustainable wealth (a dose of German Mitbestimmung). This would help to boost productivity.
There would be quality employment for those wishing to work, remembering Wilde’s dictum “Work is the curse of the drinking class” .
There would be a reasonable balance in the international balance of payments (but see above!).
As an early step, the UK would re-join the EU single market.
Creating a good economy
There are certain conditions that would need to be put in place for the achievement of this type of healthy economy – for example, equality of access to education and affordable housing, a strong social security network, proper regulation of employment, and a government emphasis on integrity rather than pork-barrel politics. Re-joining the single market would, at a stroke, resolve the issues with the Northern Ireland protocol and immediately render the UK more attractive to foreign investment. The UK currently falls short on all of the necessary underpinnings, resulting in a failing economic reality that the government does everything possible to hide from people.
But, with the huge financial challenges now hitting the country, maybe boosterism has had its day. Perhaps we’re all becoming wise to the fact that this government’s pronouncements on the state of the nation are at best only partially correct, at worst complete distortions of reality.
There are better ways to run our economy and, as voters, we can demand that they happen.