The first shop I went into after a brief holiday was our local delicatessen. After the customary exchange of pleasantries the shopkeeper told me his week had started, and been ruined, with an alarm at about 7.30am the previous Monday, informing him that his shop had been broken into.
The shopkeeper could see on a video link that the burglar was still there, and immediately telephoned the local police station in Islington, London. No one came, and the burglar got away with hundreds in cash and some goods.
I recount this incident because nobody I have told about it is at all surprised. They seem to be a regular occurrence in austerity Britain. The police, in common with other public services, are starved of resources that were once taken for granted.
And what do we hear day after day from the new prime minister, the chancellor and their colleagues? Yes: the inheritance is appalling, much worse than they expected. So how do they plan to deal with it? With more cuts, a continuation of the austerity they were good at attacking when in opposition.
Now, I don’t know about you, dear reader, but, speaking for myself, I tend to divide people into two categories: those who lift your spirits; and those who do not.
Labour’s election victory certainly lifted my spirits – and , indeed, those of most people I encountered. The comeuppance of governments led by David Cameron, Boris Johnson, Liz Truss and Rishi Sunak was long overdue. And although it is fashionable to lay much of the blame on the egregious Truss, the serious damage was wrought by Cameron, who gave his blessing to Chancellor Osborne’s austerity programme and made the historic misjudgment of calling the EU referendum; and Johnson, who devalued standards in public life.
Alas, the new government has not lifted our spirits for long. They seem to have gone out of their way to make people as miserable as possible. They say they want growth, but they take decisions, both with regard to consumer and business confidence, that seem guaranteed to inhibit it.
So how to deal with the inheritance of austerity, Brexit and sluggish growth? The great economist John Maynard Keynes spoke of the need in depressed times to foster “animal spirits”. You do not do this by promising – perhaps I should say threatening – yet more cuts to public services. Nor is this achieved by ruling out a return to the European customs union and single market.
Starmer’s promise of closer ties with the rest of Europe is all very well and welcome, but does not go nearly far enough when it comes to the trading links on which growth depends. The so called twin-track plan for global trade deals and closer EU ties verges on the preposterous. The global trade deals depend on Labour’s meek acceptance of the Conservatives’ alternative to the European customs union and single market, namely the so-called Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
According to the business and trade secretary Jonathan Reynolds, this is a “real win” for British exporters. But the Office for Budget Responsibility calculates that membership would add a mere 0.04% to UK output (GDP) over 15 years. This is derisory compared with the loss to our trade as a result of Brexit. And environmentalists have already made the point that shifting the balance of trade to far-off economies is hardly eco-friendly.
Starmer may be promising to “turn a corner on Brexit” and rebuild relationships, but decisively ruling out what matters for our trading relationship misses the point. Moreover his opposition to restoring free movement in Europe for under 30-year-olds is plain insulting to the younger generation. And the loss of free movement in general is damaging many businesses.
The British economy evolved into being an important part of the wider European economy after our entry into the EEC in 1973 and, more so, with membership of the single market from 1993. Brexit has been a recipe for chaos, damaging small and medium-sized businesses in particular. Many of these have given up the ghost when it comes to exporting to our nearest trading neighbours.
The government is desperate for new investment, but we can no longer call on the European Investment Bank, which used to make a huge contribution to infrastructure projects all over the UK.
I have referred before to the importance of taking a long-term view of the eventual benefits of productive public investment projects. In her Mais lecture Rachel Reeves seemed to take an enlightened view to borrowing, in contrast to Treasury penny-pinching. I commend to her a passage in Proust’s Within a Budding Grove, in which the retired diplomatist, M de Norpois, quotes a French statesman: “Give me a good policy and I will give you good finances.”
