Britain's uncertain future
- By Heiko Khoo
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E-mail China.org.cn, October 20, 2016
The attempt by Britain's Conservative Party in government to negotiate Britain's departure from the European Union is degenerating into a chaotic farce. With a sinking currency, there is a widespread sense of instability and uncertainty permeating the upper echelons of the business community. Now, the new Prime Minister Theresa May confronts problems that will undermine her initial popularity.
When Britain voted to leave the European Union in June this year, it caused a sea change in politics, economics and much else besides. The 52-48 percent vote to leave the EU led to the immediate resignation of the Conservative Prime Minister David Cameron. After a nasty backstabbing tussle amongst the Conservative Party's Members of Parliament, Theresa May was then crowned as the new leader and Prime Minister. May is only the second female to hold the top job in Britain, the previous being Margaret Thatcher, also a Conservative.
Pressure to call the referendum originated from the far right of conservative opinion. The campaign was spearheaded by the U.K. Independence Party who together with the majority of the mass media persistently stoked up the issue of sovereignty and immigration for two decades or more. To head off this pressure and the threat it represented for the Conservative Party's electoral base, Cameron took a massive gamble and promised a referendum on EU membership in the 2015 general election. His assumption was that with the political establishment massed behind him, the people would be scared into voting to remain in the EU for fear of the unknown. What a colossal miscalculation that turned out to be!
If fear of a growing right wing mood among their supporters shadowed Conservative MPs and caused them to reshape their language, policies and leadership, it is fear of radicalization among left-wing voters that now haunts Labour Party MPs. The Labour Left led by Jeremy Corbyn has once again overwhelmed his supposedly "moderate" opposition within the Party -- the second time within a year. It is self-evident from these developments that political polarization is not simply the product of ideological debate. Rather, these heightened tensions in Britain are rooted in the sharpening of contradictions between social classes as the rich get richer and the poor poorer. Insecurity is spread widely across the population.
This conclusion has been strongly reinforced by data published on September 29 by the Money Advice Service showing that some 44 percent of the adult U.K. population now has less than ?100 in savings - barely enough to pay for the basics of life for a few days! Even in wealthy London, 42 percent of people have less than ?100 in the bank, highlighting the massive inequality that now exists in the nation's capital. What a miserable indictment of Britain's "enterprise economy."
Another indicator of the growing inequality in British society lies in the rapidly growing housing crisis. After the Great Recession of 2008-9, the price of house ownership - that badge of honor of every aspirant middle class Brit - has continued to soar. It is now out of reach of the ordinary person who is simultaneously facing downward pressures on wages, worsening working conditions, and often savage social spending cuts.
Britain today is a textbook example of Marx's prediction in the Communist Manifesto that capitalism periodically drives the middle layers down into the working class. Yet, mainstream economists, sociologists, journalists and politicians rejected this theory of proletarianization outright only a few years back.
We only have to look behind the raw statistics to see this process in action. While there are over 5 million businesses registered in the U.K., only 1.1 million of them employ anyone at all. The rest are really sole traders. This is also true of the 1.7 million new businesses setup since 2000. Indeed, many of these "entrepreneurs" are forced to claim state financial support just to pay for the basics of life, only assuming a corporate identity in order to minimize their potential tax burden.
At the other end of the spectrum, a total of 10 million, or 40 percent of all non-state employees work for just 7000 private companies. And within this number just 100 big firms employ 5.6 million workers and shape the whole structure of the labor market and the overall economy.
A major factor in the U.K.'s vote to leave the European Union was the issue of immigration. Undoubtedly, there are parts of the country where migration from Europe has appeared to put a strain on local resources, while the idea that terrorism is linked to refugees has encouraged racism and violence. We are also in times where "austerity" is said to be the only possible economic policy open to government. So, where cuts in services take place side by side with rising immigration, racial tension inevitably escalates.
But let us not forget that it was the mighty banking sector that provoked the world economic crisis, a sector that was kindly bailed out in 2008 at the expense of the taxpayers of today and tomorrow. Notably, no prison sentences were meted out to even the most transparent banking fraudsters, despite their reckless disregard for society and their open manipulation of the law.
In her recent pronouncements, Prime Minister Theresa May has declared that the use of Article 50, the regulation that is needed to trigger a two-year process of formally leaving the EU, will start by March 2017. The new government leadership, while identifying with anti-immigration policies, is at the same time changing course on economic policy towards a Keynesian-type of stimulus focused on infrastructure investment. Thus May has adopted a cynical twin track strategy.
On the one hand she hopes that by stoking up the immigration issue she will be able to win over UKIP voters and consolidate Conservative voters. On the other hand, she also hopes that a sizeable infrastructure stimulus will take some of the steam out of Jeremy Corbyn's call for a ?500 billion investment plan under a future Labour government. In this way, she is demonstrating that contrary to all propaganda statements, the Conservatives are starting to take the new Labour alternative seriously. For example, even the government's former Justice Secretary, Michael Gove, has warned that Corbyn's Labour Party may well win the next election despite his present low opinion poll ratings and the ongoing conflict with most of his MPs.
Hanging over all of British politics is the uncertainty of how Brexit will affect society. Insecurity for EU workers and for other foreign nationals is rising. Meanwhile, individuals and firms are unable to properly plan their trade with existing clients due to sharp currency fluctuations - last week Sterling fell by 6 percent in a few hours. All sorts of speculative shocks can be expected as big investors safeguard their assets during the Brexit process.
The continuing low profit rates, weak investment and stagnant productivity in Britain, equally matched by the same conditions in the U.S., Europe and Japan, point to a gloomy economic outlook over the next few years. From this we can only expect a continuing period of turbulent political, social and economic events that will deliver yet more surprises.
Heiko Khoo is a columnist with China.org.cn. For more information please visit:
http://www.china.org.cn/opinion/heikokhoo.htm
Opinion article reflected the views of their authors, not necessarily those of China.org.cn.
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