A Socialist Government, glass half full
Illegitimi non carborundum (don’t let the bastards grind you down)! It is difficult to comment on business prospects a few weeks before the election and harder still to avoid political bias or even stereotypes. Reform is shooting Sunak in the foot echoing Major’s illegitimi, while Momentum in the form of the redoubtable Diane Abbott is trying to reverse the runes and keep the Tories in power. Rayner has reminded Starmer that some fights with the harder left aren’t worth having, and Starmer has backed down showing hitherto unsuspected flexibility and some humour.
For all the largely meaningless fandango that is the pre-election dance, this article will assume the prognostications of the polls and perhaps the more scientific bookies that Labour will win.
Ideology to the left, right or even centre (is that an oxymoron?) is rarely the harbinger of economic growth as it promises change and instability. Political instability has been fostered not only by Brexit but political discord in its aftermath and in its implementation. Austerity has been mismanaged but the cuts were inevitable following a global banking crisis in which sadly the United Kingdom was a pawn. Lord Heseltine (who retains the aura of a bright young thing at 91) has said that this is a “dishonest election” because no one is mentioning Brexit. Wise words, but surely Brexit is being addressed between the lines. Sunak will try to appease the hardliners to check their drift to Reform with tough talk on Europe and Rwanda, while Tice and Farage do to Sunak what Abbott is failing to do to Starmer.
The markets dislike instability as Truss and Kwarteng discovered but we cannot expect an immediate bounce. The market will have discounted a Labour victory and ensuing comparative stability. That is unless the markets think what Alistair Campbell thinks, that is still a very long way to go.
What does this mean for business? Keir Starmer has established some authority. Whatever you think about the removal of Corbyn and the Abbott misstep, Starmer has driven Labour to the Centre. If you’re carrying a Ming vase five miles across rough country to the finishing line, you don’t raise Brexit. Starmer has ensured that there is little Labour Brexit baggage leaving him free to negotiate without the threat of warring factions. This must be good news for business in Britain. Brexit damaged the European Union, especially its most important economy, Germany. The Socialist’s glass half full foretells lowering trade barriers and associated costs, freer movement of labour enabling growth. The virtuous circle might be completed by corresponding revitalised neighbouring economies.
What does a Labour victory mean for the relationship with Scotland? Your correspondent’s origins are declared in his name. Labour may do well in England but history tells us that Labour is unlikely to win a majority in Westminster without improving recent performances in Scotland. Businesses will hope that a strong centralist government will help heal the union. This and a softer Brexit (Scotland voted Remain) might encourage stability, benefiting the economy. Might we be less polarised if the governing party in Westminster is at least tolerably represented in Scotland. Cameron and Osbourne’s misguided threats to starve a nation (I doubt the Queen purred over that) in the final days preceding the referendum in Scotland, in its apparent effectiveness, influenced their approach to remaining in Europe. Does Europe not need the United Kingdom and Northern Ireland as much as England needs Scotland? Remove one from the other in either case and the smaller unit is damaged by the wounds inflicted on the larger. Starmer is indeed fortunate that the SNP has chosen these months to implode. Although Scotland is an economy populated by a mere five million people, the relative harmony within the United Kingdom that might result may be as important as starting to heal the bruises of Brexit. One-Nation Socialism?
Hesseltine may well be right, particularly from a Tory perspective but Starmer is proving more cunning than we thought, or did we suspect this superficially bland former Director of Public Prosecutions and eminent KC might be more politically adept than he seems. Starmer has allowed the business community by the barest of hints to assume that we’ll re-engage with Europe without upsetting leavers unnecessarily. Business prefers diplomatic compromise to hardwired ideology.
The sting is in the tail. Heseltine’s analysis might be extended. I have no idea what the big-hitting former Deputy Prime Minister and Thatcher nemesis’ green credentials are, but I doubt he’d mind the suggestion that another gaping omission in the election dialogue is the environment. Casual empiricism at least hints that human-directed climate change is happening fast and affecting business faster than expected. This is happening at a bad time as Caroline Lucas decides that it’s time for her lonely years to close as the Green spokesperson in Parliament on everything. Hopefully this is part of the Ming vase strategy (let’s avoid Chinese punning allegories). If Brexit is being addressed in the background, businesses affected by climate change will hope that Starmer is developing responsible green policies, his silence reflecting the two-edged sword of climate denying votes. In an age of unprecedented access to the finest research, the electorate remains doggedly irrational.
Businesses will hope that Starmer, like Blair before him, has reclaimed the centre ground and as the Tories drift to the right as the New Radicals, the Socialists become the New Conservatives. The glass is half full.
