Britain alone

How a decade of conflict remade the nation

Liam Stanley

• Publisher: Manchester University Press
• Year: 2022
• ISBN:
  9781526159212
• Topic: Économie
• Subtopic: Économie politique

When Britain left the European Union in January 2021, it set out on a new journey. Shorn of empire and now the EU too, Britain's economy is as national as it has ever been. A decade or so since globalisation seemed inevitable, this is a remarkable reversal. How did this happen? Britain alone argues that this "nationalisation" — aligning the boundaries of the state with its national peoples — emerged from the 2008 global financial crisis. The book analyses how austerity and scarcity intensified and created new conflicts over who gets what. This extends to struggle over what the British nation is for, who it represents, and who it values.Drawing on a range of cultural, economic, and political themes — immigration and the hostile environment, nostalgia and Second World War mythology, race and the "left behind", the clap for carers and furloughing, as well as Superscrimpers and stand-up comedy — the book traces the complex nationalist path Britain took after the crash, demonstrating how we cannot explain nationalism without reference to the economy, and vice versa.In analysing the thread that ties the fallout of the crash and austerity, through Brexit, and to the shape of lockdown politics, Britain alone provides an incisive and original history of the last decade of Britain and its relationship to the global economy.

1
A nation in debt

How can you stand there and say you didn't overspend, and didn't end up bankrupting this country? That is absolutely ludicrous. You're frankly just lying.

Audience member, BBC Question Time Election Leaders Special, 30 April 2015¹

Following this angry accusation and telling subsequent applause, the then Labour leader Ed Miliband nodded, smiled, and hesitated: ‘I guess I'm not going to convince you’.

He had a record to defend. Before becoming leader, Miliband was central to the previous Labour government as a special advisor and then Cabinet minister. During the Question Time special, he had already tried to persuade the audience over the Labour government's fiscal performance.

In response to an earlier question – ‘I've just got a really simple question: do you accept that when Labour was last in power, they overspent?’ – Miliband stuck to his lines. Schools and hospitals have been rebuilt. There was a financial crisis, and the real reason the UK has a deficit is because of its relatively large financial sector. He also mentioned that, despite all this, spending has got to fall, and ‘that's why we will reduce spending’. Given the impassioned response from the audience member – ‘bankrupting this country … absolutely ludicrous … you're frankly just lying’ – it seems Miliband was not very convincing. Labour, it seemed, had ‘overspent’. This may have just been one moment, one interaction, but it was also the culmination of a half-decade of political manoeuvres to trap Miliband, Labour, and, to some extent, the nation. All three ended up ensnared by a story from which they could not easily escape.

What was this trap? And how was it set? Or, in other words, why was austerity so compelling to so many? And why did people get so upset, angry, and emotional at the prospect of their nation being indebted? Answering these questions is key to understanding the social and political conflict that created the conditions for nationalisation. Doing so, however, requires some significant re-evaluation of the austerity period associated with the Coalition government. The common answer to these questions lies in what many critics have called ‘the austerity myth’ or ‘austerity delusion’.² This refers to how the Conservative Party, both in opposition and in coalition government with the Liberal Democrats, consistently reiterated a story that at its most basic went: Labour overspent; the UK is thus indebted and in danger; and so the Conservatives will spend less to reduce the debt, thereby further retrenching the power of the market over the state. Although critics have consistently noted the flaws in the economics of this story, it worked by positioning fiscal consolidation as the only possible path. The myth thereby closed down debate over the issue and misled people into thinking austerity is right and proper. Why this would lead to people investing so much, emotionally, into the issue is, however, not addressed.

By looking back with the benefit of hindsight, I will show that this is a limited way of interpreting this narrative and its impact. To ‘live within means’ was also presented as way of reversing a national moral decline. In rediscovering and repurposing the nation's past, austerity can somewhat surprisingly be a virtue by restoring some of the values associated with supposed historical, national glories. By reconstructing and unpicking the austerity narrative in this way, we can start to understand why austerity was so affecting – as a coherent, meaningful, and powerful narrative that mobilised the nation. In doing so, we can see how a kind of nationalist mobilisation has been bubbling away for the whole of the post-crash period, thereby creating the conditions for nationalisation.

The making of austerity

Before we get to that austerity myth, let us first recall how the Conservatives could position their opponents as fiscally irresponsible because of New Labour's legacy. New Labour's approach to economic policy was, to use political economist Scott Lavery's phrasing, a ‘hybrid’: it was a composite of Thatcherite economics and social democratic redistribution.³ With regards to the former, they granted the Bank of England operational independence; introduced fiscal rules to promote sound finances; remained committed to being Europe's flexible labour market; introduced more disciplinary welfare delivery; and promoted the City of London and liberalised finance.⁴ With regards to the latter, however, they significantly increased public expenditure, especially on the NHS; developed a range of redistributive social policies, from various tax credits to Sure Start centres; used the public sector to drive job creation in deindustrialised regions; and introduced a minimum wage for the first time.⁵ This hybrid model, Lavery argues with the emphasis added, ‘was crucial to stabilising British capitalism throughout this period’.⁶

In the long run, beyond this period, it proved to be unsustainable. New Labour's electoral success was built on speaking to a coalition of middle-income voters, global capital, and their traditional working-class base. For the first two groups, Labour maintained low inflation (except for house prices), low interest rates, and low (direct) taxes.⁷ To reach their base, they boosted public services, especially education and healthcare.⁸ To fund those increases in public services without raising the equivalent revenue, Labour started to run a fiscal deficit. Confident that boom and bust was over, and producing optimistic economic forecasts to justify it, this did not pose an immediate problem. In other words, when their presumption of never-ending growth was combined with a commitment to redistribution without headline tax rises, New Labour gave themselves little room for manoeuvre if the economy crashed. To some extent, they trapped themselves.

This came to fruition in the economic downturn caused by the 2008 global financial crisis. The fiscal situation deteriorated. Spotting a once-in-a-generation opportunity, the Conservative Party abandoned their commitment to match Labour's spending, and rebuilt their political strategy around restoring ‘fiscal responsibility’. The path was made for austerity. In June 2010, newly installed Chancellor of the Exchequer George Osborne enacted an ‘emergency budget’. It combined moderate tax rises with the largest cuts to public spending since the Second World War. ‘Fiscal consolidation’ is, however, generally considered a risky move. Many economists see it as counterproductive to generating economic growth. In the words of former International Monetary Fund (IMF) Chief Economist Olivier Blanchard, the UK was ‘playing with fire’.⁹ Why pursue it?

Austerity was a once-in-a-generation chance to strip Labour of their reputation for economic competence. It was classic Conservative statecraft.¹⁰ But it was still ‘playing with fire’. And not just with economic growth, but with the livelihoods of people and the Conservatives’ own electoral chances. Enact spending cuts too quickly and they risk social breakdown. Phase in spending cuts too slowly to minimise the effect on society and electoral support, and they risk undermining their own argument against the emergency of ‘fiscal irresponsibility’.¹¹ The Coalition government used a number of well-documented techniques to resolve these dilemmas. These included concentrating cuts on unpopular and politically electorally apathetic social groups, delegating cuts to local government, and frontloading cuts to the beginning of the five-year 2010 and 2015 parliamentary cycles. Official economic forecasts in 2010 predicted a swift return to business as usual.¹² Growth would eat away at the budget deficit (since it is measured in relation to GDP) and reduce the need for further spending cuts. With the deficit on the slide and growth restored, the Conservatives would reinforce their reputation on running the economy, dent Labour's record further, and ensure that spending cuts did not dent the social fabric (or their electoral chances) too severely.

This strategy depended on making austerity a necessity. There are very few economic policy choices that are truly necessary. Yet, as many critics have pointed out, austerity was just that: a choice. To make it necessary, auster...