Five economic issues to mobilise around in 2018
If you hoped that 2017 would be the year Britain finally saw its economic fortunes improve, you were soon to be disappointed. Over the past twelve months, Britain’s economic malaise has continued: investment remained the lowest among advanced economies, productivity stagnated yet again, real wages declined even further, and households relied on ever-growing levels of borrowing to maintain living standards. Combined with an intensifying housing crisis, disintegrating public services and looming environmental catastrophe, the picture that emerges is not one of economic recovery – but of deep, existential crisis.
It is within this context that we enter 2018. As if these challenges weren’t enough, this year the UK government also faces the small task of delivering Brexit and navigating a path outside the EU. The magnitude of this task cannot be understated: Brexit entails a once-in-a-generation reshaping of our laws, trading relationships and economic model. The path is fraught with risk and uncertainty, and the decisions made will have major repercussions for decades to come.
Like it or not, 2018 is set to be a year of change. With so much at stake, what are the most important economic issues to mobilise around? Here are five suggestions:
1. A progressive trade policy
Following the passing of the EU Withdrawal Bill in December, attention is now turning to the UK’s future trade relationship with the EU and the rest of the world. This is a critical juncture: trade policy cuts across many aspects of our lives – from how we run public services like the NHS, to how we set food standards. Agreeing trade deals is notoriously difficult, and highly controversial. It’s not at all clear that the UK government is up to the task.
So far the headlines have been dominated by David Davis’s posturing about a prospective UK-EU trade deal. While agreeing a sensible deal with the EU should be the top priority, perhaps a bigger threat comes in the form of Liam Fox’s Trade Bill, which so far has attracted far less attention. Published back in November, the Trade Bill will allow the British government to negotiate new trade deals after Brexit. As Nick Dearden wrote here back in November:
“If you were worried about US-UK trade deal TTIP, you need to take Liam Fox’s new Trade Bill seriously. If it isn’t amended, we have every reason to fear a ‘TTIP on steroids’ is coming our way. The Trade Bill will allow the British government to negotiate trade deals after Brexit. It is our only chance to make sure that these deals done will be open, democratic and accountable. And we only have a few months to do it.”
In 2017, we got a taste of some of the issues that trade deals can throw up (remember when Liam Fox told us not to be afraid of US chlorinated chicken?) – but as things stand we won’t be told what else might be sacrificed. That’s because, in its current form, the Bill ensures that trade policy will not be subject to any kind of public or democratic oversight. As Dearden continues:
“As things stand, MPs have no right to know what’s going on in these talks – or the talks that Fox hopes will commence with 16 other countries including human-rights bashing Saudi Arabia and Turkey. MPs can’t set any guidelines for Dr Fox. Once he concludes a trade deal with any of these countries, they can’t amend or stop that deal.”
The clock is already ticking. There is an urgent need to build consensus around what a progressive trade deal in the 21st century looks like, and to ensure that any negotiations are subject to appropriate democratic oversight. Regardless of your political persuasion, we simply cannot afford to leave our future in the hands of someone like Liam Fox.
2. Meaningful financial reform
It’s been a frustrating few years for those of us who have been working to put meaningful financial reform on the agenda. After years of watching the limited reforms introduced after the financial crisis being watered down or rolled back, in December 2015 the Bank of England Governor Mark Carney declared that “the post-crisis period is over”. The message was clear: the financial system had been fixed, lessons had been learned, and it was time to move on.
But this return to “business as usual” was premature. The human and financial costs of the crisis are still being felt across the country, and scarcely anyone believes that the post-crisis reforms went far enough to prevent it from happening again. As I wrote back in August:
“As memories of the crisis fade, it is essential that civil society doesn’t roll over to the demands of bank lobbyists. Many experts outside the industry-regulator nexus warn that financial reforms went nowhere near far enough, and have predicted that another crash could be just around the corner. The Systemic Risk Council, a group of global experts on financial stability, recently warned G20 leaders that the global financial system is vulnerable to another crisis. This time round, they warn, central banks and governments will have far less ammunition available to respond.”
In 2018, many key events of the financial crisis will be marked by their 10 year anniversaries – from the collapse of Lehman Brothers to the bailout of RBS. Various civil society initiatives have already been established to capitalise on the ‘10 years after’ moment and put meaningful financial reform back on the political agenda. These include the ‘10 Years After the Crash’ project by PEP and the RSA, Finance Watch’s ‘Global Change Finance Campaign’ and a major conference being organised by the Transnational Institute.
With the Brexit negotiations heating up, the stakes are even higher. As more banks threaten to shift operations abroad, the government has indicated that it may respond by slashing regulation in a bid to stem the outflow of business. Bank executives and lobbyists are already working hard behind the scenes to turn Brexit to their advantage.
To avoid history repeating itself, there is a vital need to develop a credible and effective counterweight to the lobbying power of the banks, and work to transform our broken financial system to ensure that finance serves society, not the other way around.
3. Action on the housing crisis
In 2017, the Grenfell tragedy brought Britain’s housing crisis into sharp focus. Social housing tenants burned to death due to a lack of basic safety standards, while a few hundred metres away some of the world’s most expensive properties lay empty, acquired only as speculative playthings for the world’s super rich.
Grenfell was only the tip of the iceberg. Britain’s housing crisis is rapidly becoming one of the greatest policy failures in living memory, and the consequences for the economic and social fabric of the country are immense. After Grenfell, people have slowly been beginning to wake up to the scale of the problem. As Christine Berry wrote for us back in June:
“the spotlight is turning onto the human cost of our dysfunctional housing market, and it must be kept firmly on it until we start to turn houses back into homes, rather than simply financial assets to be speculated with.”
I’ve written extensively about how to fix Britain’s broken housing market. But proposing policy solutions is the easy bit. The real challenge is one of political economy: the drive to increase homeownership over the past fifty years has created an electorate where the majority’s personal wealth is tied to the buoyancy of the housing market. Although homeownership has been falling for over a decade, most of the electorate (63% of households) still have a vested interest in seeing housing perform well as a financial asset. Politicians have faced a tension between resolving the problems of supply and affordability for non-homeowners on the one hand, and maintaining the asset wealth of existing homeowners on the other. Time and time again, their actions have prioritised the latter — to the great expense of renters.
But with homeownership rapidly becoming a pipe dream for most young people, and the number of people renting privately skyrocketing, a tipping point has now been reached. A broad coalition comprising those stuck in the private rented sector, social tenants and concerned homeowners would be a powerful voice. If mobilised effectively, 2018 could be the year when Britain’s housing crisis finally starts to be addressed.
4. Breaking with neoliberalism
In November, the UK government published its industrial strategy. While the content is far from perfect, its publication marks a historic moment. The fact that a Conservative government has published a document which hails “a belief in a strong and strategic state that intervenes decisively wherever it can make a difference” is hugely symbolic. It represents the end of neoliberal orthodoxy’s role as the dominant intellectual force underpinning UK economic policy, after 40 years in the driving seat.
The rejection of neoliberal orthodoxy by both major UK political parties, combined with the intellectual upheaval underway in the economics profession, means that we are on the cusp of an epochal shift in economic thinking and policy. The question is what comes next.
There is already a broad movement spanning academia and civil society that shares a common diagnosis on the failings of neoliberalism, and a growing convergence on the need for an alternative rooted in inclusivity, sustainability and democracy. As Laurie Laybourn-Langton wrote here back in November:
“This movement is growing and we think it now covers most of the major functions required to shift the paradigm – from academic groups and think tanks, through communications websites and supportive networks, to funders and political figures. Each year, this movement becomes more influential and is full with talent stretching across generations.”
There remains much to be done to bolster the intellectual underpinnings, policy development and communications infrastructure required to make the transition from one political-economic paradigm to another. 2018 should be the year when these efforts shift into the next gear.
But making a definitive break with neoliberalism also hinges on developing a critical mass of political support. As Nick Pearce wrote for us back in November:
“Who will be the political agents of economic transformation, and how can broadly based coalitions that unite the interests of low- and semi-skilled workers with those of middle-class professionals be created? The decline of the industrial working class, the rise of finance and decline of the UK “national” business class in core sectors, the spread of the gig economy and the parallel growth of higher education as a social insurance policy for the middle classes, coupled with the electoral dominance of a socially conservative older population, have all made the task of constructing progressive economic reform coalitions much harder.”
It’s clear that the methods of the past are no longer fit for purpose. New approaches are needed to mobilise political support for economic transformation among an increasingly diverse and splintered electorate. Glimmers of what this might look like came in the form of the ‘Big Organising’ model pioneered by the Bernie Sanders campaign in 2016, which was also used to great effect by Momentum to mobilise young voters in last year’s general election. But Labour’s defeat shows that more still needs to be done to convince voters that change is needed. 2018 provides an opportunity to build on these successes and broaden the base of support for transformative change.
5. Stepping up the fight against climate change
Given the scale of the above challenges, it’s easy to forget about the greatest challenge of all – the fight against climate change. Despite some positive developments in recent years, the hard truth is that we are still hurtling headfirst towards global climate catastrophe. As my colleague Adam Ramsay wrote for Civil Society Futures in June:
“Civil society organisations have mobilised across the country – and the planet – to demand ambitious action on climate change. And yet new fossil fuel projects continue to attract investment. Communities across the world face ever more extreme weather. The planet continues to warm. While there are many positive things to say, honesty requires acknowledging a simple truth: civil society, as it’s currently structured, has failed to stop climate change. And we’re still failing.”
What to do about this? Jamie Clarke, Executive Director of Climate Outreach, says that the climate movement must learn lessons from past failures, and take a fundamentally new approach:
“We need a mass, society wide, long term, sustained effort to keep the fossil fuels in the ground… And we need to make sure in 10 years’ time the new government doesn’t decide to change the policy. We need to shift the way society thinks about fossil fuels that make them morally, socially, and economically unviable and that’s a balance that our society has very rarely managed to do. The only equivalent is something like banning the slave trade. It took a mass-mobilised group of people, direct action from slaves and those impacted, and a moral shift and understanding that this was abhorrent.”
This means ending the presentation of climate change as an environmental or lifestyle issue, and reinforcing its status as an economic, political and – most critically – a moral issue. On a practical level, it means moving away from campaigning on climate change as a standalone issue and instead assimilating it into all progressive struggles. Working with other stakeholders to place environmental concerns at the heart of the four issues mentioned in this article – trade policy, financial reform, housing policy and replacing neoliberalism – should be a priority for 2018.
With so much at stake over the next twelve months, informed public debate is more important than ever. But for the most part the media has failed to engage in these debates, or even acknowledge the scale of the challenges we face. That’s why at openDemocracy we are bringing people together to get to grips with the long-running economic crisis unfolding in Britain, and stimulating a debate about a sensible way forward in 2018. Join the conversation.