4 January 2023

Leader: How to reverse British decline

Rather than indulging in post-imperial fantasies, Britain should learn from those mid-sized economies that are both richer and more equal than it.

By New Statesman

Photo by Simon Walker / No 10 Downing Street

As 2023 begins, a spectre is haunting the United Kingdom – that of decline. Living standards are forecast to fall this year by the largest amount since records began in 1956-57. Public services are increasingly overwhelmed after years of austerity and, now, the biggest wave of strike action since the 1980s. An intellectually and politically exhausted Conservative administration is struggling to command authority.

Britain’s economic woes are far from unique in the West but they are different in degree. As Torsten Bell, the chief executive of the Resolution Foundation, notes on page 12, a “toxic combination” of high inequality and low growth means that the average household is now significantly poorer than its counterparts in France, Germany, Canada and Australia. Indeed, if present trends continue, Slovenia and Poland will record higher living standards than the UK this decade.

Fears of British decline are hardly new. The theme was a preoccupation of Marxist historians, such as Perry Anderson and Tom Nairn, and conservative historians, such as Correlli Barnett, throughout the 1960s and 1970s. In reality, as David Edgerton argued in The Rise and Fall of the British Nation, the appearance of decline often owed more to other countries’ successes than it did to British failures (average GDP growth in the 1970s was 2.6 per cent, a superior performance to more recent decades). The question is whether this time is different.

If decline looms large it is partly because it follows a prolonged period of revivalist rhetoric. Brexit was hailed by the free-market right as a chance for the UK to forge a new global role and trump its competitors. Such boosterish rhetoric was overwrought, but it was not wrong to view Brexit as a potential opportunity for national renewal. The UK’s departure from the EU could have forced Britain to confront its deep-rooted domestic problems: dismal productivity, high inequality, dilapidated infrastructure, regional imbalances. This road was never taken. Instead, the promise of renewal has been juxtaposed with the reality of decline.

In recent years both left and right have sought to resolve this contradiction. Liz Truss prescribed radical tax cuts and free-market reforms to jump-start growth. In 2019, shadow chancellor John McDonnell promised £400bn of public investment to launch a new industrial revolution. Both political projects ended in failure.

The exhaustion of ideological alternatives has left the UK with something resembling managed decline. Since entering No 10 Rishi Sunak has restored financial stability but exhibits no vision beyond the desire to reduce inflation.

Keir Starmer’s Labour has demonstrated more ambition but the party does not yet have a sense of national mission. Rachel Reeves, the shadow chancellor, has pledged to spend £28bn a year on green investment, which is an important commitment. But does Labour truly aspire to reverse British decline or merely to mitigate it? At present there is no equivalent to the early Thatcherite movement of the mid-1970s, which offered a comprehensive diagnosis of the UK’s ills and a transformative policy programme. Thatcherism was a disruptive, counter-hegemonic project, misunderstood by much of the left, who rationalised it merely as another passing phase.

Overcoming decline requires what Britain has too often lacked: an honest account of its strengths and weaknesses. The country retains considerable advantages: world-class universities, significant military capabilities, a vibrant, open multiracial society and notable cultural and sporting soft power. But these are increasingly overshadowed by its defects.

Rather than indulging in post-imperial fantasies, Britain should learn from those mid-sized economies that are both richer and more equal than it: the Netherlands, South Korea, the Nordic countries, among others. Too often the left has fixated on reducing inequality while the right has fixated on boosting growth. The reality is that Britain needs to do both.

Fifty years ago this month, as it feared irrevocable decline, the UK joined the European Economic Community – an anniversary some have recalled with nostalgia. But to renew itself, Britain must abandon the grim binaries of Leave vs Remain. In 2023, let ideological delusions give way to a clear-eyed realism about the extent of the UK’s plight – and the route out of it.

[See also: The truth about the worst NHS crisis]