Election 2024: The Conservative economic record

So the General Election campaign is in full swing, because the last five years have been a nightmare Rishi Sunak is trying to frame the discourse in a ridiculous way, asking us not to judge him on the Government’s record. This is being hammered home by creating more diversions than Dick Dastardly in the Wacky Races – National Service, deporting people, closing universities etc. In this blog I’m going to look at the Conservative economic record since 2015, for they are solely responsible for all the major decisions taken in government since then. If you’re a keen follower of politics you’ll know a lot of this already, but it’s handy to have it all in one place with a bit of context added. We could have it so much better, it’s important to understand precisely how and why.

Britain in 2024, a place where urban decay takes many forms and major industrial plants such as Ravenscraig are not replaced with enough new opportunities

Our Credit rating went downhill fast
Since 2015 the UK has suffered multiple credit rating downgrades, as you can see from the chart different ratings agencies have taken subtly different views on the reduced status of the UK’s ability to repay its debts, however they all agree it’s a deteriorating picture, not an improving one. It’s important to note this is an unprecedented situation in the post-war era, even with the turmoil post Oil-shock and IMF bailout, lenders had more belief in the UK then than they do now. The UK is drowning in government debt, interest rates have come off the floor closer to historic norms and the economy has not delivered the growth that produces enough tax receipts. The multiple downgrades are a sign of how far we have to travel to get back to economic normality, though of course we’re living in a new norm, a mediocre norm just so long as we’re outside the European Union. Returning to a AAA rating will be like climbing a mountain with one hand tied behind our back. When times are tough in the public sector during the next parliament, remember the origin story our our misfortune – Johnson, Farage, Jenkyns, Fish, Bone, Cash, Bridgen, Redwood, François and all the other Brexidiots.

We’ve suffered multiple credit rating downgrades since 2015, an indictment on how far we’ve fallen as a country, this is unprecedented and very important

Worst inflation for a generation
During this parliament we’ve seen the first double-digit inflation since ‘The Message’ by Grandmaster Flash and the Furious Five came out. This will have spooked many young people who would’ve assumed prices moved very gradually forever. While inflation has been stoked by global events – supply chain/labour shortages after Covid lockdowns and energy price hikes caused by the Ukraine – Russia war, there are underlying factors that have left Britain more vulnerable to inflation than other countries. Our balance of payments situation is poor, our dependency on hydrocarbons is reckless and the value of the £ is unhelpful. This is why since 2021, our cumulative inflation is the worst out of any major economy. Look at the US, people are criticising its inflation position, however that in part has been fuelled by major investments as per the green revolution bound up in the Inflation Reduction Act. This has actually pepped up inflation in the short term, in order to create more economic stability, certainty and success in the long term via investment in clean tech. Where’s the investment in the UK? We had a window of opportunity to invest in infrastructure and new technology when interest rates were rock bottom but we sat on our hands instead. Well done Cameron, May, Johnson, Truss and Sunak – you all failed in the same way and have no way to deliver a brighter future.

‘Don’t push me ’cause I’m close to the edge, I’m trying not to lose my head’ one of the first rap tunes offering social commentary lamented double-digit inflation back in 1982

UK inflation – amongst the worst in the industrial world, without the excuse of any great stimulus since the end of the furlough scheme in 2021

The Eurozone has generally enjoyed lower inflation than the UK in the last six years

Patriots cry me a river, the £ went down and stayed there
While the £ fluctuates as a free, not pegged currency, the UK economy had adapted to it being at a certain level, during the New Labour years this was an average of US $1.69 to the £ and $1.57 to the £ during the coalition years. The particular nature of the UK economy – being reliant on services and high value, low volume manufactured goods – has meant the drop in the £ hasn’t helped us much at all. Indeed in terms of balance of payments the lower £ has shrunk our surplus in investment income from the rest of the world. So the £ dropped in late 2015 as soon as the EU referendum was called – a possible leave vote was immediately priced into its value. It’s now been nine years and the £ has not recovered to its previous value against all of the major currencies. This is because economic performance since has been in line with expectations – i.e. worse than our G7 colleagues.

Yes the £ has been low against major currencies before, but the EU referendum was a defining trigger point for a slump in its value that is much much more than a short term fluctuation

Business investment – heading for a lost decade
As you can see from the now notorious FT graphic, business investment went south relative to the previous trend as soon as we voted to leave. We’ve had plenty of time to pick ourselves up, pandemic notwithstanding, but it hasn’t happened. What’s at work here? Brexit has put both domestic and international businesses off investing in the UK. There are no examples from history of a major economy leaving a trading bloc or making trade less free via tariffs, non tariff barriers and quotas then going from strength to strength afterwards. There’s no compass, no route map for Brexit Britain to be a success, so investment will only return if real world outcomes confound expectations – they haven’t so far and the tone is set. When Johnson said ‘f**k business’ that was the one plan he actually executed successfully, unlike HS2, the cross-channel bridge and the estuary airport.

Say it ain’t so! The business community has turned away from Britain, previously the No 1 recipient of international investment in the EU, we’re not the open and attractive economy we once were

GDP – harking back to before the industrial revolution
If you study history and geography to GCSE level there’s a good chance that you’ll compare and contrast economics of 500 or 1,000 years ago with modern times. During the Middle Ages economic growth was slow and non-linear, so even if you lived into old age it was possible that you’d barely perceive any rise in living standards in your lifetime. In geography you learn about the five great stages – traditional society (pre-Elizabethan), conditions for take off (Restoration and beyond), Agrarian Revolution (18th century), Industrial Revolution (19th century), and Post Industrial (1960s onwards). As late as the Agrarian Revolution constant economic growth and fast rising living standards simply didn’t happen. We’ve had a taste of that during since 2019 – the first peace time full term parliament with virtually no GDP growth since the likes of Robert Walpole, Spencer Compton and Henry Pelham were Prime Minister (all legends, trust me). That’s fed into a fall in living standards, people are worse off over a prolonged period, worse than Wall Street Crash America – that’s some going.

To paraphrase John Lydon, ‘We’re not the same as when we began’, yes we’re poorer, in contrast with our European and G7 cousins. This usually happens in Banana Republics or failed states

That’s the flag-shagging, we are sovereign, take back control Tories for you. An economic record that is uniquely bad for years on end, leaving millions in need of foodbanks, struggling to pay bills, mortgages and rents. Nearly everyone feels worse off, unless they have the connections that would win them a government contract.