Two Elections – One Certainty

Tories Versus Labour

Here are two propositions with which I daresay a large number of my readers will agree, even if they find them doubly depressing.

Proposition One. On the basis of their record (and even putting aside the matter of the unfortunate personality traits of many of their MPs) the Tories do not deserve to be elected to a fifth term in government. Proposition Two. The inevitable Labour government which will take power before the end of this year will be an even bigger disaster than the Tory one they will have displaced.

Let’s just consider the first proposition. The British used to think of themselves as a kind of halfway house between Europe and America. But a report out earlier this week authored by Indermit Gill, the Chief Economist at the World Bank, argues that Britain’s bloated state sector, high taxes and public sector debt means that the country is getting more and more like France and less and less like America.

If you look at the size of government spending as a proportion of GDP, UK public spending grew from 38 percent in 2019 to almost 50 percent at the height of the coronavirus pandemic in 2020, largely due to the furlough scheme that Mr Sunak introduced when Chancellor. Spending has since come down to 44 percent of GDP but remains far higher than its pre-pandemic level. The French state remains much larger than Britain’s, at 58 percent of GDP in 2022. However, the size of the British state is much bigger than the US, where public spending is equal to just 36 percent of GDP.

Furthermore, public sector employment (that’s everyone who works for the government or its agencies such as the NHS) has grown from around 5.4 million pre-pandemic to closer to six million at the end of 2023. Taxes as a proportion of national income are at a 70-year high. Most economists perceive a correlation between high taxes and slow growth: and, sure enough, Britain’s growth outlook is pitiful. The IMF expects the US to grow by a robust 2.7 percent this year, far higher than France’s growth rate of 0.7 percent and Britain’s threadbare 0.5 percent.

Dr Gill says that the “dynamism” of the US economy was one of the reasons the US was able to bounce back from the pandemic so quickly, surpassing its pre-Covid size within a year of the first lockdown. That dynamism arises because in the USA, different states used different public health strategies during the pandemic – not all imposed lockdowns and relatively few closed schools. Also, the welfare safety net is less generous in the USA and that obliges people to get back into work in a country with a vibrant labour market. And then, in the USA, more businesses are created than in either Britain and France – and those which do not succeed are allowed to go bankrupt without trauma in a kind of corporate euthanasia.

In contrast, both Britain and France struggled to regain pre-Covid levels of output, with huge levels of state spending, welfare and debt. As Matthew Lynn wrote in The Telegraph on Wednesday (24 April), the UK is fast becoming a France tribute act. And yet the French have a high-speed train network, a system of health provision and 56 nuclear power stations that we can only envy. Evidently, our public investment has not been as efficacious as theirs. In short, the French do industrial policy much better than we do.

Figures for public borrowing out on Tuesday (23 April) showed that even with punishing tax rises the Conservative government is still nowhere near to balancing the books. The UK fiscal deficit is running at 4.4 percent of GDP, as compared with 5.5 percent across the Channel. America’s federal government fiscal deficit is, as we know, even more eye-watering at around 9 percent this year – but they own the mighty dollar.

Historians of the future will have to grapple with a question of baffling complexity. Why did the government which took Britain out of the European Union because the EU was “not working” end up making Britain a text book example of everything that is wrong with Europe? (At least most of Europe – Poland is doing exceptionally well and indeed is likely to overtake the UK in terms of GDP per capita during the course of the next decade).

We endured five years of sterile aggravation after the Brexit referendum of June 2016; and yet, having finally broken free in 2021, we have absolutely nothing to show for it. Rather than pupating into Singapore-on-Thames or East-side USA, we have become France without the freshly-baked croissants, sunshine and good-value wine.

And now to the second proposition. I contended recently here that Labour offers little in terms of radical policy to turn things round. But it is much worse than that. By promising “securonomics” (whatever that is), by restricting labour market flexibility, and by imposing swingeing taxes on “the rich”, Keir Starmer and Rachel Reeves have zero prospect of boosting UK economic growth and thus improving the national finances.

A number of commentators, even some left-inclined ones, have recently commented to the effect that Labour is getting smug about its electoral prospects. When people get smug they risk making mistakes. Shadow Foreign Secretary David Lammy has become very close to proposing a total arms embargo on Israel. His essay in Foreign Affairs recently advocated the need for “progressive realism” in our foreign policy. What does that mean? Mr Lammy is desperate to get one step ahead of David (Lord) Cameron who has proven, despite his political baggage, to be an energetic foreign secretary who can get meetings with key world leaders.

Despite their crushing lead in the opinion polls, Labour is still in campaign mode and seems remarkably unprepared for government. This week we learnt of one concrete new policy: the progressive nationalisation of the train operating companies and the creation of Great British Railways. In other words, the resuscitation of British Rail of unfond memory. But the young have forgotten British Rail, and this will be popular – as will be the re-nationalisation of the water utilities. How Labour will pay for all this is unclear.

And shadow Home Secretary Yvette Cooper is now promising to “stop the boats”. She says that the Rwanda deportation scheme is just an expensive distraction and that it will have little impact. I fear she is right about this – the Tories have invested two years and much of their credibility in a scheme that is likely to be an expensive stunt. Thus far, more Tory Home Secretaries than asylum seekers have been sent to Kigali. But what is Ms Cooper’s solution? “We would put the Rwanda money into strengthening our border security instead”. Forgive me if I remain unconvinced.

As for Labour’s response to Mr Sunak’s announcement on Tuesday (23 April) that he will put the UK “on a war footing” and to raise defence expenditure from two percent of GDP to 2.5 percent over the next six years, Labour initially failed to endorse the policy. Emily Thornberry, the shadow Attorney General, said Labour would only match the spending target “when circumstances allow”. Mr Sunak says that the uplift in defence expenditure will be financed by cutting the civil service headcount – something that Labour will be disinclined to do. John Healey, Labour’s shadow Defence Secretary, said that Labour would conduct “a strategic defence review within our first year to get to grips with the threats we face”. In other words, Labour will kick the ball into the long grass. Richard (Lord) Dannatt, a former chief of the British Army, wrote yesterday (25 April) that Labour has “no option” but to change its position and match Rishi Sunak’s pledge.

As the commentator Dan Hodges put it recently, Labour are no longer His Majesty’s Loyal Opposition but rather His Majesty’s Government-in-Wating. Therefore, it’s not good enough for them just to pelt the Tories with rotten eggs – they need to start articulating policy. Meanwhile, it is interesting to note that in Scotland the SNP is in retreat, and that across the UK the Lib Dems, who normally fare well when the Tories are unpopular, are in stasis.

Thus far, the financial markets have been entirely unphased by the prospect of a Labour government. On Monday (22 April) the FTSE-100 sailed above the 8,000 mark and has remained there all week. The City is reconciled to its fate.

Biden Versus Trump

Similarly, US politics might be summarised by two conflicting propositions. As Freddy Gray, The Spectator’s US-based commentator, wrote last week: “Most Americans do not like Trump. But poll after poll suggests that they regard the Biden administration as the bigger disaster”. Most Americans appear to think that Joe Biden and his Vice President Kamala Harris are simply not up to their jobs. It is widely said that 81-year old Biden cannot even remember the names of key members of his administration. If re-elected, he would be 86 by the end of his second term.

But if the opinion polls currently give Trump a slight advantage, that is within the margin of error. The election could go either way; but on balance I would wager a narrow victory for Biden.

Have any of my readers noticed that The Orange One looks awful lately? The Donald Trump of 2024 is not The Donald (we don’t even use that soubriquet any more) who won the presidency in 2016. Then he was an insurgent; now he is recycled goods. He is the opposite of fresh. The endless lawsuits, however justified or not, are wearying him. He can still be funny, but mostly he is angry. There is an absence of mission. Make America Great Again – the American people have heard it all before and many wonder what it really means.

Trump’s supporters point to his relatively successful first term. The US economy hummed nicely – until the coronavirus pandemic erupted. In his first year in office, Trump passed the Tax Cuts and Jobs Act 2017 – and median household income hit a record high. Poverty rates for black and Hispanic Americans reached record lows, as did unemployment. He never built that wall along the Mexican border, but his anti-migrant rhetoric still resonates with many. Trump deferred to the constitution and allowed state governors to manage lockdown policies during the pandemic.

Mr Trump’s administration brokered the historic Abraham Accords, which saw a reconciliation between Israel and its Arab neighbours that was in play until the Hamas atrocities of 07 October last year. He growled a lot but did not allow American to get entangled in any foreign wars – as promised. In contrast, Mr Biden has presided over the catastrophic retreat from Afghanistan – handing victory to the Taliban – and a deteriorating global security situation.

But just supposing I am right, and Biden wins by a few swing states giving him the majority in the electoral college – then one scenario presents itself. Trump and his people will cry foul and claim that the election has been “stolen”. The ensuing social disorder will be on a much bigger scale than the events in Washington of 06 January 2021. Things could become unpleasant.

To get a glimpse of what might happen, we turn to cinema. Alex Garland’s new film Civil War envisages a dystopian America of the near future where the culture wars have escalated into societal disintegration and armed conflict. The Daily Telegraph’s film critic, Robbie Collin, has given this film five stars. One reason that it is great cinema is that it is neither anti-Trump nor anti-woke yet is all too plausible. In the film, Texas and California have seceded from the Union for reasons that are never explained.

I am not suggesting that the presidential election in November will result in mass violence; however, the tensions in Washington are likely to increase thereafter, making the business of government more difficult. One only has to consider how hard it proved to push the most recent aid package for Ukraine through the House of Representatives, given Republican intransigence.

Who will win in November? How will it all pan out? How will the Ukraine war conclude? Will the State of Israel ever attain enduring security? And, come to think of it: How long will the Labour government last before there is a run on the pound?

Truth be told: Nobody knows.

Afterword: Down And Out In Paris And London

Returning to the theme of Britain versus France – London is certainly now more expensive than Paris.

Out in London’s Theatreland recently I popped into the Coach and Horses (the famous watering hole of the Soho bohemians which now forms part of the Fullers pub chain). And I was charged £13.30 for a (very ordinary) glass of white wine. A week or so later in Paris, I was charged €5 for a delightful pre-dinner kir at the Terminus Nord, a historic brasserie that I have frequented for many years because it retains its élan.

It is the same story with hotels. There are precious few three star hotels within walking distance of St. Pancras under £200 per night; whereas the perfectly comfortable three star hotel I use these days in Paris within easy walking distance of the Gare du Nord and the Gare de L’Est comes in at around €150 a night – with a decent breakfast too.

It is true that one has to pay for museums in Paris whereas in London they are largely free (although one is invited to donate). But the result is that London’s museums are jam-packed with tourists while those in Paris are airy and uncrowded.

Last week, I tried to get in to The Last Caravaggio at the National Gallery. As a Member, I normally saunter straight into an exhibition there. This time, there was a 30-minute queue for members – because so many groups had been squeezed in. There was even a queue for the gentlemen’s rest room – something I have never witnessed before. (I know that ladies often have to queue – most evidently at the British Museum where the throng in the gift shop in the Great Court is actually a queue of ladies in dire need).

Another gripe. It is almost impossible to walk on the pavement anywhere in central London these days without being jostled – and one constantly has to dodge pedestrians who are transfixed by their mobile phones. In Paris, it’s the cyclists one must dodge on pain of injury. London has its parks, which are glorious on the few days of the year when it isn’t raining. But Paris has its leafy spaces too.

I want to go back soon to see Paris 1974 Inventer L’Impressionnisme at the Musée d’Orsay, which is on until 14 July. But I wouldn’t even think about going to the French capital during the Olympic Games.