At the time of several political anniversaries from Theresa May becoming PM, to it being a month since Macron won a parliamentary landslide and the UK Conservative Party losing their majority, it seems as a good a point as any to ask: How, Why and What next.
1.THREE OBSERVATIONS
1.1. ‘Them and Us’ Politics
Across advanced economies there is a growing divide between those with a tangible stake in society, such as a secure job and a foot on the housing ladder. And those that do not. Politicians and policies that speak to such aspirations - and appear to bring them within reach - will be very attractive to an expanding cohort of voters. The socialist Labour leader in the UK, Jeremy Corbyn, tapped into this sentiment and polled very well in the June general election. He outperformed Gordon Brown and even Tony Blair (GE 2005). The Left like to play ‘them and us’ politics, scapegoating the ‘rich’ as the reason people are poor, presenting simple solutions as policy panaceas for a variety of ills. This is not only misleading, it is highly regressive. However, it can be successful in setting political agendas. The challenge for Conservative parties is how to speak to these issues and lead such policy debates. Rather than fall in to a pattern of rejecting policy agendas form the Left for more state intervention and spending. Which risks conservatism being perceived as simply anti-change and out-of-step. The challenge in the UK is acute. At the last election the Conservative Party failed to win a majority of any age cohort under 50. Core issues such as job security and home ownership are not the preserve of first-time voters. And cannot be deprioritised.
1.2. Its Policy Not Politics, Stupid
There is a world where the minutiae of politics really matters. This world is often referred to as a ‘village’, or living in ‘a bubble’. It is apt. It is a paradoxically parochial universe. The folk who inhabit it have a belief that what matters to them, matters to everyone else. As such they are blinkered and only partially aware of what is really driving voter thinking and voter behaviour. Moreover, what they cite as ‘unpredictable’ is in fact 'unexpected'. There is a sharp distinction. Which says more about the limits of their world-view than the world around them. There is a compelling theory that voters are switched off by politics (the banter, the bickering and the black arts that so consumes those inside the Beltway) and instead form a view through assessing the values and character of the candidate. This is informed by the candidates’ positions on policy related matters. It might only be one (iconic) policy that resonates, but that will be enough to inform their gut instinct and voting intention. Trump’s pledge to build a wall was seen by many as either regressive, impractical, or both. However, it sent a powerful signal to millions of Americans that he shared their concerns about jobs and crime, which he linked - unfairly – to cross-border immigration. So it is dangerous to assume that the voter does not care about policy, they do. They don’t care for politics.
1.3. The Importance of Macron
Emanuel Macron’s win could be recorded by history as of equal maybe greater importance than that of Trump. With his significance and legitimacy not undone by his winning on the lowest turnout for any French presidential vote since the 1960s. The Macron win stands out in many ways, but three deserve a special focus: - First, support for the flagging EU. Even before the Brexit vote, the EU was growing in unpopularity. It was and is in desperate need of a champion and renewed legitimacy and purpose. Macron is undoubtedly a good thing in the short-term for the EU and therefore for the Euro - which is a political project as much as it is an economic one. His election generates confidence in ’the project’ which is good for stability in the eurozone. Which now seems set for a period of sustained growth. - Second, support for globalisation. In setting out the benefits of globalisation Macron made a timely challenge to populist and protectionist forces, including the President of the USA. Liberal democratic values and economic order are being challenged, his spirited and robust defence has helped to stop the slide in support for a progressive, global world-view. - Third, positioning himself as an independent candidate he disrupted French politics. By promoting his candidature based on what he was ‘for’, not just what he was 'against’ he was unashamedly optimistic. It was brave and instructive, revealing that populist platforms do not need to be sensational or polemical. They can be progressive. Now the hard work begins.
2.THREE MYTHS
2.1. Myth #1. UK Economy will defy dire predictions
After the Brexit referendum, some economic and corporate news was positive. This created a sense that a soft landing might be possible. It was of course too soon to be reliable. The indicators are now swinging the other way, lending credibility to claims that Brexit will worsen the position of the UK economy and personal living standards. Beyond the damning statistic that the UK has gone from being the fastest growing economy in the G7 to the slowest, two other figures are worth highlighting: UK productivity declined by 0.5% in Q1, the first fall since 2015. Disposable incomes of UK families fell in Q1 for the third quarter since the referendum vote. These figures highlight ominous trends at the macro and personal economic levels. A squeeze on living standards and a squeeze on performance. It seems that at best, uncertainty surrounding the Brexit process will not have a negative influence on investment decisions and confidence more generally. At worst, the economy will see a flight of capital, business and talent. In reality, it is likely to be somewhere between the two, which means some pain - even if it is just short-term - is predictable and unavoidable.
2.2. Myth #2. Brexit Revives ‘Free Trade’ Those campaigning to leave the EU did so based more on ideology and idealism than pragmatism. First, the UK parliament should be sovereign. Second, the UK can rule the world economically - when the economy throws off the shackles of the European Union. Whether this ideology can drive prosperity is now about to be tested. What is certain however, is that the UK cannot recreate the economy of another era. Nor should it wish to. Instead it is going to have to deal with the reality of the global economy as it is today. This means engaging with our largest trading partner (the EU) and coping with their regulations. If the UK wishes to export to the EU it will need to comply with their rules. To quote the former UK Chancellor, George Osborne, it is: ‘Regulation without representation’. So Brexiteers will certainly revive the language of ‘free trade’ and other attractive concepts. Whether they have the power to convert them into a new reality looks like a long-shot, especially given the current geo-political and economic forces.
2.3. Myth #3. Conservatives will prop-up Mrs May For 2 years
Conservative Ministers and MPs are rightly consumed by the surprise outcome for the Party at the June General Election. The immediate spotlight fell on Mrs May’s performance and her team and their strategy. The PM’s chief lieutenants have already been scapegoated and replaced. As has the man behind the manifesto, Ben Gummer the former MP for Ipswich. (Although the latter was sacked by the electorate.) Some in the Parliamentary Party would like Mrs May to go soon. Some would prefer her to remain in place and act as a lightning rod for any bad economic news and the sapping negotiations with Brussels. This feels incredible for two reasons: First. Mrs May is weakened to the extent that she is barely credible at home, or abroad. Her inability to give voice to the feelings of the nation as the human tragedy at Grenfell Tower unfolded, confirmed critical views about her inability to lead. It is not impossible, but it is not probable, that Mrs May can rebuild confidence in herself as a Leader and her Government. Second, at a personal level, Mrs May’s passion and enthusiasm for leading is depleted. In other words, she is very likely to want to negotiate her own exit, despite any strong sense of duty she may still have. As a result, the chances of her lasting two years is remote. Two months is a better bet. Moreover, any Government with a majority of one is inherently unstable. It could fall when it is not expected to do so, at which point the Governing Party does not want to be finding a new Leader as it heads into a general election.
3.THREE PREDICTIONS
3.1. Political Realignment
Conservatives will skip a Generation. After witnessing Theresa May underperform expectations - by a long-way - during the election campaign, Conservative MPs are considering if her ‘caretaker’ premiership can be replaced for another ‘caretaker’ figure, albeit with more credibility to manage Brexit. Or, if the Party needs to switch to a more youthful candidate, (a 40 something), who may be able to better connect with the country, than a 50/60 something figurehead. However, age may not be the key determinant, rather than outlook and ability to engage wirh voters and change perceptions of the Party. There is no shortage of candidates to be both the ‘caretaker' or ‘step-change' leader. The problem is, at this point, that there is no obvious winning candidate. Critically, in perception and reputation terms the Party is in a dire place. It seems to have lost the hearts and minds of the voters. This is reminiscent of the depths it reached after 18 years in power when it was willed out of office in favour of Tony Blair’s New Labour in 1997. Conservatives need to stop the rot. Find a ‘change’ candidate that can reconnect with the country, or risk further contaminating the party and face a sustained period in opposition at Westminster. Which will pose a severe test for the successful leader of the Conservative Party in Scotland, Ruth Davidson - who has ruled out a move to London. Labour Will Not Split. The Labour Party mobilised a high-turnout and secured a significant Brexit protest vote at the General Election. However, it is the Party’s platform that is being cited as the main cause along with Corbyn’s authenticity as 'a change' candidate. Nevertheless, the Labour Party in parliament – if not the country - is split on the merits of the left-wing manifesto. Some want nothing to do with it and treat it as a freak result, against a very weak opponent. Others are either ‘fellow travellers’, or new converts. It is the first group that threaten disruption. They know the rules mean removing Corbyn as Leader is improbable, so they are contemplating standing as Independent candidates at the next election. The last time the Labour Party was in the grip of the Hard Left, a similar initiative was tried and failed. Lessons from the short-lived Social Democratic Party live on in the Labour Party. It is likely that the Party system and electoral system (and the collective memory) will stop a 21st Century breakaway.
3.2. The Brexit Backlash
If there is a deep and sustained downturn, rather than a blip, Brexit has the potential be the biggest political mis-selling scandal of our generation. It will also define the political landscape for a further generation. We can expect resentment and anger in the country not from a so-called 'soft' Brexit, but because the process causes economic pain, which could be felt most, by the socio-demographic groups that were the biggest supporters of Brexit. In turn, those closely associated with convincing the UK to ‘Leave’ could be perceived as toxic political figures, with little chance of a positive legacy. They could go from hero to zero. Which raises questions for their political parties, not least as to whether their toxicity can be ring-fenced. The reverse could also be true. And there will be an unseemly scramble to claim ‘The Brexit Effect’ as a cause for good and ill. Which goes to show that it has the potential to be an enduring political dividing line and test the skills of future leaders to transcend the divisive issue. 3.3. Editorial Obsession. In the US and the UK, the mainstream news media is obsessed with President Trump. This will not diminish, if anything it will increase. The obsession is marked by a lack of objectivity about 'news'. In short, seemingly anything that supports personal prejudices about Trump is elevated to lead news bulletins. Likewise, the reverse. There is little room for a counter narrative about Trump in the mainstream news media. They celebrate his faults, flaws and setbacks - of which there are many! But not all of them need to dominate the headlines. In effect, the media obsession risks two things: first, crowding-out the reporting of events, political or otherwise, that have greater significance to our lives. Second, diluting the impact of key Trump events. Not least the truth about any collusion between his campaign team and the Kremlin prior to the election - which one can predict will generate both more headlines and more resignations. The media should be more discerning and surgical when it comes to Trump. This applies in Europe as much it does in the US. Where there should be a healthier scepticism about leading bulletins with the actions of a foreign leader. A typical Trump tweet is of less significance to the lives of Brits than a landmark policy from Chinese leader Xi Jinping. However, Jinping, or indeed any other leader, bar Kim Jong Un, has yet to be prioritised by most News Editors. The media fascination with Donald Trump helped him to get elected, such was the 'free' air time he was given. They now want to undo what they helped to create.