Under PM Boris Johnson, the Conservatives have won a large majority in the general election held last Thursday. It may sound harsh to say so but winning the election is the easy part. Views in the Cebr office have differed but I had always expected that the Conservatives could win a popular vote on the twin planks of ending the Brexit paralysis and keeping Jeremy Corbyn out of Downing Street.
We think that the Tories will set themselves four partly contradictory tasks:
- Uniting a country that has been divided in so many ways, regionally, between the countries that make up the United Kingdom, between Brexiteers and Remainers, between old and young and between Left and Right;
- Sorting out Brexit and at the same time negotiating the right trade deals with the rest of the world;
- Reviving an economy that has become anaemic; and
- Removing subsidies from parts of the quasi public sector whom the Tories believed have compromised their public sector neutrality by anti-Tory activity
Oddly, the first of these tasks may be the least difficult. The SNP’s success in this election means that a second Scottish referendum will become hard to stop. But it can reasonably be delayed until after the Scottish Assembly elections in 2021. With a bit of luck, several factors might play into the Tories’ hand by then: the Alex Salmond trial, the possibility that Brexit will prove less catastrophic than feared and a continued underperformance of the SNP in government might swing the Scots to vote to remain in the Union. Northern Ireland, on the other hand, could quite likely decide that its new status as effectively the only part of the UK to remain essentially in the EU makes them highly attractive place to do business. The fact that Brexit is likely to be fairly soft will annoy Leave ultras, but they will have little scope to affect things. Boosting the parts of the UK that are more economically depressed will be harder, but the imaginative proposals on Free Ports, combined with infrastructure (not just rail but more importantly road) will make a difference. And Cebr has consistently forecast that the Flat White Economy will spread to the North of England – a process that will be accelerated if the government is clever about developing centres of knowledge and creativity around the country as well as getting the required digital infrastructure in place.
Getting Brexit right, particularly within the 12 month timetable set in the withdrawal agreement, looks harder, particularly against the background of trade negotiations with other countries that may cut across any agreement. At least the artificial deadline, set to ensure Brexit occurred within the life of the 2017 Parliament, can be jettisoned or fudged. But most British people do not want a complete divorce from the EU and something that can be presented as Brexit while leaving the UK close to the EU will probably prove a popular compromise and in line with Boris’s instincts.
It will be hard to reconcile the promises on public services made in the election and expected by the Tories’ new supporters in the former Labour heartlands with the low tax economy that could boost growth. But there are some easy wins – like reforming stamp duty and improving competition policy. The reduction of Brexit and other policy uncertainty should boost inward investment especially in 2020 when loose monetary policy around the world will probably mean that growth outperforms expectations. But the Tories may have to settle for more redistribution of growth rather than much higher growth in the short term.
Where the new government is likely to be attacked by its critics as far right is in its likely plans to remove subsidised status from quasi public sector bodies that they believe have abused their position in a partisan anti-Tory direction. It is likely that committed Blairites in some public sector jobs will be removed. The BBC licence fee may eventually go but will have to be phased out. Channel 4 can hardly expect to keep its public broadcaster status. All this will prove controversial.
But there is an opportunity to ride the tide of increased confidence and reduced uncertainty to reshape the UK both politically and economically in a way that lasts for a generation at least. That is the prize that can be achieved if the re-elected government can run the country as effectively as it ran its election campaign.
Contact: Douglas McWilliams email@example.com phone: 07710 083652