speri.comment: the political economy blog

That was the Crisis that was: the 2017 election and the strange demise of the 2007-08 crisis

Despite dominating UK politics for the last decade the crisis has been a notable absence from the 2017 general election campaign

Chris Kirkland, Lecturer in Politics, University of Liverpool

Chris Kirkland2017 marks the tenth anniversary of the onset of the economic crisis. For the past decade and the last two UK general elections in 2015 and 2010 the issue of the economy has been the central focus of political discussions. Bank closures, on both sides of the Atlantic, the ‘Run on the Rock’ and the visible changing face of the British high street that followed the 2007-08 crisis were all defined as being once in a generation events – comparable only to the crises of the 1930s and 1970s. The crisis has dominated the political agenda, however the discourse of the 2017 general election appears to have moved on from discussing the crisis of 2007-08.

This is not to say that the crisis has been ‘resolved’. Rather the end of the crisis is signified by political parties and the media altering the political agenda.  Carefully created narratives of new highly salient issues (Brexit) have detracted attention from the underlying problems within the British economy.  Here it is important to note that not all crises are ‘resolved’ – some crises take a prolonged time to fully emerge, and some fail to appropriately link cause and effect and therefore fail to be resolved as they cannot adequately assign blame.

The crisis in the UK, beginning in 2007, is now largely understood as a domestic debt crisis, based upon prevailing narratives emanating from the media and Conservative Party; David Cameron and George Osborne were keen to construct narratives of ‘Labour’s debts’ blaming the party for excessive spending, and failing to ‘fix the roof while the sun [was] shining’. But this debt crisis has not followed such a simply pathology of blame attribution and crisis resolution, despite the language and rhetoric of crisis dominating the political agenda for seven years since the election of 2010.  Conventional understanding of crises suggest that a crisis can only be resolved following some form of change – e.g. through the resignation of a minister or blamed agent, a new framework for regulation or changing patterns of consumption.  Such changes are important in preventing a similar crisis from occurring.

The Conservative electoral victory (and Labour’s defeat) in 2010 arguably confirmed the ‘debt crisis’ discourse as dominant (and thus accepted over Labour’s insistence, and alternative framing, that the crisis was a ‘Global Financial Crisis’). Recent analysis by the IFS demonstrates that despite seven years of austerity measures ‘debt is forecast to remain above twice pre crisis levels throughout the next parliament’ and that the UK has the fifth largest budget deficit of 35 advanced economies. Despite much blame being attributed (principally in the election campaigns of 2010 and 2015) Britain is still heavily indebted as a nation.

Yet warnings of the economic consequences of such high debt levels have been markedly absent from political discourse in the 2017 general election campaign. Equally, notions of blame attribution (which were still being used two years ago by the Conservatives whose 2015 manifesto noted that ‘the job is not finished… huge challenges remain at home. We have cut the record deficit we inherited to five per cent of GDP, but that is still too high’) appears to have disappeared as the issue of Brexit is according to one IPSOS-MORI poll perceived to be ‘the single most important’ issue facing Britain. This is not to deny that domestic policies haven’t been discussed and that the campaign is less Brexit-centric than Theresa May would have envisaged (or even liked) when she called the election.  Yet such discussions haven’t been explicitly about macroeconomic policy per se, but focused upon issues of adult social care and, more recently, national security.

One indicator of this shift is the number of times the words ‘debt’ and ‘deficit’ appear in the two main political parties’ manifestos. The words appeared a total of 46 times in the Conservative and Labour manifestos of 2010, 45 times in 2015, but just 8 times in the latest manifestos.  Figures are used by calculating the number of times the two words were used relative to the crisis of 2007-08 and resolution of that crisis.  Other references that didn’t relate to the crisis, (for example, references to third world debt) were excluded from the calculations.

graphInstead of focusing upon the economy, the media and political parties, acting as agenda setters, are more focused on, and have shifted attention towards, the question of Brexit, and in particular different conceptualisations of what Brexit might look like. Theresa May has through both the calling of the election, and the campaign itself, sought to present the election as a question of who is best placed to negotiate Britain’s exit from the EU with the other 27 member states, and argued for a strong mandate to lead such negotiations.

Although Brexit is an important issue in its own right the emphasis to shift the discourse towards it acts as paradigm reinforcing. Rather than seek to further explore and understand the economic problems that led to the crisis ten years ago macroeconomic indicators are now explored relative to the Brexit process, changing the parameters of contemporary debate. (Un)employment is being linked to questions of migration and freedom of movement, inflation linked to potential new trade deals and the Brexit process, rather than any notion of economic competence, is portrayed as the key (downward) driver of the value of sterling.  The desire to defend the existing neoliberal  paradigm is not new; others have noted how previous austerity policies have been based upon underlying ideologies of the state and have stopped short of retributive measures aimed of prevent blamed agents from instigating another crisis, allowing for ‘the strange non-death of neoliberalism’.

The question is where does this shifting discourse leave the austerity agenda? Having consistently talked about a ‘long term economic plan’ this is not something the Conservatives are likely to drop quickly, but does the focus away from debt and the deficit suggest that they are seeking to increase their  room for manoeuvre if the Brexit negotiations have adversarial affects on the economy?  It is likely that austerity may continue certainly in the short term, but if Brexit negotiations run into difficulty in 2018-19 may we see a change of approach?  Alternatively, is the rationale for continued austerity now framed in a more diverse framework – for example one which has ideological considerations about the scope and size of the state?

Whilst there are many arguments to suggest moving away from an austerity agenda is beneficial, moving away from understanding and seeking to resolve the crisis of 2007-08 is not without its problems. This is not to imply that austerity is the only manner in which such resolutions can be found – rather it is the only manner that has hitherto been offered by the political elite.  Without learning the lessons of the crisis – what went wrong and why – and acting upon these the path towards crisis resolution is made much harder (if not blocked entirely), as is the prevention of similar crises in the future.  One question that has not been answered (or even asked) within the election is what happens if another major economic crisis, similar in scale to 2007-08, happens again?  Equally the failure to address the problems that have previously been identified (i.e. high levels of national debt and budget deficits) sets a worrying precedence for further crises; that the failings (perceived or otherwise) of both parties can simply be swept under the carpet through the shifting of discourse towards a new event/crisis.

Shifting the discourse away from such solutions implies that politicians are comfortable with Britain’s ability to survive another crisis of this magnitude- or that such an event is highly unlikely. However the problem with such assumptions is that – as the evidence of the 1930s and 1970s demonstrates – such once in a generation events tend to happen, approximately, every 40 years or so.

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