In times of struggle, the British buy cars

It's not a rational response to economic hardship, but it is a British one.

The UK car industry has in the past been associated with British Leyland’s unreliability, emptying factory floors and rusting scrap yards. It is now the most unlikely, but welcome, source of continuous good news in the post-2008 economy.

As the recession trudges on it’s become an accepted wisdom that consumers will not spend on luxuries, they will avoid large expense and they are not confident enough to invest in long term products. It seems a stretch to imagine that in a recession the car industry would remain buoyant; surely, it’s pure fantasy to say that it would do well?

There were early signs that the car industry held hope for consumers, GDP-watchers and policy makers alike. When the Labour government launched a car scrappage scheme in March 2009 car sales increased beyond expectations. Up to 400,000 cars, each around 27 per cent more efficient than its scrapped counterpart, were sold as a result of the scheme. The policy will go down in records as one of the most successful of the stimulus policies following the 2008 crash.

When that stimulus was taken away wouldn’t the car industry, which was already in decline before the crash, lose business? Maybe in the short term, but in the long term the good news has continued. Foreign companies have chosen to invest in production at plants in Sunderland, Ellesmere Port and Halewood. The first quarter of 2012 became the first time since 1976 that motor exports exceeded motor imports. With models like the Land Rover Freelander, the Vauxhall Astra and the Nissan Qashqai now built in the UK, the car manufacturing industry is now among the most viable and important in the UK.

British people aren’t buying cars in the middle of a recession, are they? Yes. They really are. In the year from July 2011 to July 2012, new car sales increased by 10.5 per cent even as we slipped back into recession. With their much welcomed GDP boosting powers this increase does not look like it is stopping.

On 1st September, when the new “62” registration plate is released, over 165,000 new cars will make their way from forecourts to the UK’s roads. This week Vertu Motors, a top ten UK motor retailer, released research which estimates that these sales will be worth in the region of £500m to the treasury in VAT alone, and an additional £20m in road tax.

Boosts in sales are not only good for the UK’s GDP, but for the budget too. New models are more carbon efficient than ever before, passing on benefits to consumers and relative improvements for the environment too.

In trying times, when all that we are given are negative stories and confidence is low, we can find a surprising and much needed boost for UK consumers and manufacturers in high cost luxury goods.

In times of struggle, the British buy cars. Go figure.

Cars pile up in a scrapyard as they're replaced with newer models. Photograph: Getty Images

Helen Robb reads PPE at Oxford University where she is deputy editor of ISIS magazine.

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When Theresa May speaks, why don’t we listen?

Not many Prime Ministers have to repeat themselves three times. 

Theresa May is the candidate of Brexit and market panic. She ascended to the highest office because, in the fraught weeks after Britain’s vote to leave the European Union, she represented a safe haven for nervous Conservative MPs, the dependable family mutual that remained open while all along the Conservative high street, her rivals were shutting up shop.

Her popularity, as revealed in high poll ratings outside Westminster, too, owes itself to the perception that she is a serious politician in serious times, happily installed atop the ship of state to guide it through the rocky waters of Brexit negotiations.

May’s premiership has been defined by market panics of a different kind, however. The first is in the currency markets, where sterling takes a tumble whenever she pronounces on Britain’s future relationship with the European Union, falling both after her conference speech on 2 October and after her start-of-the-year interview with Sophy Ridge on 8 January. The second is in the opinion pages, where May’s stock oscillates wildly from bullish to bearish.

In the first months of May’s government, she was hailed as an Anglo-Saxon counterpart to Angela Merkel: a solid centre-right Christian democrat who would usher in a decade of conservative hegemony. More recently, she has been compared to Gordon Brown because of her perceived indecisiveness and repeatedly accused of failing to spell out what, exactly, her government’s Brexit objectives are.

In a symbol of the splits on the right between the Brexiteers and Remainers, the Economist, that bible of free-market globalisation and usually a reliable tastemaker as far as Westminster groupthink is concerned, began 2017 by dubbing the Prime Minister “Theresa Maybe”. Though May’s Downing Street is less concerned with the minutiae of what goes on in the public press than David Cameron’s, the contention that she is indecisive was a source of frustration.

There is an element of truth in the claim that May still views the world through a “Home Office lens”. One senior minister complains that Downing Street considers the Ministry of Justice as a “rogue outpost” of May’s old stomping ground, rather than a fully fledged department with its own interests and perspectives.

Yet even the most authoritarian of home secretaries would struggle to secure a conviction against May on the charge of opacity as far as her Brexit approach is concerned. She has hit the same grace notes with the reliability of a professional musician: Brexit means freedom from the jurisdiction of the European Court of Justice and control over Britain’s borders, two objectives that can only be achieved as a result of Britain’s exit not only from the EU but also the single market. This was confirmed on 17 January in the Prime Minister’s Lancaster House speech in London.

David Cameron used to say that he would never have “a people”. Certainly, there is no Cameroon tendency in the country at large to match the generation of council house residents that became homeowners and lifelong Conservatives because of Margaret Thatcher and Right to Buy. However, there is, unquestionably, a Cameroon people or faction to be found at almost every rung of London’s financial services sector or at editorial meetings of the Economist, though it as at the Times and the Sun where the treatment of May is at its most noticably rougher than in the Cameron era. 

Michael Gove, her old rival, is not only employed as a columnist by the Times; he enjoys the confidence and admiration of Rupert Murdoch. That the Times secured the first British interview with Donald Trump was a coup for Murdoch, an old associate of the president-elect, and for Gove, who conducted it. It left May in the unlovely position of making history as the first prime minister to be scooped to a first meeting with a new American president by a sitting MP in modern times. It also attested to a source of frustration among May’s allies that she is, for all her undoubted popularity, still ignored or doubted by much of the right-wing establishment.

That condescension partly explains why her words are often listened to briefly, acted on hastily and swiftly forgotten, hence the pound’s cycle of falling when she makes an intervention on Brexit and rising shortly thereafter. The Lancaster House speech was designed to break this pattern. Downing Street briefed the most potent paragraphs at the weekend so that the markets could absorb what she would say before she said it.

As a result, the pound rallied as May delivered her speech, which contained a commitment to a transitional deal that would come into effect after Britain has left the EU. Some financiers believe this arrangement could become permanent, which once again demonstrates how much they underestimate May’s ability to enforce her will.

Being underestimated by Cameron’s people, in Westminster and the City, has the unintended effect of shoring up Theresa May’s position. A prolonged and sustained bout of panic would increase the pressure for a soft landing, but its absence makes it harder for Labour to oppose her effectively, although it has largely acquiesced to the Tory plan for Brexit, at least as far as membership of the single market is concerned. 

Yet for all the plaudits that the Prime Minister’s Lancaster House speech attracted, for all her undoubted popularity in the country, she is in the anomalous position of being a Conservative Prime Minister who has priorities on the European stage other than the preservation of the City of London and to whom Rupert Murdoch is not a natural ally.

As such, she may find that her deadlier enemies come from the right.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.