The Economist turns on Labour

Brown accused of waging "class war"

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The Economist cast its vote for Labour at the last two elections, but judging by this week's cover it'll be backing the Tories in 2010.

The accompanying leader declares:

Britain has much experience of class politics, and none of it has been good. Class politics makes for bad economics: the state swells, public money gets wasted and entrepreneurs grow nervous. And it makes for a sad country, too: divisions deepen, suspicion flourishes and the social contract frays. When the time comes to judge the parties' electoral strategies, voters should remember that.

"Class war" was once a term reserved for epic battles such as those between Margaret Thacher and the NUM, but apparently now the charge can be made on the basis of a single quip by Gordon Brown at PMQs.

That Brown's satirical remark (he joked that the Tories' tax policies had been "dreamt up on the playing fields of Eton") sparked such a media storm shows how little we've been exposed to genuine class politics in recent years.

It's disappointing to see a supposedly liberal title such as the Economist ignore the Tories' far more outrageous plans for inheritance tax. The magazine chides Labour for its decision to shelve an increase in the inheritance-tax threshold and ignores the entrepreneurial and meritocratic case for the tax.

For a refreshing argument from the right in favour of inheritance tax, read Irwin Stelzer's essay in this week's magazine.

 

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George Eaton is political editor of the New Statesman.

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The Brexit slowdown is real

As Europe surges ahead, the UK is enduring its worst economic growth for five years. 

The recession that the Treasury and others forecast would follow the EU referendum never came. But there is now unmistakable evidence of an economic slowdown. 

Growth in the second quarter of this year was 0.3 per cent, which, following quarter one's 0.2 per cent, makes this the worst opening half since 2012. For individuals, growth is now almost non-existent. GDP per capita rose by just 0.1 per cent, continuing the worst living standards recovery on record. 

That Brexit helped cause the slowdown, rather than merely coincided with it, is evidenced by several facts. One is that, as George Osborne's former chief of staff Rupert Harrison observes, "the rest of Europe is booming and we're not". In the year since the EU referendum, Britain has gone from being one of the west's strongest performers to one of its weakest. 

The long-promised economic rebalancing, meanwhile, is further away than ever. Industrial production and manufacturing declined by 0.4 per cent and 0.5 per cent respectively, with only services (up 0.5 per cent) making up for the shortfall. But with real wage growth negative (falling by 0.7 per cent in the three months to May 2017), and household saving at a record low, there is limited potential for consumers to continue to power growth. The pound's sharp depreciation since the Brexit vote has cut wages (by increasing inflation) without producing a corresponding rise in exports. 

To the UK's existing defects – low productivity, low investment and low pay – new ones have been added: political uncertainty and economic instability. As the clock runs down on its departure date, Britain is drifting towards Brexit in ever-worse shape. 

George Eaton is political editor of the New Statesman.