Banker-hatred expresses a longer, deeper crisis

Financiers' immunity from justice mirrors their insulation from recession.

Why are we so outraged by the Barclays-Libor affair? Silly question really. It is scandalous that traders appear to have manipulated a fundamental market-making interest rate in pursuit of a quick profit. It is emblematic of habits and ethics that steered the British economy onto the rocks in 2007-08. The detail of the story – the brazen emails that lay bare the scam – exude the arrogant sense of entitlement that presents the protagonists in a repulsive light. And it reminds us, when we see Bob Diamond, conspicuously unburdened by judicial investigation or conscience, that the caste of people with the strongest claim to have caused the financial crisis are the same ones who seem least afflicted by its consequences. That provokes our natural sense of injustice.

But there is another layer to public feeling about this issue. It was the subject of an event I attended this morning at the Resolution Foundation, the consistently excellent think tank that dedicates a lot of thought to the problems facing low-to-middle income households. They are famously squeezed (the low-to-middle income households, that is; Resolution are hardly even cramped in their lovely spacious West End office and, outside of Westminster, are not all that famous).

The key observation contained in Resolution analysis – available on their website – is that wages and earnings for most people in Britain stopped growing some time in the middle of the last decade. As the cost of basic goods and services has risen, a process accelerated by some painful bursts of inflation in the last couple of years, people are struggling to keep their heads above the water. Crucially, this process started before the crash and before the recession. It is also a phenomenon recorded in many other developed economies and is especially pronounced and protracted in the US. (For a brilliant account of how wage stagnation is hollowing out the American middle class, read this essay by Ed Luce in the Financial Times. Behind a paywall, sadly.)

In the UK, the trend for decline in wages and the attendant slide in living standards was held back by the growth of tax credits. Shadow Chief Secretary Rachel Reeves spoke at this morning’s event and mounted a vigorous defence of tax credits – generally scorned by the coalition as a tool of deranged Brownian micro-management and first in line for cuts. The other way Britons topped up stagnant wages was private sector borrowing: credit cards, store cards, re-mortgaging, high street lending etc. That, needless to say, was not a terribly sustainable route to prosperity.

An important point that Resolution make (and that Reeves touched on but with characteristic caution) is that, when growth returns to the UK economy, there is no reason why it should do so in a way that solves the longer term structural squeeze on incomes. This is not some abstract question of economic balances. It is probably the issue that will decide the next election. On current trajectories, the overwhelming portion of British voters will reach 2015 feeling poorer, less secure in their jobs - if they have one - and less hopeful for the future than they did in 2010. And that is true even if the economy is growing.

Downing Street are alert to the problem. One reason why fuel duty rises were scrapped this week is that David Cameron and George Osborne badly need to find ways to signal that they have noticed how hard many people are finding it to make ends meet.

One Number 10 advisor told me recently of his conviction that politics for the next decade will come to be dominated by the decline in living standards for ordinary households and the question “so what are you going to about it?” I think he is probably right.

And it is against that backdrop that the Barclays scandal has to be seen. It is not just offensive in some abstract judicial way. It isn’t just scandalous as a case of bad regulation and wickedness unpunished. Seeing what bankers have been up to and suspecting that they might get away with it, when they have escaped the financial consequences of their actions and preserved their rising incomes, is a vicious, sneering affront to the British people. Politics itself will be devalued - more than it already is - if it fails to offer an effective response to their anger.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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A global marketplace: the internet represents exporting’s biggest opportunity

The advent of the internet age has made the whole world a single marketplace. Selling goods online through digital means offers British businesses huge opportunities for international growth. The UK was one of the earliest adopters of online retail platforms, and UK online sales revenues are growing at around 20 per cent each year, not just driving wider economic growth, but promoting the British brand to an enthusiastic audience.

Global e-commerce turnover grew at a similar rate in 2014-15 to over $2.2trln. The Asia-Pacific region, for example, is embracing e-marketplaces with 28 per cent growth in 2015 to over $1trln of sales. This demonstrates the massive opportunities for UK exporters to sell their goods more easily to the world’s largest consumer markets. My department, the Department for International Trade, is committed to being a leader in promoting these opportunities. We are supporting UK businesses in identifying these markets, and are providing access to services and support to exploit this dramatic growth in digital commerce.

With the UK leading innovation, it is one of the responsibilities of government to demonstrate just what can be done. My department is investing more in digital services to reach and support many more businesses, and last November we launched our new digital trade hub: www.great.gov.uk. Working with partners such as Lloyds Banking Group, the new site will make it easier for UK businesses to access overseas business opportunities and to take those first steps to exporting.

The ‘Selling Online Overseas Tool’ within the hub was launched in collaboration with 37 e-marketplaces including Amazon and Rakuten, who collectively represent over 2bn online consumers across the globe. The first government service of its kind, the tool allows UK exporters to apply to some of the world’s leading overseas e-marketplaces in order to sell their products to customers they otherwise would not have reached. Companies can also access thousands of pounds’ worth of discounts, including waived commission and special marketing packages, created exclusively for Department for International Trade clients and the e-exporting programme team plans to deliver additional online promotions with some of the world’s leading e-marketplaces across priority markets.

We are also working with over 50 private sector partners to promote our Exporting is GREAT campaign, and to support the development and launch of our digital trade platform. The government’s Exporting is GREAT campaign is targeting potential partners across the world as our export trade hub launches in key international markets to open direct export opportunities for UK businesses. Overseas buyers will now be able to access our new ‘Find a Supplier’ service on the website which will match them with exporters across the UK who have created profiles and will be able to meet their needs.

With Lloyds in particular we are pleased that our partnership last year helped over 6,000 UK businesses to start trading overseas, and are proud of our association with the International Trade Portal. Digital marketplaces have revolutionised retail in the UK, and are now connecting consumers across the world. UK businesses need to seize this opportunity to offer their products to potentially billions of buyers and we, along with partners like Lloyds, will do all we can to help them do just that.

Taken from the New Statesman roundtable supplement Going Digital, Going Global: How digital skills can help any business trade internationally

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