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1 December 2017

Mr Bric fears for Brexit Britain: rock star economist Jim O’Neill on what lies ahead

“Talk about the irony: here are we dragging ourselves out with Europe looking better than it has done for at least ten years, if not twenty.”

By George Eaton

The first minister to resign from Theresa May’s government (though far from the last) was Jim O’Neill. On 23 September 2016, the former Goldman Sachs chief economist, who was appointed the previous year by George Osborne to oversee the Northern Powerhouse project, left his post as commercial secretary to the Treasury.

Though O’Neill’s departure was superficially amicable, it reflected multiple tensions with May’s team. The rock star economist (who coined the term “Brics” in 2001) was said to have been alienated by the lack of commitment to a northern supercity (which he calls “ManSheffLeedsPool”). I met O’Neill, 60 – dressed in an open-necked blue shirt with a red tie round his shoulders – to discuss the reasons for his resignation and the future of the global economy.

“The Northern Powerhouse is not as important a priority as it should be, and as it was under David [Cameron] and George [Osborne],” the Mancunian told me over tea at the Mayfair Arts Club. “But it’s nowhere near as bad as it was in that period when her two aides [May’s former joint chiefs of staff Fiona Hill and Nick Timothy] were around.”

Timothy has denied opposing the Northern Powerhouse, stating that he merely wanted an equivalent focus on the Midlands and other regions. But O’Neill, a board member of Osborne’s Northern Powerhouse Partnership, maintained that Team May’s antipathy to the former chancellor led them to undermine the programme.

“I was – and remain – stunned by how something as important as this can be so easily influenced by two unaccountable people [Hill and Timothy],” he said. “It was easy for me – why would I want to be part of this? I didn’t realise I was working in the Soviet Union. The whole cabinet was petrified of them, never mind others in the civil service.”

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This was not the only cause of O’Neill’s departure. He was irritated by the prevarication over Chinese investment in the Hinkley Point nuclear power station and by May’s championing of grammar schools (“I went to a comprehensive school… I’m a strong believer that grammar schools are not the right way”). And although he relished government (“the general capability of the civil service is fabulous, especially at the Treasury… It reminded me of Goldman Sachs”), O’Neill had little time for the House of Lords.

“The biggest reason I left was because I didn’t want to take the Tory whip in the Lords – because I’m not a Tory. And, as I knew beforehand, being a minister in the Lords is such a time-consuming thing. Every Monday, Tuesday, Wednesday most weeks, I couldn’t go home until God knows what time, just in case there’d be some weird vote that I’d have to go with the government on.”

Midway through our conversation, O’Neill quipped that he had “Mr Brics” stamped on his forehead. The economist is indelibly associated with the acronym, which refers to the emerging economies of Brazil, Russia, India and China.

Is it still a useful concept?  “Yes, is the simple answer. Sixteen years on, China over that period has grown more than I assumed it would… This summer we had the ninth political leaders’ meeting.”

O’Neill named France (because of Emmanuel Macron’s reforms), Poland (“other than Australia, the only economy of the global Top 30 that has not had a recession in the past 30 years”), Chile and India as the economies to watch. 

“Because of its demographics, if India did a few things right it could easily grow by 12 per cent a year.” But he added: “Unless they do a lot more on sanitation and personal hygiene, India’s got a mammoth antibiotic problem coming” (O’Neill led a review of antimicrobial resistance for the British government).

As a student of globalisation, he can envisage a world where the UK’s trade with China and India outweighs that with Europe. The most interesting economic statistic of the year, he told me, was that Germany’s largest trade partner is now China. “If you want to be good at global trade, you’ve got to be good at global trade. Whether you’re in the EU or not is a bit of a red herring.”

Yet as a “dispassionate Remainer”, he warned of Brexit: “Unless we can somehow get a bespoke deal for certain industries, it’s really bad news… We have two of the five most productive automotive plants in the world [in Sunderland and Swindon]  and it’s only because we’re, crucially, connected through the single market.”

Meanwhile, the global economy is growing at the strongest rate since 2008. “Eight of the ten largest economies are all accelerating at the same time, which is quite rare,” O’Neill noted. “Unfortunately, us [Britain] being one of the two that aren’t. Talk about the irony: here are we dragging ourselves out with Europe looking better than it has done for at least ten years, if not twenty.”

Outside economics, O’Neill’s greatest passion is Manchester United. He spoke savagely of the Glazer family’s leveraged buyout. “Some would say who am I to criticise that? But to apply that in such an aggressive way to something that is at the core of so many people’s lives is just inappropriate.” He gave up his United season ticket three years ago and prefers to watch away games.

I ended by asking O’Neill whether he would return to government. “Very unlikely. Not being able to make what are objectively clear policy decisions because of the games of the party… I find that quite a turn-off.” 

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This article appears in the 29 Nov 2017 issue of the New Statesman, The most powerful man in the world