Is Britain going to be OK?

I have been itching to try and answer this question. Over the past 6 months I have travelled to the US, Asia and Europe and each time when I come home I bring with me a clear sense of Britain’s advantages. But within days the imperfections we all live with return to the forefront of my mind, and the notion of British exceptionalism becomes lost in the routine of work and family life. Quickly I slip back into doubt; there is so much to consider. What a ridiculous question! A question which only occurs to those who fear the answer might be different.

But here goes. To end the procrastination, I have given myself the length of my train journey from Paddington to Pewsey (1 hour 15 minutes) to write something down. Most of Paddington has recently been refurbished and it is a pleasing, uplifting starting point for an expedition in deliberation. The 18.33 to Exeter St David’s is waiting at Platform 5, and on my way I pass the Heathrow Express which evokes stirring echoes of George Osborne’s famous slogan ‘Britain is open for business’; a different messages is on the front page of my (free) London Evening Standard: “Heathrow chaos: now border staff plan strike”. I make it through the ticket gates with my head ringing with a very British combination of optimism and caution. Which best represents Britain’s prospects?

On Platform 5 I walk the length of the Class 43 Inter City 125 towards Carriage A, which is a designated Quiet Carriage. The livery – bright pink doors and a fluid pink and purple graphic on a midnight blue background called ‘Dynamic Lines’ – irks rolling stock which is 30 years old but handsome still and serviceable in a draughty, slam-door sort of way. We leave on time, as we normally do. The Great Western Mainline, which runs to Penzance, will be electrified sometime between 2015 and 2020, and the Inter City stock will be replaced with the (imported) Hitachi Super Express. This evening I am lucky to have two seats to myself; cynics among my commuter friends warn we should not make the mistake of equating new rolling stock with better seating or more leg room. But enough of British cynicism and British trains, there isn’t time.

And stop scanning the Evening Standard.

[QUOTE OF THE DAY: What? I’m down with all of them”. Gwyneth Paltrow on being asked by Amanda de Cadanet in an American TV interview about her favourite sexual position.]

Tomorrow London votes for a new mayor, and there are local government elections across the UK. There is a two-page interview of David Cameron on pages 8 and 9. Cameron will be bracing himself for a bad set of results but Boris should hold London and this will frustrate Ed Milliband’s attempts to break through as a serious threat to Cameron. “I want a Boris in every city” says Cameron. “When I see Boris succeed I think GOOD.”

Aaargh – Thames Valley industrial parks are beginning to flit past. Reading station beckons but it is a terrible bottleneck and we should be held waiting while a platform becomes free. And so we halt. Now, get to the point!

1. We have a head of state who rules in the name of service and love. The monarchy is associated with pomp and formality and the military and emotional brevity but it rules in the name of community and safety and love. This sounds glib but austerity and anxiety are exerting a disaggregating pressure on our society, and the ruling spirit really counts. Examine the Queen’s behaviour; prepare to miss her when she is gone. Look how hard Prince Charles works for others. It seems to have rubbed of on his sons. And the royal family casts harmless star dust over the land and channels the affection of tens of millions around the world to London and the United Kingdom. And it is authentic and organic; it is played by real people doing their best for the sake of it. Only the British could under-appreciate this feat of state craft.

2. The monarchy also denies power to the executive; it acts as a quiet break on prime ministerial ambition. Too quiet for some, perhaps, but all prime ministers are kept in their place – even Tony Blair had to explain himself on a weekly basis. Despite empowering Margaret Thatcher and Blair to over-reach, our political system is fundamentally efficient and trusted: it ejects incumbents at roughly the right time. It points forward and embraces change, although we continue to navigate choppy waters without any real sense of where we want to end up. The absence of a long term, deliberated and widely understood strategy costs us and is the biggest and most damaging gift of empire which we still possess.*

Lakes and canal, both swollen with water after a wet April. A golf course, a driving range and immediately Newbury race course; the white fencing, the native woodland greening in the distance, the Dubai Duty Free Grandstand. Red brick terraced houses; a station in need of a lick of paint; ‘Home of Vodafone’ say the ugly signs – this is a company town. From Newbury in Royal Berkshire reaches a global network of masts and booster stations and submarine cables and a hundred million service agreements and handsets and legally binding small print and monthly revenues which in 2010/11 generated an operating profit of £12.2bn.

3. We vote with kindness. Look at the French who are as rich as we are, and live in a much bigger, and more blessed piece of geography. And yet a nation to whom many British commentators defer to for its sophistication and cuisine and esprit, votes every four years in vast numbers for dark-thinking nationalists and malcontents. The French vote against things, and we vote for things. We live on the open sea, we are blown about – we know nothing is perfect; they live in the fertile valley and grow everything in neat rows and lose the light on a regular basis. The BNP is a nasty but laughable quarry few in Britain fear. Picture Cameron, instead of one of the French Presidential candidates having to swear and bluster at globalisation so that he might fool 6 million hearts of oak that only he had the force to keep Britain unblemished, and change at bay. We live in the real world and we are not afraid. Cherish this.

Next stop Hungerford. The country gets wild and scruffy. I must try and get to 5. before we cross into Wiltshire:

4. In Britain organised religion has diminished in authority to the extent that the church must ingratiate itself to the majority through acts of charity, not the other way around. Thus it has become an emblem of kindness and tolerance, and its clergy have suppressed the superstitions and bossiness which once came naturally to them. This is very important, frees us and makes us modern. We are not God fearing; we are more concerned by funding the NHS than the infinite possibilities of heaven. Look what religion is doing to the US, once a nation celebrated for its enlightenment.

5. We lack an intelligentsia. Another way of saying this is that we are a pragmatic, grounded people weary of grand ideas and theories. As a pragmatic, grounded Brit I am weary of making this sort of grand assertion. But I can say that we lack an intelligentsia because it is simply not there. We have Jonathan Miller and Melvin Bragg and Neil McGregor and as many intelligent men and women as we need but they cannot move en masse, or seize a platform without risking mockery. Of course, this leads many to despair for our lack of sophistication and long for the French style (see point 3.). But does the absence of grandstanding Bernard-Henri Lévys and Michel Houellebecqs matter? More importantly, it makes Britain an inherently sceptical, doubting sort of place – Jerusalem can be built only with great patience and toil; if it ain’t broke, don’t fix it. These honest, muscular virtues arm a people battling decline. There are no short cuts.

Bedwyn is minutes away. The line tracks the canal. We are in the gloaming; all I can see is fields climbing into the sky filled with sheep. I must not become sentimental.

6. The absence of an intelligentsia doesn’t mean we don’t believe in things. British values – fairness, tolerance, freedom of speech and association, the rights of the individual – are world famous. We are prepared to fight for these values, which makes us unusual and gives us a stake in the future and this gives us character because we have to care about the consequences of our actions. We haven’t minded soldiers dying up to now, though we are most of us uncomfortable about Afghanistan and whether it has been worth it. Just about all of us are embarrassed about Iraq, and how Blair allowed himself to be shepherded into it by President Bush, and took the rest of us with him. (Once in, Blair fought tooth and nail in Iraq in the name of British values like fairness, tolerance and freedom of speech and association). But the point I want to make is that Britain is a country which is willing to defend its values and interests. We are a P5 member of the UN Security Council, we have a place at top table. We may not, for the time being, have aircraft carriers, but we are engaged. This matters to all of us who live here because it places us on the front line, and garners us; in a small way we are critical and we cannot be indifferent to what is happening beyond our shores. Our voice is heard.

7. I have mentioned the economy only obliquely but of course it is fundamental. In an era of globalisation, the most important thing. Despite all our fears we are still good at the things we need to be good at. We are extraordinarily creative (though we not good enough at converting bright ideas into great businesses). Britain leads the world in music and theatre and publishing and contemporary art and being badly behaved; our pioneers lead the pack in restaurant kitchens and behind the world’s bike sheds and prowl base camp waiting to ascend Everest in Mallory’s footsteps. Our cigarette companies are world beaters, as are our pharmaceutical giants. We have the best universities in Europe. The quality and value of our scientists is at last understood. At the other end of the curriculum, we produce the bookish and the rule-makers in patient reams, ream after ream, and these white collar guardians of best practice and legal precedent and the P&L and risk management are just what is needed by the rapacious capitalists of Asia and the Americas and Africa. Though bruised, the City remains the world’s financial centre, and only bad policy will topple it. Making things lingers in our DNA, and the third industrial revolution (digital manufacturing, new materials and transformed industrial processes) gives us a chance to broaden our high tech manufacturing base. Look at the  McLaren factory at Woking and see the future. The financial crisis has created a new generation of restless entrepreneurs with their heart set on proving themselves and flying the flag and buying somewhere on the beach in the Bahamas. These wealth creators will always be with us, in the future they will pay more tax. An open economy, Britain has attracted $1.09 trillion of inward investment since 1970 (the highest in the EU) and is the world’s second largest investor in other countries ($1.7 trillion), after the US. The UK remains the largest inward investor in the US. Etc.

8. The richness of our cultural and sporting life. What a rich brew this place is, and so well stirred and sweated out that it would be hard to separate. Shakespeare still fundamental, not just to us but to the world. The world’s greatest football league. The world’s best cricket team. Test matches. Film. Dogs. The Olympics will have wild flower meadows, brought carefully to flower in the critical weeks of July and August. Segue to allotments. The Great Northern Run. Celebrity Come Dancing.

We are coming into Pewsey. There is Martinsell Hill and its lone scots pine. I am almost done.

8. Things we can’t help: language (universal), geography (temperate, mild, room for global warming), our time zone (key to London’s success as a financial centre).

9. We are not in the eurozone.

10. A raced, generalist point with hints of sentimentality but it will have to serve as a summary. There remains something exceptional about this country; exceptional in a way that is dynamic and connected to the globe and shaping the future in a way that no other European power is capable of, even if they make better cars or cheese than us (and we make both very well). There is something inspiring about Britain in a steady, unpretentious, rather pedantic sort of way – we have a nobility; or it might just be kindness. In spite of our self-doubt / self-hatred, we inspire others and we know there is something important about what our island represents.

*But we need a national strategy, which is understood by all, not just the elites. All the above is a snap shot and may not last forever. We barely have any laurels left to rest on. It’s time to try and point everyone in the same approximate direction. In 1944, a senior mandarin’s suggestion to the permanent secretary at the Foreign Office that a two year foreign policy might be introduced, updated every six months, elicited the response “That way lies Bedlam”. Our long imperial glide path is at an end. We are come to rest, nose-first into the sand dunes and now we must climb out and make our way on foot. 

PS: And we must persuade the Scots to stay in the Union. This is vital, and despite Alex Salmond’s twinkle and ruritanian silhouette, this looks set to be a nasty fight in a confined space which could still be won by the local man prepared to throw his weight around. 

[I thought I would start with why Britain will be alright because I am naturally an optimist and this pastiche of an argument is closest to what I believe, or perhaps what I prefer to believe. But there’s also an argument to be made that we really are finished, and should fear for the lives of our grandchildren. I am saving this for another train ride home.] 


3 thoughts on “Is Britain going to be OK?

  1. stuff-happens.org

    Al – thought you would find this interesting. Written by our Russian equity sales guy in NYC…and you thought the UK was having a tough time…..

    JPM’s Russian Head of Equities, Vlad Bril, has translated an editorial from today’s Russian business daily, Vedomosti. I agree with Vlad’s view that it is a fair and accurate description of Russia’s current state of affairs. The original Russian version is below.
    Yesterday’s speech by PM Vladimir Putin in his final report to the Duma on the Government’s work in 2011, in our opinion, was absolutely truthful. Indeed, few governments can boast of such results – GDP growth in Russia is ahead of many countries, wages are rising and the ruble has strengthened its position. We have a low external debt, population growth and increased pensions. But the report clearly omits several important facts about the life of the country, without which the picture is incomplete.

    Despite all the successes, money and people are fleeing the country. In the four years of Putin’s premiership the capital flight from Russia reached a catastrophic level – $ 338.9 billion – the amount equal to Russia’s entire annual state budget.

    Capital flight is accompanied by a brain drain: according to polling agency Levada Centre, over the past 12 months the desire to leave the country was expressed by about a third of the polled residents of cities with a relatively high level of education. During the last three years 1.3 million people left Russia, 40% of them had college education.

    The intellectual and financial elite are leaving the country, among other things, because Russian entrepreneurs have in recent years been subjected to monstrous reprisals from the state. During the last 10 years, according to the Center for Legal and Economic Research, every sixth entrepreneur was criminally prosecuted. Two-thirds of the companies owned by the prosecuted business-people were closed and two million people employed by them lost their jobs. According to experts, more than 100,000 business-people are currently behind bars.

    The country is suffering from a catastrophic shortage of investment: its volume still has not surpassed the pre-crisis highs. Of those capital investments that are being made, two-thirds are the large-scale State-financed oil and gas pipelines. The rest look more like desperate hole-patching rather than investments: 70% of the 10,000 enterprises polled in the survey conducted by the Higher School of Economics have invested in the replacement of old equipment. The reason for these investments was not the low efficiency of the equipment, but its complete physical depletion.

    One of the reasons why companies cannot invest is significant rise in tax burden, which Mr. Putin for some reason forgot to mention. When the current cabinet commenced its work, the total tax burden was 35.8% of GDP; now, according to presidential aide Arkady Dvorkovich, the tax burden reached 40% of GDP.

    Increased social tax contributions not only slowed down investment and growth, but also pushed some business in the ‘grey economy’ contributing to the development of ‘cash transactions’ and criminal schemes.

    Budget problems also have increased. Following the crisis, most governments have actively pursued a policy of belt-tightening, bringing their expenditures to more reasonable levels while Putin’s government has done the opposite: during the post-crisis years the share of social spending in our budget has risen from a fourth to a third. A pre-crisis budget deficit (excluding oil and gas revenues) of 2-3% of GDP rose to 10% of GDP today. The current budget would not sustain the 2008-like shocks when the price of oil has fallen by 75%. Unfortunately, Russian senior citizens are still not well-off. While pensions did increase, they barely reach the subsistence level.

    Mr. Putin is proud of the fact that we began to build more apartments, but he did not mention that today fewer people can afford them. Housing became less affordable because of the rise in corruption price premiums. Builders set aside 20% to 50% of the value of the investment project for the bribes to government officials. According to authors of the “Strategy 2020”, Russian corruption leads to a 15% higher prices for food and 25%-30% for real estate. In the 2011 ranking of perceived corruption by Transparency International Russia occupies 143th place out of 183 – on par with Nigeria and Uganda.

    The report to the Duma ought to have mentioned the growth of monopolistic state-owned corporations – we have eight now with one more on its way. It would also be nice to include in the report the number 1 trillion rubles (33B$) – this much, according to President Dmitry Medvedev, is stolen every year in State procurement.

    Apart from that, Putin’s report is an exemplary one and is full of progressive ideas.
    Link to Moscow Times’ play-by-play of Putin’s speech: http://www.themoscowtimes.com/news/article/archived-live-blog-putins-address-to-state-duma/456556.html

    Отчет премьера Владимира Путина о блестящей работе правительства, на наш взгляд, абсолютно правдив. Действительно, мало какое правительство может похвастаться такими результатами — по росту ВВП Россия впереди многих стран, зарплаты растут, а рубль укрепляет свои позиции. У нас низкий внешний долг, прирост населения и повышенные пенсии. Но в докладе явно не хватает нескольких существенных фактов о жизни страны, без которых картина не будет полной.
    Несмотря на все успехи, из страны бегут деньги и люди. За четыре года путинского премьерства из России вывезена катастрофическая сумма — $338,9 млрд (объем чистого вывоза капитала, по данным ЦБ за 2008-2011 гг. и I квартал 2012 г.). Это как весь бюджет страны за целый год.
    Деньги бегут вместе с мозгами: в течение последнего года желание уехать из страны выражали около трети опрошенных жителей крупных городов с достаточно высоким уровнем образования и дохода, констатирует «Левада-центр». За три года Россию покинули 1,3 млн человек, 40% из них — с высшим образованием.
    Интеллектуально-финансовая элита покидает страну в том числе потому, что в последние годы российские предприниматели подвергаются чудовищным репрессиям со стороны государства. За 10 лет, по данным Центра правовых и экономических исследований, уголовному преследованию подвергся каждый шестой предприниматель. Две трети компаний попавших «под статью» бизнесменов закрылось, без работы осталось до 2 млн человек. По расчетам экспертов, за решеткой сейчас находится более 100 000 бизнесменов.
    Стране катастрофически не хватает инвестиций: их объем все еще не преодолел кризисного спада. Да и те капитальные вложения, которые есть, на две трети обеспечены масштабными государственными стройками — это нефте- и газопроводы. А остальное больше похоже не на инвестиции, а на отчаянное латание дыр. 70% из опрошенных ВШЭ 10 000 предприятий инвестировали в замену старого оборудования. Причем не из-за его низкой эффективности, а из-за полного физического износа.
    Компаниям просто нечего инвестировать из-за резкого роста налоговой нагрузки, о которой почему-то забыл сказать Путин. Когда нынешний кабинет приступал к работе, совокупная налоговая нагрузка была 35,8% ВВП, сейчас, по оценке помощника президента Аркадия Дворковича, нагрузка достигла 40% ВВП.
    Повышение страховых взносов не только затормозило инвестиции и экономический рост, но и привело к уходу бизнеса в тень, расцвету наличного оборота и криминальных схем.
    Бюджетные же проблемы только разрослись. После кризиса большинство стран активно проводило политику затягивания поясов, делая более разумными свои расходы, в то время как правительство Путина делало все наоборот: за посткризисные годы доля социальных расходов в нашем бюджете выросла с четверти до трети. А бюджетный дефицит с докризисных 2-3% ВВП (без учета нефтегазовых доходов) вырос до 10% ВВП. Нынешний бюджет не выдержит потрясений, сопоставимых с 2008 г., когда цена на нефть упала в четыре раза.
    К сожалению, старики в итоге все равно не разбогатели. Пенсии хотя и повысились, но едва достигают прожиточного минимума.
    Путин гордится тем, что мы стали строить больше квартир, но не упомянул, что купить эти квартиры в состоянии все меньше людей. Жилье недоступно из-за коррупционной надбавки к себестоимости. Застройщики закладывают на взятки чиновникам от 20 до 50% стоимости инвестиционного проекта. По расчетам экспертов «Стратегии-2020», коррупция приводит к дополнительной наценке в 15% на продовольствие, в 25-30% — на недвижимость. В рейтинге восприятия коррупции Transparency International за 2011 г. Россия на 143-м месте из 183, на одном уровне с Нигерией и Угандой.
    В отчете о работе правительства надо бы еще отметить рост числа госкорпораций — их уже восемь и планируется новая. Неплохо бы включить в отчет цифру 1 трлн руб. — столько, по признанию президента Дмитрия Медведева, каждый год разворовывается при госзакупках.
    А в остальном доклад Путина образцовый и полон прогрессивных идей.
    Читайте далее: http://www.vedomosti.ru/opinion/news/1631599/dopolnenie_k_otchetu#ixzz1rowZ3vYU
    SALES COMMENTARY
    Igor Chernomorskiy | J.P. Morgan | CEEMEA Equity Sales | T: +1 212 622 7069 | M: +1 917 406 4544 | igor.chernomorskiy@jpmorgan.com | 383 Madison Ave, New York NY 10179
    Please click this link to view our disclaimer: http://www.jpmorgan.com/pages/jpmorgan/email
    Click on this link to access our research coverage and analysts

  2. Laurence

    Your article demonstrates all the qualities you celebrate in the British: pragmatic, allusive, thoughtful, both poetic and grimly competent (“our cigarette companies are world beaters”). I’d like to add – I think Brits are contrarians, to the point of eccentricity. Very anti establishment, even our establishment, and I think that inspires people.

    But I don’t understand why the Union is essential. Plus – ‘persuade’ is a world away from ‘throw his weight around’. One seems right and appropriate, the other suggests a thousand years of what has already been – or rather, the legacy of a bullying self-righteous mercantile empire and the Victorian ethos that grew out of it (pull yourself together, force down your food, stiff upper lip etc). If the UK is to grow up into our post colonial present, it needs to find a way – does it not? – that is grounded in an older tradition – a set of values that embodies our history not just of grandeur but of tolerance, experimentation and consensus – Britain was after all the birthplace of the pilgrim fathers, the USA, the Quakers, the Shakers, the Levellers, William Blake, Bunyan, Charles James Fox, the Rolling Stones, Led Zeppelin… it’s no accident that foreigners are drawn like flies to Notting Hill, Camden, King’s Road – not just street markets and shopping malls but icons of the counter culture, of eccentricity, grunge and dissent. We are a dissenting nation, a nation that refuses to follow the herd. And a spiritual, moral one. Forget that and revert to ‘knowing what’s best for the Scots’ or amorally representing our business interests (even if that’s fags and arms) and we forget who we really are.

    Laurence

  3. stuff-happens.org

    You misunderstand me, or I expressed myself poorly. I don’t think we should bully the Scots to stay in the Union. I think we should PERSUADE them to, through the referendum process that is now set. My fear is that Alex Salmond will THROW HIS WEIGHT AROUND in order to try and win a referendum I suspect a minority Scots think is essential for future prosperity and happiness. The SNP has form here, Scotland is a small place and so far – for example – dissenting voices from the business community have been immediately mocked and put down … The atmosphere is not conducive to debate, I wager, though I am commenting from London and an inexpert observer of Scottish politics.

    I believe we are all better off in the UK – it has a critical mass, it works, we share a common history and see the world pretty much the same; more to the point a break-up will be costly in terms of money and energy and time and force our leaders to naval-gaze and row in sibling terms at a time when we need to be looking outward and working together.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s