Denis Bright invites discussion on Jeremy Corbyn’s National Investment Fund. Can it assist in revitalising the British economy and the finacial hub of the City of London? Is the future of Britain in better hands with the remnants of Thatcherism as claimed by Conservatives at their Annual Conference?
Following Labour’s net gain of 30 seats at the UK General Elections on 8 June 2017, Jeremy Corbyn’s inspirational Conference Speech at Brighton continues the paradigm changes in British politics
Challenges remain in coping with the continued loss of 35 seats to the Scottish Nationalist Party (SNP). There are big swathes of Comservative blue constituencies across England between London and the Industrialized North. Seventy constituencies are still required to form a majoirty government.
The latest YouGovernment/Times Poll shows that support base for the Conservative Party has declined by 4.5 per cent since the national elections. This gives Labour a 4 per cent lead in the polls to 22-24 September 2017.
The minority government of Theresa May seems to have run out of consistent solutions to the economic and wider structural problems facing Britain.
The Conservative Government’s only support base is from the over 65 year age group. Amongst younger voters in the 18-24 year range, Labour outpolls the Conservatives by a remarkable 70 to 15 per cent margin.
The UK Economic Context
As the UK Economy enters the troubled waters of Brexit, short-term economic projections are being scaled back. Britain has to craft a new economic identity beyond the remnants of Thatcherism which favours more leadership from the corporate sector as the only path forward.
At the Conservative Party Conference in Manchester, there is growing concern at the lack of direction in Theresa May’s government as economic growth rates for 2018 pose new challenges:
The editorial in the UK Guardian Online sums up the likely reactions from Insiders within the Conservative Party at Manchester (Guardian Online 1 October 2017):
Mrs May made it abjectly clear on Sunday that she is both temperamentally and politically too weak to sack someone who is disloyal to her and an embarrassment to the country.
It is possible that Mrs May will get her wish this week and survive. The Conservative party has deep instincts of self-preservation and discipline. The idea that a new leader, Mr Johnson least of all, would unite either the party or the country on Brexit or anything else lacks credibility. Though they are divided on many things, the Tories are as one in their wish to avoid handing power to Jeremy Corbyn. But the real question is not whether Mrs May will survive but whether she deserves to. The reality is that there is almost no sign whatever of that.
Britain’s once robust financial sector is being challenged by investment flows towards the most dynamic European markets such as Switzerland, the Netherlands and Spain.
The global profile of British financial markets has declined since the Global Financial Crisis (GFC).
The McKinsey Global Institute has just summarised the current situation (McKinsey Global Institute Online August 2017):
The largest banks in the United Kingdom have already reduced their foreign bank assets by one-quarter since 2007. Gross inflows of loans and other investment to the United Kingdom were negative over the past three years (2014 to 2016), indicating that foreigners are withdrawing capital. Gross loan outflows from the United Kingdom were negative in 2012, 2013, and 2015, indicating that UK-based lenders (including foreign subsidiaries of European and US banks based in London) were reducing their stock of foreign loans. The City of London has shed jobs. Much will depend on how Brexit negotiations proceed and on what access banks based in London will have to EU markets.
Even when British financial markets were thriving before the GFC, investors targeted gains from speculation in subprime lending ventures, financial derivatives and futures markets which have little real impact on productive investment in the wider economy. The City of London welcomed money laundering from developing countries and transfers from investors in the US to avoid banking and taxation controls.
During the Obama Years, British financial institutions were prominent on the list of fines imposed in the US financial regulatory agencies for money laundering activities. Large sections of The Handbook of Business and Corruption (2016) are available online from Emerald Group Publishing.
More enlightenment on the role of the City of London in Global Finance comes from Tony Norfield. Having worked for twenty years at Bloomberg, Tony Norfield moved on to become head of foreign exchange strategies at the Dutch lender ABN Amro. From this former insider role, Tony Norfield is aptly qualified to offer a negative insider interpretation of the roles played by the City of London in global finance.
Tony Norfield identifies London as the world’s biggest international banking and foreign exchange market, shaping the development of global capital (Amazon Books 2017).
London as a global financial hub attracts all the big international companies-not just the banks. Tony Norfield offers a shocking and insightful interpretation of the role of the US dollar in global trading, the network of British-linked tax havens, the flows of finance around the world and the system of power built upon financial securities.
Such provocative interpretations contrast with the favourable interpretations of Thatcherism from conservative think-tanks in the UK and Australia.
Until the arrival of Jeremy Corbyn, Thatcherism enjoyed a fair degree of bipartisan support. Any return to government intervention in directing financial priorities was perceived as a vote loser by British Labour.
The Paradigm Change to Labour’s National Investment Fund
Released in Labour’s Manifesto for the 2017 General Election, a National Transformation Fund offered a a 250 billion pound investment fund to modernise essential infrastructure over ten years. Capital investment of these dimensions would come from a National Investment Bank (NIB). This would be established by a 20-billion pound bond issue. The NIB would then attract corporate investment from Brtiain and abroad.
Support for this type of government involvement in the direction of essential public investment flows would provide alternatives to Thatcherite financial processes.
The consequences of a continued focus on deficit reductions by Conservative Governments are reflected in the falling trend-lines for UK GDP Growth (FT Online 30 September 2017).
As the Conservative Party Conference approaches in Manchester this week, the centre-right political rhetoric fluctuates wildly between appeal for a soft Brexit (EU Brexit Summit in Florence), a re-statement of Thatcherite values (Bank of England Address) and a commitment to more responsible social policies (Manchester Conference).
Can Britain as the world’s ninth largest economy in PPP terms, still speak so defiantly in the Trump Era when the US Department of Commerce has imposed a 220 per cent tariff on the C-series Bombardier airliners with a Made in British Ulster Tag for the Canadian firm, Bombardier? (Independent Online 29 September 2017).
Jeremy Corbyn’s public investment agenda will be in stark contrast to the rhetorical flair of attempts by British Conservatives to re-market a new post-Brexit version of neoliberalism at the forthcoming Conference which is expected to attract more protesters than Delegates (Metro Online Manchester 28 September 2017).
Denis Bright (pictured) is a registered teacher and a member of the Media, Entertainment and Arts Alliance (MEAA). Denis has recent postgraduate qualifications in journalism, public policy and international relations. He is interested in promoting discussion to evaluate pragmatic public policies that are compatible with contemporary globalization.