The State of British Politics

by Tayyaba Khurshid
A state’s economic prosperity and stability depend on a stable government that works efficiently for the progress and development of a state. The choices and policies adopted by the political leadership of any state during hard times severely impact a state’s internal and external stability. From a colonial power that colonized various regions (from Asia to Africa) to a recessive economic State, British politics and politicians in power have ruined Britain, where its financial system is in collapse, and the leadership cannot manage the economy and the energy crisis Britain is facing. The inflation in Britain is now 10%, and the outlook is bleak with growing recession and rising unemployment. The Brexit decision by the Conservative party, the resignation of various Prime Ministers, the Ukraine crisis, and the decisions taken by the government to overcome the challenges posed by internal and external factors are some of the reasons that led to the present political and economic crisis in Britain. Brexit and UK’s recessive economic state The departure of the United Kingdom from the European Union can be viewed as a self-inflicted injury to its economy, impacting prices, investment, and trade. This outcome is not solely a consequence of a pandemic or energy crisis, but rather a result of the decision made in 2016 to leave the EU. At the time, the choice between leaving and remaining in the EU appeared to be a straightforward one between two options. (Foster 2022). However, the unfolding of events was quite distinct from the initial expectations, and the United Kingdom had to bear the consequences of its decision to leave the European Union. As a result, the country found itself outside both the European single market and a customs union. The costs associated with Brexit were initially obscured by the global impact of the Covid-19 pandemic, which caused the shutdown of economies worldwide. Later, the Ukraine Crisis disrupted global energy markets, exacerbating inflationary pressures and further exposing the costs of Brexit. As rightly suggested  “We are starting to see the Brexit effect, and it’s not particularly pretty” (Parker 2022). Subsequent to the pandemic, there was a resurgence of trade among all the other members of the G7, while the trade recovery in the United Kingdom remained largely stagnant. Consequently, the UK’s trade intensity has fallen behind its counterparts. Brexit has also affected local businesses that cannot send their product to a single market without any hurdle. It has made businesses less efficient and more costly. Since 2016, business investment has exhibited growth in all G7 nations with the exception of the United Kingdom. All areas of prices and investment, and trade have adverse effects. Prime Minister Boris Johnson and Lord David Frost ratified the Northern Ireland Protocol with Ireland and supported the Brexit campaign. The impact of Brexit has created a political conspiracy surrounding its effects, with no political party in the UK willing to broach the subject. The Conservative Party has been reluctant to admit the severity of Brexit’s impact on the UK economy. Similarly, the Labour Party has refrained from addressing the Brexit controversy due to concerns that it may remind voters of the reasons behind their vote for the Conservative Party. In the United Kingdom, individuals who discuss Brexit are frequently criticized as being “Re-moaners” or “Re-maniacs.” The populace is urged to embrace a viewpoint that was solely espoused by the UK Independence Party in 2015. All other parties, including the Conservative Party, Liberal Democrats, Greens, trade unions, the CBI, and the broader British political and civic society, believed the UK was better positioned within the European Union. Still, those who thought that Brexit was necessary couldn’t contemplate the harsh impacts of Britain losing 4% GDP after leaving the European Union. As per OBOR Economic and Fiscal Outlook, There has been a 15 % reduction in trade activity due to Brexit. The UK’s exports have not backed up like other countries after Covid, which is again the effect of Brexit. Although, the Britain government has concluded bilateral deals and almost 71 new agreements with other countries like Japan, New Zealand, and Australia. According to the House of Commons Library (2022), the Australian Deal is projected to increase Britain’s GDP by 0.08% by 2035. Business investment in the country peaked in 2016, the same year as the Brexit referendum, but has yet to recover to that level. Additionally, the value of the pound has declined due to the strength of the dollar, which has had a global impact on currencies. A weaker pound has led to increased costs for goods, contributing to inflation. The Office of Budget Responsibility has estimated that these factors will result in a 4% reduction in GDP over the next 15 years. While politicians and ministers in the UK have attributed the economic recession to global issues and energy price pressures, it is essential to acknowledge the long-term economic challenges faced by the country. Since 1970, the UK’s economic growth has slowed progressively, and productivity has remained stagnant since the global financial crisis of 2008. Premiership of Boris Johnson, the Resignation series, and the downfall of the economic and political state Boris Johnson served as the Prime Minister and leader of the Conservative Party in the United Kingdom from 2019 to 2022. Prior to this, he held the position of Foreign Secretary from 2016 to 2018 and was the Mayor of London for two consecutive terms spanning eight years from 2008 to 2016 (Geiger, 2022). Johnson won the majority of Conservative Party votes in 2019, and his leadership coincided with the onset of the Covid-19 pandemic, which posed significant challenges to the country. In 2020, the Prime Minister negotiated a trade deal with the European Union that saw the UK leave both the single market and customs union. Johnson touted this deal as one that would promote increased trade between the UK and Europe, stating that “This deal will allow our companies and exporters to do even more business with our European friends.” (Johnson, 2022). However, the reality has been vastly different from what was predicted, as noted by Paul Johnson, Director of the Institute for Fiscal Studies. According to him, “Britain has lost a substantial portion of our trade with the EU, including high-value professional services, which have made us poorer.” (Johnson 2022). The Prime Minister of the United Kingdom, Boris Johnson, faced a significant challenge in the form of the Covid-19 pandemic. His handling of the pandemic has been criticized, as the UK had the highest death rate among developed countries at one point. Despite this, Mr. Johnson has highlighted the success of the UK Covid vaccine roll-out, which has enabled the country to reopen its economy by exporting vaccines more than other states. However, his political opponents have criticized his ability to lead, citing his ignorance and delayed lockdowns as contributing factors to the high death toll. Furthermore, Mr. Johnson’s character has been called into question, as he has been investigated for various scandals, such as violating Covid SOPs and breaking the law by conducting indoor gatherings. Although his resignation was ultimately forced by the resignation of numerous ministers, Mr. Johnson expressed confidence in the country’s system to produce another leader committed to leading the nation through difficult times and improving the way things are done to promote growth and income (News 2022). The resignation of Boris Johnson couldn’t end the political and economic crisis as Prime Minister Liz Truss had to resign six weeks after becoming the 15th Prime Minister for Britain on 20th October 2022. After two days after her appointment by Queen as Prime Minister, the Queen died on 8th September, and her funeral procession continued for ten days. UK politics was suspended during this period, but after 19th September, her downfall began. She had a bunch of policies that she wanted to implement; she and her finance Minister Kwasi Kwateng announced a stimulus package of a 45 billion pound tax cut which government borrowings would fund. The tax cut was not the right strategy because, in an already weak economic situation, a government can cut taxes, reducing Govt. revenue and leading to a Budget Deficit. Her government came up with the idea of Borrowings, where the government takes loans from private corporations, banks, non-banking financial institutions, and other countries to spend on public service. The government is taking more loans in exchange for government security and treasury bills. Her tax cut plan benefited rich people who paid more tax, which created instability in the UK financial market and further led to a sharp fall in the pound’s value. The British pound became one of the worst-performing currencies, with a 24% decline against the dollar. With the tax cut, inflation in the UK reached 9.9% (Keown 2022).To control the rising inflation, the Bank of England intervened and increased the interest rates by purchasing government bonds. Growing interest rates impacted ordinary people’s interest payments and utility bills, where the electricity bill rate increased by 80% (NPR 2022). The growing interest rate has worsened the high cost of living in Britain. IMF and other institutions criticized Liz Truss. She had to withdraw from the tax cut plan for which she faced a heavy back clash and had to resign, becoming the shortest-serving Prime Minister in UK history. In her resignation speech, Liz Truss acknowledged that she could not fulfill the mandate for which she was elected by the Conservative Party, stating “I recognize, though, given the situation” (B. News 2022)  News 2022). It has been suggested that her focus on populist policies rather than making difficult long-term decisions contributed to her downfall. Following the resignation of Liz Truss, Rishi Sunak assumed the role of Prime Minister during a challenging period. He made a pledge to bring professionalism, integrity, and accountability to the government. The recent series of resignations and the Ukraine crisis has posed severe challenges to British politics and the decision-making process, resulting in a weakened state of affairs. While the EU is struggling with an energy crisis and facing difficulties in making consensus-driven decisions, the economic situation in Britain has been troubled for quite some time, beginning with the 2008 financial crisis and further exacerbated by Brexit. The recent resignations of political leadership and the policies they have implemented to address these challenges have sown seeds of uncertainty for the country’s future.  

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