History told us that the recovery from the Great Recession of 2008/09, given it had been caused by a financial crisis rather than merely being part of the normal boom-and-bust cycles, would be slow.
Most are familiar with the images and stories of the Great Depression, notably those from either side of the Atlantic.
However, few people would have predicted the utterly grim decade the UK economy has just had, in terms of the length of time the misery has continued under the Conservatives.
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There have undoubtedly been challenges stemming from the UK banking sector crisis that blew up more than a decade ago amid global turmoil, with Bank of Scotland owner Lloyds Banking Group and Royal Bank of Scotland requiring to be rescued by the UK taxpayer in late 2008 and early 2009 through bailouts running into tens of billions of pounds.
Such a global financial crisis, and consequent disruption of lending activity, has a huge knock-on impact on businesses and households, and, sure enough, it ushered in a deep recession in the UK and elsewhere.
The initial policy response from the previous Labour government was correct – to cut value-added tax.
But then the Tories won power in 2010 and the rest is history.
It is difficult to imagine more policy errors than those delivered under successive Conservative governments over nearly a decade now.
An ill-judged austerity programme with an atrocious mix choked off growth, after the Liberal Democrats propped up the Tories in a coalition. The degree to which the Liberal Democrats abandoned key tenets of their 2010 election campaign is no less remarkable when looked back upon nearly a decade later.
VAT was hiked, and welfare spending was cut savagely. Basic arithmetic would have provided the clue that this was a bad idea. Taking money away from the lowest-income households, which have to spend all that they have to live, subtracts directly from aggregate demand. Both the VAT hike and the welfare cuts, not to mention public-sector pay caps, ensured that such subtraction happened in spades.
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Big corporation tax cuts failed to provide any significant boost to business investment, as companies kept their hands in their pockets or focused on paying dividends to investors.
George Osborne’s vision of “a Britain carried aloft by the march of the makers”, proclaimed by the former chancellor in his March 2011 Budget, failed spectacularly to materialise.
What has been most notable about those long years following the Great Recession is that the Tories have failed comprehensively to deliver a meaningful recovery. It is difficult to remember them even delivering a false dawn.
It has been a period characterised for long spells by falling real incomes.
As if things were not bad enough as the first Tory term drew to a close, we had former prime minister David Cameron’s bright idea to hold a referendum on European Union membership. Talk about turning a drama into a crisis, as Mr Cameron headed down this blind alley in an apparent attempt to settle internal quarrels within the Conservative Party over the UK’s place, or otherwise, in Europe. These debates had, of course, been going on for decades.
However, with arch-Brexiter Nigel Farage attempting to appeal to right-wing Tory voters, Mr Cameron seemingly took the bait on Europe. There was no need for this – history also tells us that fringe parties such as those fronted by Mr Farage might make a great deal of noise at by-elections and at other times but are unlikely to win anything much when it comes to General Elections.
Once the referendum was announced, there was always, whatever the opinion polls said for most of the time, a grave danger that there would be a vote to Leave.
Another thing that history tells us is that, when you get a deep and protracted economic downturn, some people look around for people to blame for their misfortune.
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So the anti-immigration sentiment that figured so largely in the Brexit vote was, while utterly unacceptable, also entirely predictable.
The UK electorate, of course, voted narrowly for Brexit. The Scottish electorate voted very convincingly to remain in the EU.
Sterling’s plunge in the immediate wake of the Brexit vote said it all, in terms of what the vote meant and continues to mean for the UK’s economic prospects.
In the period since the Brexit vote, huge political and economic uncertainty has seen UK growth grind to a halt. This uncertainty has choked off business investment and unsettled households already reeling from many years of misery.
Public sector net debt has spiralled to around £1.8 trillion under the Tories, as the UK economy has remained in grim shape in the stranglehold of austerity and amid the chaos of Brexit.
The UK economy stagnated during October after declining in each of the preceding two months – its worst run since the first quarter of 2009 – figures published earlier this month by the Office for National Statistics revealed.
Comparing the three months to October with the May to July period, UK gross domestic product was flat.
Meanwhile, a survey published by the Chartered Institute of Procurement & Supply and IHS Markit earlier this month showed the UK private-sector economy shrinking in December at the fastest pace since July 2016, the month after the Brexit vote.
The survey signalled manufacturing output was tumbling and showed the key services sector recording consecutive monthly falls in activity for the first time since 2009.
And it pointed to manufacturing production volumes plunging in December at the fastest pace since July 2012, amid export weakness.
No one was in any doubt of the stickiness and depth of the mire that the UK, and other economies around the world, were going to have to drag themselves out of in the wake of the global financial crisis.
Sadly, the UK is among those to have made major and simple policy errors in dealing with the situation.
The emergency VAT cut unveiled by former Labour chancellor Alistair Darling back in late 2008 was exactly the right way to go about things to provide maximum support to an economy at a time when the taxpayer had had to throw the kitchen sink at the financial sector to prop it up. The VAT cut benefited low-income households in particular.
However, over the last decade, economic misery has piled up for millions in the UK, alongside the heap of Tory policy errors.
And let us not forget that right-wing Conservatives managed to persuade many of the electorate that the hardship was the fault of EU membership. Thus ushering in Brexit and compounding the misery.
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