How the UK economy created an economic crisis in 10 steps

THE UK economy is broken and it’s beyond repair – we have passed the point of no return and now poor living standards, slow/negative economic growth and rising poverty are impossible to escape.

It would now take too long to convince the voters of London and the South East to accept that everything they think they know about how the economy works is completely wrong and to abandon neoliberalism and accept a radical reset of political and economic thinking.

All Unionist parties have embraced neoliberalism.

None of the Westminster parties are proposing a new approach. They have all doubled down on their outdated economic thinking.

Because their ideas of economy are wrong, their Government’s policies have also been wrong for decades and so the UK is now locked into an economic system that harms people, the environment and business and trade.

Thirty years of economic pain

This situation wasn’t caused by Liz Truss or even Boris Johnson and his Brexit project: these are symptoms of the deadly economic disease that set in around 30 years ago.

Ronald Reagan and Margaret Thatcher laid the foundations but Tony Blair, Gordon Brown, David Cameron (and the Tories that followed) and now Starmer have all been singing from the same neoliberal hymn sheet. 

READ MORE: Gordon Brown in challenge to Keir Starmer over benefit policies

As a result, the UK has experienced 30 years of comparatively low economic growth and productivity. We now have an economy that cannot sustain the living standards the UK population has come to expect. 

An exercise I’ve used with strategy clients in the past is called the “Nightmare Top 10”, where instead of brainstorming positive ideas, we list all the things we shouldn’t do unless we want to crash the company’s sales, lose its best people and trash its reputation.

If someone did that exercise for economic policy 30 years ago it would have looked like this:

The Nightmare Top 10

1. Create an entire economic system based on the cult of measuring GDP. Tell people economic growth solves everything, wealth will trickle down as the rich get richer, inequality won’t be a problem and that measuring the things that make life worthwhile such as happiness, health, security, wellbeing and the environment is just too hard. 
2. Say that the banks are so much smarter than anyone else when it comes to creating money that we should deregulate them. Trust them to get on with it – a casino banking system isn’t a problem because they know how to bet. When the banks inevitably crash, we should only bail out wealthy shareholders, not ordinary people.
3. Create a housing crisis by selling off public housing and cutting council budgets so they can’t build new ones. Let’s also not have any rent controls. This will create a house price bubble, so that only wealthy asset holders can afford to buy property and young people’s rent can pay second-home mortgages for wealthy landlords.  
4. Brexit – isolate the UK from the world’s biggest markets and make it difficult to export.
5. Underfund the NHS so it underperforms and people forget why it was free in the first place. We can privatise it and sell bits to investor friends of the government. 
6. We have an ageing population so let’s pay the developed world’s second lowest pension. That will create pension poverty while encouraging the middle-classes to buy private pensions or more flats to rent.  
7. Offer tax cuts for big oil companies and ignore the climate impact of fossil fuels. Don’t even consider creating an oil fund or investing in renewable energy because that would mean no cost of living crisis when our overreliance on fossil fuels is exposed. 
8. Bring in unnecessary austerity measures, by telling people that government budgets have to be balanced like household budgets and don’t operate like mortgages where you become wealthier by investing in the future.
9. Tell people that inflation is solved by raising interest rates, even when caused by energy cost increases (that our energy strategy caused) and not by consumer demand – the only type of inflation that reacts to interest rate rises.
10. If productivity accidentally increases and undermines our strategy, let’s cut Research and Development Tax Credits for hi-tech companies by 5% and blame it on austerity. 

It’s almost as if someone was trying to create an economic, cost of living, banking and environmental crisis.  

It’s not going to get any better – the next UK General Election will just be a choice between two shades of neoliberalism and outdated economic thinking that will continue Britain’s inextricable economic decline.

But Scotland is not Britain.

Scotland’s government and people are buying into a different socio-economic approach based on societal, economic and environmental wellbeing.

It’s absolutely not socialism nor neo-capitalism but a balanced approach that realises that: 

You can not have a thriving economy without a thriving society and you can not have a thriving society without a thriving economy.  

READ MORE: Doubts UK Government will meet deposit return scheme 2025 deadline 

Sure, if we had a magic wand we could just undo all of the nightmare economic decisions of the last 30 years of neoliberalism but we don’t need one.

If we want to experience economic wellbeing in a more successful, greener, fairer, wealthier, thriving Scotland, all we need is to become an independent nation again, to follow our dreams and wake up from Broken Britain’s worsening economic nightmare.

Gordon MacIntyre-Kemp is the CEO of Business for Scotland, the chief economist at the wellbeing economics think tank Scotianomics, the founder of the Believe in Scotland campaign and the author of Scotland the Brief.