|Gordon Brown in 2008 (Image: PA Images)|
Looking at the tricky global economic situation right now, I feel a sense of déjà vu. We, and perhaps Prime Minister Rishi Sunak more specifically, find ourselves in a similar position as in 2009. In 2008, the financial markets crashed, people left, right and centre were losing their jobs and it seemed like there was no way out of the mess. Watching news clips of Lehman Brothers' bankers in New York, leaving their offices with boxes of their goods in, will never leave my memory.
Of course, in 2023, we aren't seeing mass employment and crashing markets. In fact, the UK in particular has seen its FTSE 100 reach record highs in recent days, and the percentage of unemployed adults remains low. While this all sounds great, as in 14 years ago, many Britons are feeling the pinch. When domestic and foreign political affairs go pear shaped at once, as we're seeing now, it's impacting on everyday things that we take for granted. As a result, the number of people in fuel poverty has risen rapidly, visible and more traditional businesses are collapsing and there's a whiff of restlessness across the board. In 2008, it was somewhat, and arguably, thanks to extremely costly corruption and invasions, and in 2021-22, due to the Covid-19 pandemic and Russia's attack on Ukraine.
We didn't notice it at the time, but thinking about it 14 years later, 2009 was a year which would have gotten Britain on a road to long-term economic recovery - and it was then-Prime Minister Gordon Brown who helped shape that change. Despite some claiming it led to his political demise, I'll always argue what he and his Chancellor, Alistair Darling, announced in the 2008 and 2009 budgets, opened the door to what might have been, had the Labour Party retained power in 2010.
The announcement I'll always remember was the decision to cut VAT from 17.5% to 15% for the entire of 2009. It was a vital move that helped people like myself. At that time, I attended University away from my hometown and actually, having food and transport cheaper than what it was a year previous, was a lifeline. You definitely could tell the difference in prices, and it showed with the slowing of inflation (it reached below 2% for much of the year). And in the 2009 budget, Labour hit those earning more than £150,000 per year with a 50% income tax, an increase of 5%. It was an unpopular policy at the time, but it's something that the Party is keen to introduce again after the Conservatives reversed it. Bank of England's base interest rate was even reduced from 5% to 0.5%, a luxury desired by many today.
These economic decisions were huge risks, but Brown and Darling had nothing more to lose. The Conservatives will always recall the time the Party came to power in 2010 when they saw a sarcastic 'There's no money left' note from the then Treasury Chief Secretary. But actually, the recession wasn't deemed to be as bad, if we compared it to other major economic forces. It was a longer slog, yet, when Labour lost power, UK's situation was more-or-less what was seen in 2007, before the global crisis.
Political commentators (and Tory members) may still be up in arms about the economic mess in the late noughties, the recession Britain is heading towards now is likely to be just as long and painful. And yet, the challenges are seen as greater on the ground. For example, there were 40,000 using foodbanks in 2009 - seen as scandalous then, but it's nothing compared to the 2.1 million using them in 2022. There were 40,000 homeless households in England in 2009, compared to 274,000 in 2021. The Bank of England may have recently downgraded the threat of a recession, this forecast will only come true if the current government could come up with brave and impactful economic decisions where people can notice improvements in their bank accounts. Odd payments here and there simply won't cut it, especially as prices of everything continue to shoot up astronomically.
This is the make-or-break year for Rishi Sunak. Like Brown in 2008-9, he has little to lose. He simply cannot sit back and shrug when organisations like IMF believe that the UK could perform worse, economically, than even Russia, despite so many sanctions imposed on Putin's regime. He's stubbornly sticking to what he thinks is right, imposing similar austerity measures as his predecessors. The main difference compared to when, say, David Cameron was in power, is that he has to do without European Union funding and support, a lifeline for UK governments for decades.
It isn't just economics that links Sunak today to where Brown was 14 years ago. For years, Brown was Chancellor, yearning to be leader. Tony Blair resigned in 2007, the moment when the going was to get tough. Sunak had the same yearning since he was appointed Chancellor in early 2020. When that promotion was confirmed, political commentators believed he was a Prime Minister in-waiting. It took two leaders (Boris Johnson and Liz Truss) until he was able to lead, and yes, he waited a lot less time to grab the keys to 10 Downing Street. The difference is bold delivery. For example, current Chancellor, Jeremy Hunt, is ruling out further support for the masses as they continue to put no pressure on utility firms who plan to hike their prices further this April. Gordon Brown would've doorstepped these companies, as well as Ofgem, to actually stop this lunacy.
The economy can only do well when people can spend with confidence. We aren't seeing that. Brown's regret - and the nation's regret, I'm boldly claiming - is that he couldn't finish the job post-2010. 2009, a year into the global crisis, and a year before a general election where he was punished, by both unforgiving voters and Nick Clegg's Liberal Democrats. At 2023, we're a year away from a general election and, again, a year after a global crisis hits Britain. There's a growing sense that voters will be unforgiving and polls show the Tories in dire straits.
It's unlikely Sunak will learn from Brown (or be inspired by some of his policies) because listening is a distraction to him - he won't listen to the concerns by unions, neither will he entertain the endless list of warnings by financial experts about the cost of living crisis. He ought to, however, as personal accounts are becoming less and less anecdotal by the minute. Continue this ear closing, and he'll have no choice but to roll the red carpet for Sir Keir Starmer's Labour come 2024, and possibly reprint a note saying 'Sorry, there's no money left'.
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