In a moment of hubris, or scenting what seemed like an opportunity, Theresa May called a UK general election believing the Tories to be unchallengeable. Her promises of stability and security now look especially ironic, as the UK faces yet another bout of political uncertainty.
Challenges within the UK have hardened
The challenges we had going into this election – both domestically and globally – remain, but we now face those challenges with a weakened government, lacking a clear mandate, and dependent on the votes of others.
The election campaign overall was remarkable for the lack of discussion about the real economic issues affecting the UK economy: high personal and public debt, an ageing population and the attendant costs of benefits, the lack of housing particularly in fast-growing areas, poor productivity, low wages and no rise in living standards, the pace of technological change and the educational needs of filling skilled roles in the future.
The result means that these economic challenges just got that little bit harder. The decisions needed in an attempt to put policies in place to resolve these issues, a little tougher. It is, in a word, an omni-shambles.
Lack of a mandate to pursue structural change
UK productivity has seen no growth since 2007, sitting 17% below where it should be and 18% below the EU average. Yet productivity is the key to economic growth. It is a pre-requisite for raising living standards and overall prosperity and for meeting the Government’s policy challenge of cutting spend. A lack of consensus in Westminster about how to achieve that, risks the UK being left further behind in its long-term ability to compete globally.
How we harness and take advantage of technology and its power to disrupt business models and shift industrial morés, how we tackle education and lifelong learning to meet the changing needs of a 21st century labour market and how we promote investment in infrastructure, must be high on the domestic policy agenda. That’s where stability and resolute action around the policy priorities are vital.
EU hand in negotiations strengthened
Today’s result undoubtedly further weakens the UK government’s already poor hand in negotiations to remove Britain from the EU. It is now more likely than ever that British businesses will face a ‘cliff edge’ as we approach the deadline of March 2019, meaning transitional arrangements must be negotiated. The only possible way to avoid that is for the Government to agree to Brussels’s terms. But allowing freedom of movement – the premise on which the Leave campaign fought – and paying the EU for access to the single market would be anathema to the UK government and would render the referendum pointless. The phrase ‘between a rock and a hard place’ springs to mind to describe the UK’s negotiating position. I hope I am wrong.