Aeron Davis
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Austerity, spin and the road to Brexit
Posh boys take charge
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Chapter seven reviews the post-financial crisis period and the Coalition Government years, taking us up to 2016 and Brexit. In 2010, just as in 1979, Treasury orthodoxies and small-state politicians found a policy consensus on hacking back public expenditure. The only thing that mattered was eliminating the structural deficit. The trouble was that 2010 was not 1979. There was nothing to replace the impact of public-sector, local council and welfare cuts. There were no great state assets to sell off. The various forms of pseudo-Keynesianism in place stopped operating, as credit creation, big finance and the housing market ground to a halt. International investors (or Ponzi-scheme players) saw a busted economy and took their money elsewhere. When the muted ‘recovery’ did come it was not U but K shaped. The main government interventions – QE, ultra-low interest rates and housing market boosts – primarily benefited big corporate and wealthy asset owners. Rentier capitalism in Britain flourished.

In 2012-13, the Coalition, stuffed full of ‘posh boy’ asset owners, declared the economy was recovering. It clearly was for the bankers, property owners and big companies of London and the South-East. International investors were being tempted back too. The news media, as London-bound and small-state minded as the ministers and CEOs they reported on, were happy to agree the nation had turned a corner. But, all the while, salaries were not recovering, housing costs were shooting up, precarious working conditions were on the rise, and regional communities and economies were collapsing faster than ever. Then, came the EU Referendum. Unsurprisingly, the Remain camp’s lead argument, that the economy would tank if the UK left the EU, provoked a general ‘so what’s new?’ shrug of the shoulders. Anything the Treasury presented suddenly seemed no more or less plausible than any lie put out by the Leave side. The rest is Brexit.

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Bankruptcy, bubbles and bailouts

The inside history of the Treasury since 1976


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