The last time a British finance minister revealed tax and spending plans, markets went haywire and the country’s prime minister ultimately lost her job. The new government is not looking for a repeat performance.
On Thursday, Chancellor Jeremy Hunt is due to unveil a budget that will aim to restore confidence in the United Kingdom’s ability to manage its public finances. But that may be easier said than done.
Media reports indicate that the government is looking to come up with between £50 billion ($59 billion) and £60 billion ($70 billion) through a mix of tax increases and spending cuts, many of which may not take effect until after the next election in 2024.
“If you do too much, too soon, you risk worsening the recession,” said Ben Zaranko, a senior research economist at the Institute for Fiscal Studies. “If you delay everything until after the next election, you risk not being seen as credible.”
A new wave of austerity could help restore the government’s reputation with financial markets after the budget from former Prime Minister Liz Truss — which featured an unorthodox combination of major tax cuts and ramped-up borrowing — unleashed panic.
But it will do little to ease fears about the country’s grim economic prospects. The United Kingdom is one of two G7 economies to havecontracted in the third quarter. It’s now smaller than it was before the coronavirus pandemic. The Bank of England is forecasting a lengthy recession, which could stretch into 2024.
New cuts could make matters worse. When the government adopted an austerity program in 2010 on the heels of the Great Recession, it shaved 1% off the country’s GDP, according to the UK budget watchdog. Just four years ago, former Prime Minister Theresa May pledged to bring nearly a decade of austerity to a close.
Now, tax rises could further depress consumer confidence — already near a record low — and spending cuts risk placing further strain on public services that are already buckling under enormous pressure.
Still, Hunt intends to show he has a plan to reduce government debt as a proportion of GDP in the medium-term. It currently stands at 98%. The Office for Budget Responsibility said in July that it could reach nearly 320% in 50 years.
“We do have to do some tax rises, do some spending cuts, if we’re going to show we’re a country that pays our way,” Hunt told Sky News on Sunday.
How did the United Kingdom get here? There’s no shortage of finger pointing.
Part of the problem is global in nature. Interest rates have risen rapidly around the world as central banks attempt to rein in inflation. That’s pushed up borrowing costs for the government, dealing a shock after years in which money was cheap.
At the same time, skyrocketing energy costs, exacerbated by Russia’s war in Ukraine, have compelled governments to step in to cushion the blow of crippling energy bills — shortly after they spent significant sums helping households and businesses through the pandemic.
Hunt has scrapped plans to cap energy bills for typical households at £2,500 ($2,981) for the next two years. Instead, support will only be guaranteed until next spring. But the measures will still prove costly.
The government can’t blame all its problems on the rest of the world, however.
“You can just look at how the UK is performing relative to every other country in Europe, and it’s obvious there’s a UK-specific element to this,” Zaranko said.
The United Kingdom’s exit from the European Union has weighed on trade and contributed to shortages of workers in key industries.
“The UK economy as a whole has been permanently damaged by Brexit,” former Bank of England official Michael Saunders told Bloomberg TV this week. “If we hadn’t had Brexit, we probably wouldn’t be talking about an austerity budget this week. The need for tax rises, spending cuts wouldn’t be there.”
And while inflation in the United States cooled more than expected in October, falling to 7.7%, it’s still rising sharply in the United Kingdom, reaching a 41-year high of 11.1% last month.
That’s bolstering expectations that the Bank of England will need to keep raising interest rates and could hold them higher for longer, though recession may complicate those forecasts.
The country’s labor market also remains extremely tight, with an employment rate lower than before the coronavirus hit and a record number of people who aren’t working due to long-term illness.
“The UK does stand out in that labor supply has been very constrained, perhaps more so than in other countries,” said Ruth Gregory, senior UK economist at Capital Economics.
TIRANA, Albania — Albania’s prime minister said Tuesday that Britain is carrying out a “calculated attack” on his country by blaming it for the increased number of migrants crossing the English Channel.
Edi Rama said that the new U.K. Cabinet was scapegoating Albanians because it “has gone down a blind alley with its new policy resulting from Brexit.”
Britain has seen more than 40,000 migrants crossing the Channel in small boats this year, a record high. Almost a third are Albanians, according to the U.K. government.
The U.K. and France signed an agreement Monday that will see more police patrol beaches in northern France in an attempt to stop migrants from trying to cross in small boats.
British authorites accuse Albanian criminal gangs of “abusing” Britain’s asylum system and modern slavery laws.
Ged McCann, intelligence manager at the National Crime Agency, said organized crime groups from Albania were “effectively bringing in the labor force” for illegal marijuana-growing operations in boats across the English Channel.
“Many individuals that are arrested in cannabis (farms) arrived in the country a matter of days before on small boats,” he said.
U.K. interior minister Suella Braverman has described the cross arrivals as an “invasion on our southern coast” — words that drew criticism at home and abroad. Rama blasted her words as a “crazy narrative” and attempt to cover up for the U.K.’s failed borders policies.
“The fact there came no apology shows it was a calculated attack,” he added Tuesday.
Rama said that visa liberalization would help lower the number of people arriving illegally, but the U.K. government’s policy is “completely the reverse.”
“The British government has launched a blind alley road with its new policy that has resulted from Brexit,” he said at a news conference.
Last week, U.K. Prime Minister Rishi Sunak’s office said it was “extremely grateful” for Albania’s cooperation on managing migration.
Sunak has described the migrant crisis as a “serious and escalating problem.” He acknowledged that “not enough” asylum claims are being processed, but maintained his Conservative government was getting a grip on the situation.
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Jill Lawless contributed to this report from London.
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Follow AP’s coverage of migration issues at https://apnews.com/hub/migration and Llazar Semini at https://twitter.com/lsemini
German Chancellor Olaf Scholz arrivedin China on Friday with a team oftop executives and a clear message: business with the world’s second largest economy must continue.
Scholz met with Chinese leader Xi Jinping at Beijing’s Great Hall of the People after landing in the capital Friday morning, according to a Chinese state media account. The German chancellor is also expected to meet with Premier Li Keqiang.
Joining Scholz for the whirl-wind one day visit is a delegation of 12 German industry titans, including the CEOs of Volkswagen
(VLKAF), Deutsche Bank
(DB), Siemens
(SIEGY) and chemicals giant BASF
(BASFY), according to a person familiar with the matter.They are set to meet with Chinese companies behind closed doors.
The group entered China without participating in the usual seven-day hotel quarantine. Images showed hazmat-clad medical workers greeting their jet at Beijing’s Capital International Airport to test the official delegation for Covid-19.
During the Friday morning meeting between the two leaders, Xi called for Germany and China to work together amid a “complex and volatile” international situation, and said the visit would “enhance mutual understanding and trust, deepen pragmatic cooperation in various fields and plan for the next phase of Sino-German relations,” according to a readout from state broadcaster CCTV.
Scholz’s visit — the first by a G7 leader to China in roughly three years — comes as Germany slides towards recession. But it has fired up concerns that the economic interests of Europe’s biggest economy are still too closely tied to those of Beijing.
Since the invasion of Ukraine this year, Germany has been forced to ditch its long dependence on Russian energy. Now, some in Scholz’s coalition government are growing nervous about the country’s deepening ties with China. Beijing has declared its friendship with Russia has “no limits,” whileChina’s relations with the United States are deteriorating.
The tension was highlighted recently by a fierce debate over a bid by Chinese state shipping giant Cosco to buy a 35% stake in the operator of one of the four terminals at the port of Hamburg. Under pressure from some members of the government, the size of the investment was limited to 24.9%.
The potential deal has raised concerns in Germanythat closer ties with China will leave critical infrastructure exposed to political pressure from Beijing, and disproportionately benefit Chinese companies.
But Germany is hardly in a position to rock the boat with Beijingas it grapples with the challenge of reviving its struggling economy. Its consumers and companies have borne the brunt of Europe’s energy crisis, and a deep recession is looming.
If the European Union and Germany were to decouple from China, it would lead to “large GDP losses” for the German economy,Lisandra Flach, director of the ifo Center for International Economics, told CNN Business.
The Kiel Institute for the World Economy estimatesthat a major reduction in trade between the European Union and China would shave 1% off of Germany’s GDP.
Germany needs to shore up its export markets as ties with Russia, once its main supplier of natural gas, continue to unravel.
When it comes to China, Germany won’t want to “lose also this market, this economic partner,” said Rafal Ulatowski, an assistant professor of political science and international studies at the University of Warsaw.
“They [will] try to keep these relations as long as it’s possible.”
As Western countries have imposed swingeing economic sanctions on Russia, China has publicly maintained its “neutrality” in the war while ramping up its trade with Moscow.
That has triggeredabacklash in Europe, where some companies are already becoming wary of doing business in China because of its stringent “zero Covid” restrictions.
Pressure on Berlin is also mounting over China’s human rights record. In an open letter Wednesday, a coalition of 70 civil rights groups urged Scholz to “rethink” his trip to Beijing.
“The invitation of a German trade delegation to join your visit will be viewed as an indication that Germany is ready to deepen trade and economic links, at the cost of human rights and international law,” they wrote in the memo, published by the World Uyghur Congress. Based in Germany, the organization is run by Uyghurs raising awareness of allegations of genocide in China’s Xinjiang region.
It suggested Berlin was “loosening economic dependence on one authoritarian power, only to deepen economic dependence on another.”
In an op-ed published in a German newspaper on Wednesday, Scholz said he would use his visit to “address difficult issues,” including “respect for civil and political liberties and the rights of ethnic minorities in Xinjiang province.”
A spokesperson for the German government addressed wider criticism last week, saying at a press conference that it had no intention of “decoupling” from its most important trading partner.
“[The chancellor] has basically said again and again that he is not a friend of decoupling, or turning away, from China. But he also says: diversify and minimize risk,” the spokesperson said.
Last year, China was Germany’s biggest trading partner for the sixth year in a row, with the value of trade up over 15% from 2020, according to official statistics. Together, Chinese imports from, and exports to, Germany were worth €245 billion ($242 billion) in 2021.
Still, the furore surrounding the Hamburg port deal is a reminder of the tradeoffs Germany has to confront if it wants to maintain close ties with such a vital export market and supplier.
A spokesperson for Hamburger Hafen und Logistik (HHLA), the company operating the port terminal, told CNN Business on Thursday that it was still negotiating the deal with Cosco.
Flach, of the ifo Center for International Economics, said the deal warranted scrutiny because “there is no reciprocity: Germany cannot invest in Chinese ports, for instance.”
However, it is easy to overstate the impact of the potential agreement, said Alexander-Nikolai Sandkamp, assistant professor of economics at the Kiel Institute for the World Economy.
“We’re not talking about a 25% stake in the Hamburg harbor, or even the operator of the harbor, but a 25% stake in the operator of a terminal,” he told CNN Business.
Jürgen Matthes, head of global and regional markets at the German Economic Institute, told CNN Business that critics were no longer simply weighing the business benefits of Chinese investment in the country.
“Politics and economics have to be looked at together and cannot be taken separately any longer,” he said. “When geopolitics comes into play, the view of China has very much declined and become much more negative.”
China’s recent treatment of Lithuania has also deepenedconcerns that Beijing “does not hesitate to simply break trade rules,” Matthes added. The small, Eastern European nation claimed last yearthat Beijing had erected trade barriers in retaliation for its support for Taiwan.
China has defended its downgrading of relations with Lithuania, saying it is acting in response to the European nation undermining its “sovereignty and territorial integrity.” This year, after a Lithuanian official visited Taiwan, Beijing also announced sanctions against her and vowed to “suspend all forms of exchange” with her ministry.
As the German delegation touches down on Friday, they will be faced with another issue, which has become the single biggest headache for companies across China.
“The biggest challenge for German businesses remains China’s zero-Covid policy,” said Maximilian Butek of the German Chamber of Commerce in China.
“The restrictions are suffocating economic growth and heavily impact China’s attractiveness as a destination for foreign direct investment,” he told CNN Business.
He said the broader restrictions were so stifling that some companies had moved their regional headquarters to other locations, such as Singapore. “Managing the whole region without being able to travel freely is almost impossible,” he added.
In a brief statement, Volkswagen told CNN Business that its CEO was attending the trip since “there have been no direct meetings for almost three years” due to the coronavirus pandemic.
“In view of the completely changed geopolitical and global economic situation, the trip to Beijing offers the opportunity for a personal exchange of views,” the automaker said.
Despite Beijing’s Covid curbs and geopolitical tensions, Germany has every economic incentive to stay close to China.
Its dependency on China can be seen across industries. While about 12% of total imports came from China last year, the country was responsible for 80% of imported laptops and 70% of mobile phones, Sandkamp said.
The automobile, chemical and electrical industries are also reliant on Chinese trade.
“If we were to stop trading with China, we would run into trouble,” Sandkamp added.
China made up 40% of Volkswagen’s worldwide deliveries in the first three quarters of this year, and it’s also the top market for other automakers such as Mercedes.
Wariness among some German officials over the country’s closeness with China could filter into a more restrictive trade policy, though economic cooperation is still in both parties’ interests.
Last week, Germany’s economy minister Robert Habeck told Reuters that the government was efforting a new trade policy with China to reduce dependence on Chinese raw materials, batteries and semiconductors.
Unidentified sources also told the news agency that the ministry was weighing new rules that would make business with China less attractive. The ministry did not respond to a request for comment from CNN Business.
But “despite all odds and challenges, China remains unrivaled in terms of market size and market growth opportunities for many German companies,” said Butek, of the German Chamber.
He predicted that “the large majority will stay committed to the Chinese market and is expecting to expand their business.”
Companies appear to be toeing that line. Last week, BASF CEO Martin Brudermüller was quoted in Chinese state media as saying that Germans should “step away from China-bashing and look at ourselves a bit self-critically.”
“We benefit from China’s policies of widening market access,” he said at a company event, according to state-run news agency Xinhua, pointing to the construction of a BASF chemical engineering site in southern China.
— CNN’s Simone McCarthy, Chris Stern, Lauren Kent, Claudia Otto and Arnaud Siad contributed to this report.
LIVERPOOL, England — On the long picket line outside the gates of Liverpool’s Peel Port, rain-soaked dock workers warm themselves with cups of tea as they listen to 1980s pop.
Dozens of buses, cars and trucks honk in solidarity as they pass.
Dockers’ strikes are not new to Liverpool, nor is depravation. But this latest walk-out at Britain’s fourth-largest port is part of something much bigger, a great wave of public and private sector strikes taking place across the U.K. Railways, postal services, law courts and garbage collections are among the many public services grinding to a halt.
The immediate cause of the discontent, as elsewhere, is the rising cost of living. Inflation in the United Kingdom breached the 10 percent mark this year, with wages failing to keep pace.
But the U.K.’s economic woes long predate the current crisis. For more than a decade, Britain has been beset by weak economic growth, anaemic productivity, and stagnant private and public sector investment. Since 2016, its political leadership has been in a state of Brexit-induced flux.
Half a century after U.S. Secretary of State Henry Kissinger looked at the U.K.’s 1970s economic malaise and declared that “Britain is a tragedy,” the United Kingdom is heading to be the sick man of Europe once again.
The immediate cause of Liverpool dockers’ discontent that brought them to strike is the rising cost of living. | Christopher Furlong/Getty Images
Here in Liverpool, the “scars run very deep,” said Paul Turking, a dock worker in his late 30s. British voters, he added, have “been misled” by politicians’ promises to “level up” the country by investing heavily in regional economies. Conservatives “will promise you the world and then pull the carpet out from under your feet,” he complained.
“There’s no middle class no more,” said John Delij, a Peel Port veteran of 15 years. He sees the cost-of-living crisis and economic stagnation whittling away the middle rung of the economic ladder.
“How many billionaires do we have?” Delij asked, wondering how Britain could be the sixth-largest economy in the world with a record number of billionaires when food bank use is 35 percent above its pre-pandemic level. “The workers put money back into the economy,” he said.
What would they do if they were in charge? “Invest in affordable housing,” said Turking. “Housing and jobs.”
Falling behind
The British economy has been struck by particular turbulence over recent weeks. The cost of government borrowing soared in the wake of former PM Liz Truss’ disastrous mini-budget on September 23, with the U.K.’s central bank forced to step in and steady the bond markets.
But while the swift installation of Rishi Sunak, the former chancellor, as prime minister seems to have restored a modicum of calm, the economic backdrop remains bleak. Spending and welfare cuts are coming. Taxes are certain to rise. And the underlying problems cut deep.
U.K. productivity growth since the financial crisis has trailed that of comparator nations such as the U.S., France and Germany. As such, people’s median incomes also lag behind neighboring countries over the same period. Only Russia is forecast to have worse economic growth among the G20 nations in 2023.
In 1976, the U.K. — facing stagflation, a global energy crisis, a current account deficit and labor unrest — had to be bailed out by the International Monetary Fund. It feels far-fetched, but today some are warning it could happen again.
The U.K. is spluttering its way through an illness brought about in part through a series of self-inflicted wounds that have undermined the basic pillars of any economy: confidence and stability.
The political and economic malaise is such that it has prompted unwanted comparisons with countries whose misfortunes Britain once watched amusedly from afar.
“The existential risk to the U.K. … is not that we’re suddenly going to go off an economic cliff, or that the country’s going to descend into civil war or whatever,” said Jonathan Portes, professor of economics at King’s College London. “It’s that we will become like Italy.”
Portes, of course, does not mean a country blessed with good weather and fine food — but an economy hobbled by persistently low growth, caught in a dysfunctional political loop that lurches between “corrupt and incompetent right-wing populists” and “well-intentioned technocrats who can’t actually seem to turn the ship around.”
“That’s not the future that we want in the U.K,” he said.
Reviving the U.K.’s flatlining economy will not happen overnight. As Italy’s experience demonstrates, it’s one thing to diagnose an illness — another to cure it.
Experts speak of an unbalanced model heavily reliant upon Britain’s services sector and beset with low productivity, a result of years of underinvestment and a flexible labor market which delivers low unemployment but often insecure and low-paid work.
“We’re not investing in skills; businesses aren’t investing,” said Xiaowei Xu, senior research economist at the Institute for Fiscal Studies. “It’s not that surprising that we’re not getting productivity growth.”
But any attempt to address the country’s ailments will require its economic stewards to understand their underlying causes — and those stretch back at least to the first truly global crisis of the 21st century.
Crash and burn
The 2008 financial crisis hammered economies around the world, and the U.K. was no exception. Its economy shrunk by more than 6 percent between the first quarter of 2008 and the second quarter of 2009. Five years passed before it returned to its pre-recession size.
For Britain, the crisis in fact began in September 2007, a year before the collapse of Lehman Brothers, when wobbles in the U.S. subprime mortgage market sparked a run on the British bank Northern Rock.
The U.K. discovered it was particularly vulnerable to such a shock. Over the second half of the 20th century, its manufacturing base had largely eroded as its services sector expanded, with financial and professional services and real estate among the key drivers. As the Bank of England put it: “The interconnectedness of global finance meant that the U.K. financial system had become dangerously exposed to the fall-out from the U.S. sub-prime mortgage market.”
The crisis was a “big shock to the U.K.’s broad economic model,” said John Springford, from the Centre for European Reform. Productivity took an immediate hit as exports of financial services plunged. It never fully recovered.
“Productivity before the crash was basically, ‘Can we create lots and lots of debt and generate lots and lots of income on the back of this? Can we invent collateralized debt obligations and trade them in vast volumes?’” said James Meadway, director of the Progressive Economy Forum and a former adviser to Labour’s left-wing former shadow chancellor, John McDonnell.
A post-crash clampdown on City practises had an obvious impact.
“This is a major part of the British economy, so if it’s suddenly not performing the way it used to — for good reasons — things overall are going to look a bit shaky,” Meadway added.
The shock did not contain itself to the economy. In a pattern that would be repeated, and accentuated, in the coming years, it sent shuddering waves through the country’s political system, too.
The 2010 election was fought on how to best repair Britain’s broken economy. In 2009, the U.K. had the second-highest budget deficit in the G7, trailing only the U.S., according to the U.K. government’s own fiscal watchdog, the Office for Budget Responsibility (OBR).
The Conservative manifesto declared “our economy is overwhelmed by debt,” and promised to close the U.K.’s mounting budget deficit in five years with sharp public sector cuts. The incumbent Labour government responded by pledging to halve the deficit by 2014 with “deeper and tougher” cuts in public spending than the significant reductions overseen by former Conservative Prime Minister Margaret Thatcher in the 1980s.
The election returned a hung parliament, with the Conservatives entering into a coalition with the Liberal Democrats. The age of austerity was ushered in.
Austerity nation
Defenders of then-Chancellor George Osborne’s austerity program insist it saved Britain from the sort of market-led calamity witnessed this fall, and put the U.K. economy in a condition to weather subsequent global crises such as the COVID-19 pandemic and the fallout from the war in Ukraine.
“That hard work made policies like furlough and the energy price cap possible,” said Rupert Harrison, one of Osborne’s closest Treasury advisers.
Pointing to the brutal market response to Truss’ freewheeling economic plans, Harrison praised the “wisdom” of the coalition in prioritizing tackling the U.K.’s debt-GDP ratio. “You never know when you will be vulnerable to a loss of credibility,” he noted.
But Osborne’s detractors argue austerity — which saw deep cuts to community services such as libraries and adult social care; courts and prisons services; road maintenance; the police and so much more — also stripped away much of the U.K.’s social fabric, causing lasting and profound economic damage. A recent study claimed austerity was responsible for hundreds of thousands of excess deaths.
Under Osborne’s plan, three-quarters of the fiscal consolidation was to be delivered by spending cuts. With the exception of the National Health Service, schools and aid spending, all government budgets were slashed; public sector pay was frozen; taxes (mainly VAT) rose.
But while the government came close to delivering its fiscal tightening target for 2014-15, “the persistent underperformance of productivity and real GDP over that period meant the deficit remained higher than initially expected,” the OBR said. By his own measure, Osborne had failed, and was forced to push back his deficit-elimination target further. Austerity would have to continue into the second half of the 2010s.
Many economists contend that the fiscal belt-tightening sucked demand out of the economy and worsened Britain’s productivity crisis by stifling investment. “That certainly did hit U.K. growth and did some permanent damage,” said King’s College London’s Portes.
“If that investment isn’t there, other people start to find it less attractive to open businesses,” former Labour aide Meadway added. “If your railways aren’t actually very good … it does add up to a problem for businesses.”
A 2015 study found U.K. productivity, as measured by GDP per hour worked, was now lower than in the rest of the G7 by a whopping 18 percentage points.
“Frankly, nobody knows the whole answer,” Osborne said of Britain’s productivity conundrum in May 2015. “But what I do know is that I’d much rather have the productivity challenge than the challenge of mass unemployment.”
‘Jobs miracle’
Rising employment was indeed a signature achievement of the coalition years. Unemployment dropped below 6 percent across the U.K. by the end of the parliament in 2015, with just Germany and Austria achieving a lower rate of joblessness among the then-28 EU states. Real-term wages, however, took nearly a decade to recover to pre-crisis levels.
Economists like Meadway contend that the rise in employment came with a price, courtesy of Britain’s famously flexible labor market. He points to a Sports Direct warehouse in the East Midlands, where a 2015 Guardian investigation revealed the predominantly immigrant workforce was paid illegally low wages, while the working conditions were such that the facility was nicknamed “the gulag.”
The warehouse, it emerged, was built on a former coal mine, and for Meadway the symbolism neatly charts the U.K.’s move away from traditional heavy industry toward more precarious service sector employment. “It’s not a secure job anymore,” he said. “Once you have a very flexible labor market, the pressure on employers to pay more and the capacity for workers to bargain for more is very much reduced.”
Throughout the period, the Bank of England — the U.K.’s central bank — kept interest rates low and pursued a policy of quantitative easing. “That tends to distort what happens in the economy,” argued Meadway. QE, he said, is a “good [way of] getting money into the hands of people who already have quite a lot” and “doesn’t do much for people who depend on wage income.”
Meanwhile — whether necessary or not — the U.K.’s austerity policies undoubtedly worsened a decades-long trend of underinvestment in skills and research and development (Britain lags only Italy in the G7 on R&D spending). At British schools, there was a 9 percent real terms fall in per-pupil spending between 2009 and 2019, according to the Institute for Fiscal Studies’ Xu. “As countries get richer, usually you start spending more on education,” Xu noted.
Two senior ministers in the coalition government — David Gauke, who served in the Treasury throughout Osborne’s tenure, and ex-Lib Dem Business Secretary Vince Cable — have both accepted that the government might have focused more on higher taxation and less on cuts to public spending. But both also insisted the U.K had ultimately been correct to prioritize putting its public finances on a sounder footing.
It was February 2018 before Britain finally achieved Osborne’s goal of eliminating the deficit on its day-to-day budget.
Austerity was coming to an end, at last. But Osborne had already left the Treasury, 18 months earlier — swept away along with Cameron in the wake of a seismic national uprising.
***
David Cameron had won the 2015 election outright, despite — or perhaps because of — the stringent spending cuts his coalition government had overseen, more of which had been pledged in his 2015 manifesto. Also promised, of course, was a public vote on Britain’s EU membership.
The reasons for the leave vote that followed were many and complex — but few doubt that years of underinvestment in poorer parts of the U.K. were among them.
Regardless, the 2016 EU referendum triggered a period of political acrimony and turbulence not seen in Westminster for generations. With no pre-agreed model of what Brexit should actually entail, the U.K.’s future relationship with the EU became the subject of heated and protracted debate. After years of wrangling, Britain finally left the bloc at the end of January 2020, severing ties in a more profound way than many had envisaged.
While the twin crises of COVID and Ukraine have muddled the picture, most economists agree Brexit has already had a significant impact on the U.K. economy. The size of Britain’s trade flows relative to GDP has fallen further than other G7 countries, business investment growth trails the likes of Japan, South Korea and Italy, and the OBR has stuck by its March 2020 prediction that Brexit would reduce productivity and U.K. GDP by 4 percent.
Perhaps more significantly, Brexit has ushered in a period of political instability. As prime ministers come and go (the U.K. is now on its fifth since 2016), economic programs get neglected, or overturned. Overseas investors look on with trepidation.
“The evidence that the referendum outcome, and the kind of uncertainty and change in policy that it created, have led to low investment and low growth in the U.K. is fairly compelling,” said professor Stephen Millard, deputy director at the National Institute of Economic and Social Research.
Beyond the instability, the broader impact of the vote to leave remains contentious.
Portes argued — as many Remain supporters also do — that much harm was done by the decision to leave the EU’s single market. “It’s the facts, not the uncertainty that in my view is responsible for most of the damage,” he said.
Brexit supporters dismiss such claims.
“It’s difficult statistically to find much significant effect of Brexit on anything,” said professor Patrick Minford, founder member of Economists for Brexit. “There’s so much else going on, so much volatility.”
Minford, an economist favored by ex-PM Truss, acknowledged that “Brexit is disruptive in the short run, so it’s perfectly possible that you would get some short-run disruption.” But he added: “It was a long-term policy decision.”
Where next?
Plenty of economists can rattle off possible solutions, although actually delivering them has thus far evaded Britain’s political class. “It’s increasing investment, having more of a focus on the long-term, it’s having economic strategies that you set out and actually commit to over time,” says the IFS’ Xu. “As far as possible, it’s creating more certainty over economic policy.”
But in seeking to bring stability after the brief but chaotic Truss era, new U.K. Chancellor Jeremy Hunt has signaled a fresh period of austerity is on the way to plug the latest hole in the nation’s finances. Leveling Up Secretary Michael Gove told Times Radio that while, ideally, you wouldn’t want to reduce long-term capital investments, he was sure some spending on big projects “will be cut.”
This could be bad news for many of the U.K.’s long-awaited infrastructure schemes such as the HS2 high-speed rail line, which has been in the works for almost 15 years and already faces a familiar mix of local resistance, vested interests, and a sclerotic planning system.
“We have a real problem in the sense that the only way to really durably raise productivity growth for this country is for investments to pick up,” said Springford, from the Centre for European Reform. “And the headwinds to that are quite significant.”
For dock workers at Liverpool’s Peel Port, the prospect of a fresh round of austerity amid a cost-of-living crisis is too much to bear. “Workers all over this country need to stand up for themselves and join a union,” insisted Delij.
For him, it’s all about priorities — and the arguments still echo back to the great crash of 15 years ago. “They bailed the bankers out in 2007,” he said, “and can’t bail hungry people out now.”
LONDON — She’s already been forced to resign as U.K. home secretary once this fall.
And now scandal-hit Suella Braverman — controversially restored to her role by new PM Rishi Sunak just last week — is clinging to her job for a second time over claims she broke the law by holding thousands of undocumented migrants in bleakly unsuitable conditions at a former military base in southeast England.
In a statement to the House of Commons Monday, the Tory hard-liner denied widespread reports that she personally prevented officials from mass-booking hotel rooms for hundreds of asylum seekers who could no longer be hosted at the overcrowded Manston processing facility in Kent. Experts said if proven this could amount to a breach of the ministerial code — a resigning matter.
“Like the majority of the British people I am very concerned about hotels, but I never blocked their usage,” Braverman insisted, as opposition MPs called for her to resign. “As a former attorney general, I know the importance of taking legal advice into account.”
The Manston site is currently holding about 4,000 people, more than three times its maximum capacity of 1,600. Many are being forced to stay far longer than the legally permitted 24 hours. Reports suggest hundreds are sleeping on bare floors, and that disease is rife.
David Neal, the U.K. government’s independent chief inspector of borders and immigration, told MPs last week he was left speechless by the “wretched conditions.” He revealed some migrants from Afghanistan had been held in a marquee for 32 days, though the facility is designed only to host people for a maximum 24 hours while they undergo checks before being transferred to detention centers or hotels.
The crisis has been triggered by a huge increase in the number of undocumented migrants attempting to cross the English Channel — numbering nearly 40,000 so far this year, according to Ministry of Defense figures. On Sunday alone some 468 people made the dangerous journey in eight boats, the MoD said.
Since leaving the EU, the U.K. has been asking for a bilateral deal with France and the wider EU bloc to return those crossing the Channel to the first country deemed safe they enter into. So far, none has been forthcoming.
“The system is broken,” Braverman admitted. “Illegal migration is out of control and too many people are more interested in playing political parlor games, covering up the truth, rather than solving the problem.”
She said the Home Office is currently negotiating extra accommodation for undocumented migrants with private providers and considering “all available options” to tackle overcrowding at processing centers in the U.K.
She also told MPs she was “appalled” to learn, on her first appointment as home secretary in September, that there were “over 35,000 migrants” staying in hotels around the U.K. at an “exorbitant cost” to the British taxpayer. She instigated an urgent review into alternative options, she said, but that the department has continued procuring hotel rooms in the meantime.
But earlier Monday, local Conservative MP Roger Gale described the overcrowding at the Manston facility as “wholly unacceptable” and suggested the situation may have been allowed to happen “deliberately.”
“I was told that the Home Office was finding it very difficult to secure hotel accommodation,” he said. “I now understand this was a policy issue, and that a decision was taken not to book additional hotel space.”
The accusations add to the pressure on the home secretary, whose return to the Cabinet last week was widely questioned given she had been forced to quit only six days earlier after being caught using her personal email account to share sensitive government documents.
A Home Office review published Monday found Braverman sent six Home Office documents to her personal email address between September 15 and October 16. One was then forwarded on to a backbench ally for his perusal — a clear breach of security rules.
Striking a defiant tone, Braverman admitted to having made mistakes but insisted the broader claims about her conduct were a conspiracy to keep her out of high office. She told MPs that some people would like to “get rid” of her, adding: “Let them try.”
A Braverman ally conceded the home secretary is “in great difficulty” but warned she had “deliberately put in an impossible position by those who would rather her not to hang around.”
“The pressure is not easing in any way, and I think it may be too much for her.”
LONDON — It took one bruising campaign defeat and six weeks of exile — but on Tuesday, Rishi Sunak will finally become U.K. prime minister.
He faces the toughest in-tray of any British leader since World War II, entering No. 10 Downing Street as the country hurtles into winter with energy bills, hospital waiting lists, borrowing costs and inflation all soaring.
The challenge has been magnified by Liz Truss’ brief crash-and-burn premiership. As a result of her now-infamous mini-budget, which was scrapped almost in its entirety after causing chaos in financial markets, the Conservatives are trailing the opposition Labour Party by over 30 percentage points in opinion polls.
On Monday, Sunak told MPs he was ready to hit the ground running as he addressed them for the first time since becoming Tory leader. Over the days and months ahead, he will need to carry out his first ministerial reshuffle without further fracturing his party; oversee the first budget since the last one wreaked havoc on the economy; and determine what support to offer voters with their energy bills past this spring.
Prime ministers tend to think of their first 100 days as a way to set the tone for their premierships. For Sunak, who has just over two years to govern before he is required to face a general election, that first impression is going to be particularly important.
October 25 — Meeting with the king and first speech outside No. 10 Downing Street
Sunak will become the prime minister Tuesday after an audience with King Charles III, where he will ask the monarch for permission to form a government.
Sunak will then address the country for the first time as prime minister from the steps outside No. 10 Downing Street at around 11.35 a.m.
To much of the British public, the former chancellor is a familiar face who announced the wildly-popular furlough scheme during the coronavirus pandemic in 2020.
His task now will be to reassure people that the government will support them during another difficult economic period — only this time he is in a much tougher position. The popularity he gained during the pandemic has waned, and he is taking over after a major government crisis — the third Tory prime minister to hold office within three months.
October 25 — First reshuffle
The first big political test for Sunak will be his Cabinet reshuffle. Tory MPs believe he will learn the lesson from Truss’ first and only one, where she divvied up roles between her allies and left almost everyone who didn’t back her out in the cold.
“I think his reshuffle will be more unifying, bringing in people from all wings and will not be as destabilizing as Liz’s,” an MP who did not back Sunak predicted.
Sunak’s leadership rival Penny Mordaunt is expected to be handed a major Cabinet position | Dan Kitwood/Getty Images
Sunak is likely to make at least his major Cabinet appointments Tuesday afternoon, so they are in place to line up alongside him on the House of Commons’ front bench when MPs grill him during so-called prime minister’s questions (PMQs) on Wednesday.
His biggest decision will be whether to keep Jeremy Hunt — who was drafted in by Truss in a last-ditch effort to save her premiership — as chancellor. He is also likely to hand a big job to his leadership rival Penny Mordaunt.
Close Sunak allies who are likely to get promotions include Mel Stride, the current chairman of the Treasury select committee, Craig Williams, Claire Coutinho and Laura Trott. Tory big beast Michael Gove could see a return to Cabinet.
October 26 — First PMQs
Sunak will go head-to-head as prime minister with Keir Starmer, the Labour leader, for the first time on Wednesday.
Unlike his predecessor, Sunak won’t have much to worry about from his own side — Tory MPs have largely rowed behind him since he became their leader on Monday, with many expressing relief that the perpetual state of crisis of the Truss government has ended.
But MPs will want him to demonstrate that he can land blows against Starmer at a time when Labour is streets ahead in the polls. Sunak told Tory MPs on Tuesday that their party faced an “existential threat” as a result of its low poll ratings.
October 28 — Deadline to form a government in Belfast
If a power-sharing arrangement is not in place at Stormont by Friday, a fresh set of elections to the Northern Irish assembly will have to be triggered.
Calling these elections — the second set in seven months — could be one of the Sunak government’s first acts and an indication of successive Tory prime ministers’ failure to deal with the political crisis in Northern Ireland.
The Democratic Unionist Party issued a fresh warning on Monday night that it would not participate in the assembly unless Sunak takes action on the post-Brexit Northern Ireland protocol agreed with the EU.
October 31 — First budget
The next budget was penciled in for October 31 by Kwasi Kwarteng, the Truss-era chancellor who wanted to use it to reassure financial markets still reeling from his last one.
The timing of the budget — widely derided by Tory MPs because of the optics of holding it on Halloween — was intended to give the Bank of England time to react before its own key meeting on November 3, where it will set interest rate levels for the weeks ahead.
In its biggest test so far, Sunak’s government will have to decide whether to stick with that date; what actions to take to reassure the markets; and how to fill the enormous hole in the U.K. public finances.
Carl Emmerson, deputy director of the Institute for Fiscal Studies, said: “If his chancellor is Jeremy Hunt and Sunak is comfortable with the way things are proceeding for next Monday, then going ahead has lots of advantages.
“You get the announcement out before the Bank of England makes its next inflation figure, and you get the Office for Budgetary Responsibility forecasts out there, which helps show the markets you are serious about them.
“The case for changing that date is much stronger if Sunak says, ‘Actually, I want to do something different to what Jeremy Hunt has been planning, and I need more time,’” Emmerson added.
November 3 — Bank of England rates meeting
The Bank of England’s monetary policy committee is expected to raise interest rates at its meeting on November 3, triggering a fresh hike in people’s mortgages.
This is the point when many people will realize for the first time that they will have to make much larger mortgage repayments once their current fixed-rate deals come to an end.
Sunak made combating inflation and keeping mortgages low a central theme of his leadership campaign over the summer. Reacting to the rates decision and ensuring the government works closely with the Bank of England to combat inflation will be a key test of his premiership.
November 6 — COP27 summit in Egypt
Sunak made a point of telling Tory MPs on Tuesday that he is committed to the U.K.’s goal of achieving net-zero carbon emissions by 2050.
The question now is whether he attends the COP27 climate summit in Sharm El Sheikh, Egypt. Truss reportedly planned to go, despite her skepticism of aspects of the net-zero agenda.
If Sunak does go to Egypt, it could be his first foreign trip in office (unless he decides to make a quick visit to Ukraine beforehand) and his first opportunity to present himself on the world stage.
November 8 — Boundary changes
The Boundary Commission for England will publish its new constituency map on November 8.
At this point, some Tory MPs will know with near certainty that their constituencies are being carved up between neighboring areas, with some forced to jostle with colleagues over who will get to stand where.
It will be a political headache for Sunak to deal with, and any MPs whose safe seats become marginal will sense their political careers coming to an end — and will have less of an incentive to support him in key votes in the months ahead.
November 13 — G20 meeting in Indonesia
The next big foreign trip coming down the track is the G20 summit in Bali, Indonesia.
The meeting will be an opportunity for Western powers to present a united front against Russia following its invasion of Ukraine and against China’s increased aggression toward Taiwan, but also to hold talks behind closed doors. There have been reports that both China’s Xi Jinping and Russian Vladimir Putin will attend.
Sophia Gaston, the head of foreign policy at the Policy Exchange think tank, said this was shaping up to be “one of the most extraordinary summits of modern history, with a violent war raging in Ukraine and the leading protagonist, Vladimir Putin, on the guest list alongside other autocratic leaders and outraged democratic allies.”
“As well as promoting free trade and the rules-based international order, Sunak would likely see the G20 as an opportunity to build support for his proposed ‘NATO-style’ technology alliance,” Gaston said. “He may well also debut a new U.K. message on the net-zero transition.”
Late November or early December — Chester by-election
Labour whips are preparing to trigger a by-election in the city of Chester in late November or December.
The by-election is taking place because the city’s MP Christian Matheson resigned after a parliamentary watchdog recommended he be suspended for sexual misconduct.
Matheson sits on a 6,164-vote majority, and the seat has traditionally been a swing seat flipping between the Tories and Labour. It was Conservative up until 2010.
Based on current polling figures, Labour should win a significantly larger majority than it currently has, though by-elections do suffer from small turnouts and so unexpected results are not uncommon. A dramatic Tory defeat would set alarm bells ringing in the party.
Another by-election could be triggered in the coming months if, as expected, Boris Johnson elevates his ally and MP Nadine Dorries to the House of Lords in his resignation honors. That would likely be the first by-election in a Tory-held seat fought with Sunak as party leader.
December 31 — U.K. deadline for joining trans-Pacific trade bloc
The U.K. government has said it hopes to conclude negotiations on joining the CPTPP — a trade agreement signed by 11 countries including Australia and New Zealand — by the end of the year.
Securing this deal was one of Truss’ priorities. For Sunak it would represent both a concrete foreign policy achievement and an indication that the U.K. is successfully building closer diplomatic ties with countries in the Indo-Pacific after Brexit.
Talks around the partnership have thrown up some diplomatic obstacles, with China reacting angrily to U.K. trade officials meeting Taiwanese counterparts. Both China and Taiwan have applied to join the CPTPP.
There have been suggestions that the evidence against him is so damning that Johnson could face temporary suspension from parliament or even be kicked out as an MP. The inquiry may have formed part of Johnson’s decision not to stand for the Tory leadership contest.
If the privileges committee says Johnson should be sanctioned once it concludes its inquiry, Sunak will have to judge his response and decide whether to whip Tory MPs to back its recommendations even if that provokes Johnson’s ire. There is also the risk that Sunak himself will be dragged into the probe, given he too was fined over the Partygate scandal.
Among other things, the probe will examine the impact of the economic policies that Sunak designed as chancellor during the pandemic, putting his decisions under scrutiny.
His “Eat Out to Help Out” scheme — which encouraged people to dine in restaurants during the post-lockdown summer of 2020 — could become a focus, with critics claiming it drove up coronavirus-related infections and deaths.
February — Energy support nears its end
By the time Sunak’s first 100 days are up, there will be pressure on the government to explain how it will support people with their energy bills past the spring if wholesale gas prices haven’t drastically fallen. Hunt has already rolled back the Truss government’s two-year guarantee and instead capped people’s energy bills at an average of £2,500 for just six months. That policy ends in April.
The Institute for Fiscal Studies’ Emmerson said: “We’ve got a big generous offer from the government through this winter — although prices are still a lot higher than they were last year, they will be nowhere near as high as they would have otherwise been.
“The prime minister and chancellor will spend a lot of time thinking about how they replace that scheme. In some ways, it’s very similar to the kind of furlough scheme that Sunak had during the pandemic — very generous, big scheme with lots of crude edges to it,” he said.
“It’s understandable wanting to get in place quickly to support people, but how do you get out of it? Do it too quickly and that’s too much pain for too many people — keep it in place for too long, and that’s very expensive to the government.”
It’s just one of so many enormous decisions the new PM faces in his first 100 days.
On resigning after just 45 days in office, Truss becomes Britain’s shortest-serving prime minister in history and the third Conservative Party leader to be toppled in as many years
Dan Kitwood | Getty Images News | Getty Images
LONDON — U.K. Prime Minister Liz Truss resigned Thursday after just 44 days in office, firing the starting gun on yet another Conservative Party leadership contest.
It means Truss becomes Britain’s shortest-serving prime minister in history and the third Conservative leader to quit in as many years. Her resignation kickstarts the search for a new leader at a time when the country faces a worsening cost-of-living crisis and a looming economic recession.
Her short speech Thursday confirmed she no longer felt she had the authority to govern after a failed tax-cutting budget that rocked financial markets and led to a rebellion in her political party.
The race to find Truss’ replacement is already well underway.
Graham Brady, the Conservative politician who oversees leadership votes and reshuffles, outlined on Thursday how the fast-tracked leadership election will proceed this time around.
Brady said he hoped the process would be concluded by Oct. 28, but the result could come much sooner than that — potentially as early as Monday evening.
Candidates vying to succeed Truss as prime minister have until 2 p.m. London time on Monday to gather the support of at least 100 Conservative Members of Parliament to run. It is a particularly high bar of nominations for a party composed of 357 MPs and caps the number of candidates able to contest for the leadership to a maximum of three.
Brady said nominations could be accepted via signature or by email and the ballots would be conducted as necessary thereafter. He told reporters that MPs will have the chance to hear from the nominated candidates at a hustings on Monday afternoon, although these will be held behind closed doors.
Graham Brady, U.K. lawmaker and chairman of the 1922 Committee, speaks to the media outside the Houses of Parliament in London, UK, on Thursday, Oct. 20, 2022.
Bloomberg | Bloomberg | Getty Images
If only one candidate receives 100 nominations on Monday, they will become the next leader of the party and the new prime minister.
If there are two candidates with 100 nominations, an indicative ballot will be held on Monday afternoon to show the level of support each has in the party. It is thought that the candidate with the fewest number of votes may step down at this stage to avoid an online ballot among the party membership.
And if there are three candidates in the running on Monday, the one with the fewest number of votes from MPs will be eliminated in results announced at 6 p.m. London time. An indicative ballot of the two remaining candidates would then follow, with the result announced later that evening.
The race to become Britain’s next prime minister, and the fifth since the Conservatives took power in 2010, has yet not seen anyone announce their intention to run for office.
Dan Kitwood | Getty Images News | Getty Images
Conservative Party Chairman Jake Berry said Thursday it had been agreed that should the party put forward two candidates, there would be an “expedited, binding online vote of Conservative Party members.”
In this scenario, Conservative members would take part in an online vote to choose the next leader of the party.
The ballot will close at 11 a.m. London time on Oct. 28 and the winner will be declared later that day.
The race to become Britain’s next prime minister, and the fifth since the Conservatives took power in 2010, has yet not seen anyone announce their intention to run for office.
However, it is thought former Finance Minister Rishi Sunak, former Defense Secretary Penny Mordaunt and — despite being ousted from office just three months ago — former Prime Minister Boris Johnson could be among the main contenders.
Once the winner of the leadership contest has been declared, Britain’s King Charles will then ask them to form a government, making them the next prime minister in the process.
Thereafter, the new prime minister will not have long to prepare before the scheduled medium-term fiscal plan announcement on Oct. 31.
LONDON — It is a British cliché that a week is a long time in politics. Liz Truss proved it true on Thursday when she became the shortest-serving British prime minister in history. In a matter of days, her U-turn on economic plans that made global markets jittery and the resignations of key ministers prompted calls from within Truss’ party for her to step down. But the shakeup at the top is hardly an outlier in the recent history of Britain’s Conservatives, whose latest troubles have been years in the making.
DAVID CAMERON’S DECISION
Some observers date the current leadership crisis to Conservative Party infighting over the role of the European Union during Cameron’s 2010-2016 tenure Britain’s leader. The pro-EU prime minister decided to resolve the debate by calling for a nationwide referendum on Britain’s membership in the bloc. With almost 52% voting to leave and 48% to remain, the 2016 referendum resulted in a divisive Brexit. It also led Cameron to resign.
MAY’S BREXIT MANDATE
Theresa May succeeded Cameron as Conservative leader and prime minister on a mandate to “deliver Brexit.” She remained in the job for three years and 11 days, by which time the U.K.’s departure from the Europe Union was still pending. The House of Commons three times rejected the withdrawal agreement May’s government negotiated with the EU. It was a tumultuous time mired in frustration in Brussels and discord in Westminster. Following a string of Brexit-related resignations from her government and under pressure from within her party, May ended up resigning.
BORIS JOHNSON’S TURN
In July 2019, Leave campaigner Boris Johnson became Britain’s third prime minister in just over three years. Johnson made Brexit finally happen in January 2020 after four years of international squabbling. The emergence of the coronavirus pandemic weeks later threw the U.K. off course again. Johnson’s was accused of moving too slowly to limit travel, create an effective test-and-trace program and to project vulnerable older people. Though Johnson won praise for a swift rollout of a nationwide vaccination program, the tight restrictions on businesses, public events and private gatherings the government ultimately imposed would lay the groundwork for the end of his tenure.
WHOSE PARTY IS THIS?
Photos and witness accounts emerged indicating Johnson and government officials broke their own COVID-19 rules on social gatherings during the pandemic. In April of this year, Johnson received a fixed penalty notice for attending one such gathering. He was the first sitting U.K. prime minister to be punished for breaking the law. The scandal, dubbed “partygate” by the British press, triggered a wave of disgust across Britain, especially among those who were not permitted to attend the funerals of loved ones who died during the pandemic. Though Johnson survived a no-confidence vote over that, revelations in July that he appointed a deputy chief whip accused of misconduct led to a wave of ministerial resignations. It cost Johnson his job. He announced his resignation on July 7.
TRUSS MAKES HISTORY
Johnson ally and former Foreign Secretary Liz Truss swept past former Treasury chief Rishi Sunak in September to become Britain’s third female prime minister – and the last leader to meet with Queen Elizabeth II. However, Truss is likely to be remembered for her brevity. After resigning Thursday, she holds the record as the shortest-serving leader in modern British history, clocking up a mere 44 days in office. Her demise was swift. The pound plummeted after the announcement of her mini-budget, which included billions in unfunded tax cuts. To stymie the damage, Truss made U-turns on major tax policies and replaced her Treasury chief. But the resignation Wednesday of Home Secretary Suella Braverman, who left with pointed criticism of her boss, unleashed a torrent of Tory calls for Truss to resign, too.
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AP journalist Thomas Adamson in Paris contributed to this story.
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Follow AP’s coverage of British politics at https://apnews.com/hub/british-politics
LONDON — It was a revolution 11 long years in the making.
For a small but vocal band of right-wing libertarians, Liz Truss’ appointment as U.K. prime minister on September 6 seemed the triumphant end point of an epic and improbable march that led them from the fringes of British politics to Whitehall’s grandest corridors of power.
In the course of just over a decade, a group of little-known politicians, fringe think tanks and outspoken media figures had helped drag the Tory Party, and the nation it led, from David Cameron’s vision of so-called compassionate Conservatism — hugging huskies and all — to a Brexit-backing, free-market embracing, low-tax juggernaut.
It took them four Tory prime ministers, four general elections and an era-defining referendum to do it — but with Truss in charge, they were finally living their dream. The country was to be remade in their image.
It lasted 44 chaotic days, and no more.
“They felt their moment had come at last,” said Tim Bale, professor of politics at Queen Mary University London. “This would prove that Brexit hadn’t been a ghastly mistake, but a fantastic opportunity. But of course, as it was always based on fantasy, it was always bound to collide with reality.”
Truss was elected Conservative leader — and so U.K. prime minister — last month on the votes of just 81,000 party members, a group large enough to defeat her more centrist opponent, Rishi Sunak, but still small enough to fit comfortably inside Wembley stadium, home of the England football team.
This band of true-blue believers had been wooed by her heady promises of a low-tax, low-regulation state that would embrace the opportunities provided by Brexit.
But as soon as PM Truss started to put her promises into action — via a ‘mini-budget’ on September 23 which included tens of billions of pounds in unfunded tax cuts alongside a massive energy subsidy scheme — the markets began sliding into turmoil. Within days it was clear Truss had triggered an economic crisis — and one that sent the Conservative poll ratings tumbling along with the value of the pound.
Her MPs, facing electoral oblivion, were terrified.
In the weeks that followed, Truss was forced to sack her Chancellor Kwasi Kwarteng and U-turn on most of their economic program in a desperate bid to stabilize the markets. This week her home secretary, Suella Braverman, followed Kwarteng out the door. Her MPs became mutinous, some publicly demanding her head. Support rapidly drained away.
Truss was forced to sack her Chancellor Kwasi Kwarteng and U-turn on most of their economic program in a desperate bid to stabilize the markets | Jeff J Mitchell/Getty Images
Truss’ disastrous six weeks in power were an abject humiliation for the prime minister herself, of course — but also for the libertarian right of the Conservative movement that had fought its corner for years.
Winners and losers
“I’m pretty distraught about it,” said Mark Littlewood, director general of the Institute for Economic Affairs (IEA), one of the right-wing Westminster think tanks that inspired the Truss agenda. (He, like most of the interviewees for this article, was speaking after the abandonment of Truss’ economic program earlier this week, but before she finally resigned Thursday afternoon.)
“It did actually appear as if we had a new government that, in very broad terms, shared the IEA analysis of the problems with our economy, and it not being market-oriented enough.”
But Truss botched the “political execution” rather than economic thinking, Littlewood insisted, lamenting that “if the execution goes badly wrong, it has a rebound effect on the ideas.”
Indeed, Conservative libertarians explain the Truss debacle in various ways: She was not clear enough about what she was doing and the reasons for it; she made the announcements in the wrong sequence; she refused to match her tax cuts with spending restraint; and she failed to produce independent proof that her plans would work. There is certainly little sign of remorse.
“The position we’re in now is that these reforms basically have not been tried,” Littlewood insisted. “Her attempts to implement change were too hurried; too rushed; not thought through; naïve in some regard.”
Former UKIP leader Nigel Farage was another right-wing libertarian who had been advocating for low-tax, small-state ideals for decades.
“I think the hope was that the Kwarteng budget was going to mark a very significant moment,” Farage said. “That now appears to be dead. And I would have thought dead for a very, very long time. The people in the Conservative Party that I talk to, who think on my wavelength … have pretty much given up.”
But Tories opposed to the libertarian agenda are delighted at its failure — if not the disastrous fallout, for country and party alike. “The mild flirtation with Tea Party libertarianism has been strangled at birth, and I think for the general good fortune of the Tory Party that has to be seen as a good thing,” Tory backbencher Simon Hoare told the BBC.
One serving Cabinet minister added: “[The libertarians] are going to have to adjust to reality like the rest of us. They can’t buck the market.”
Former UKIP leader Nigel Farage was another right-wing libertarian who had been advocating for low-tax, small-state ideals for decades | Peter Summers/Getty Images
Nicky Morgan, a former Cabinet minister who previously co-chaired the centrist ‘One Nation’ caucus of Tory MPs, said her party must now return to its former broad-church approach.
“The task for the ‘One Nation’ wing of the party is almost to ignore the libertarian right and get on with reasserting one-nation politics, and prove to everyone from Liz Truss downward that if we want to stay in power, then being sane and sensible in the middle ground is a much stronger place to be,” she said.
The long march
For some on the conservative right, so-called Trussonomics was the inevitable end point of a march toward deregulation that began with the Brexit movement in the early 2010s. Farage was one of a number of Brexiteer thinkers who wanted the U.K. to leave the EU in a bid to drive up business competitiveness.
Bale said the libertarian strain in the Conservative Party had in fact been present for decades, but that the Brexit cause emboldened it and brought it to the fore.
The turning point came in 2011, when a number of right-wing Conservative MPs — many of them newly-elected the previous year — rebelled against then-Prime Minister David Cameron and voted in support of a referendum on EU membership. “That was the first time they realized their strength,” Bale said.
Across the country, anti-EU sentiment was rising, fueled by the eurozone crisis and soaring levels of immigration.
“There was a ‘push me, pull you’ going on,” Farage said. “The stronger UKIP got, the more emboldened the Tory Brexiteers got. 2011 was the moment when UKIP suddenly started coming second in by-elections. This group in the Tory Party, and this group outside the Tory Party — namely my group — always had very similar policy goals.”
Cameron was spooked, and the pressure from within and without his party forced him to agree a referendum on Britain’s EU membership. It was won by the Leave-supporting side in 2016, cheered on by a highly vocal section of the right-wing U.K. press which also supports low taxes and deregulation.
“The referendum allowed them all to coalesce around a single issue,” said David Yelland, a former editor of the Rupert Murdoch-owned, Brexit-backing Sun newspaper, who now speaks out against the influence of right-wing media.
“The right of the Conservative Party and their supporters in the media and the think tank world knew they had one go at this. They had to win Brexit, otherwise they were finished. And they did. And since then that has emboldened them.”
Keep pushing on
With Cameron forced from office, the group’s next battle was with his successor Theresa May, a euroskeptic Remainer who tried to negotiate a less drastic form of Brexit which would have left Britain tied to many of Brussels’ rules and regulations.
Farage said the “loose relationship” between pro-Brexit libertarians inside and outside the Tory Party maintained its hold over the new Tory leader, ultimately blocking her proposed Brexit deal in Parliament and forcing her resignation.
Theresa May was a euroskeptic Remainer who tried to negotiate a less drastic form of Brexit | WPA pool photo by Henry Nicholls/Getty Images
Boris Johnson then emerged as the next prime minister, a genuine ‘Vote Leave’ campaigner who was able to push through the hard-nosed form of Brexit the group had dreamed of. But his personal brand of domestic politics was less to their taste — a sort of high-spending boosterism which appealed to millions of Tory and pro-Brexit voters, if not to the libertarian right.
“The core Brexiteers were not ultra-libertarians,” explained former Tory MP Stewart Jackson, who lost his job as a ministerial bag carrier to vote with the pro-Brexit rebels in 2011.
“There were a few that wanted [London to become] Singapore-on-Thames … but the bulk of Brexiteer MPs and definitely Brexiteer voters were much more what I would call communitarian.”
But Jackson said the vacuum of ideas about how best to respond to Brexit, even among many Brexiteers, left space for the libertarians to fill. “They were the only game in town in terms of a new intellectual concept that the U.K. could consolidate on, being outside the European Union,” he said.
With Johnson’s departure in July following a series of personal scandals, the likes of Littlewood — as well as his brothers in arms at neighboring think tanks the Taxpayers Alliance and the Adam Smith Institute — found themselves in the ascendance.
Their ideas found favor with Truss — who despite not being a Brexiteer at the referendum, was a follower of the libertarian cause — and her Chancellor-to-be Kwarteng. The ambitious pair were among colleagues who wrote a now infamous 2012 pamphlet named “Britannia Unchained” offering radical right-wing solutions to Britain’s economic problems.
Less than two months after Johnson’s departure, their economic prospectus was finally put to the test — and exploded on impact.
The arc of history
As Truss and Kwarteng look back at the ashes of their brief Downing Street careers, the pro-Brexit right is licking its wounds and wondering where it goes next.
Shanker Singham, another libertarian thinker who is close to Truss and the IEA, insisted it was too soon to tell whether the low-tax, ultra-competition agenda is too damaged by the Trussonomics experiment to resurface in the near future.
Brexit supporters march in Fulham in the final leg of the March To Leave Rally on March 29, 2019 | Dan Kitwood/Getty Images
“It’s a very febrile atmosphere, and things have to settle down,” he said. “There’s a big arc of history here, and Liz Truss’ mini-budget does not suddenly transform the arc of history.”
Littlewood insists there will be another chance to implement libertarian policies in less than a decade, given the structural economic problems Britain faces.
“Had this [mini-budget] gone as smoothly as I had imagined it in my dreams, rather than as badly as it has gone in my living nightmare, I think we could have got quite a lot of this done now,” he said. “Unfortunately, a large amount of it is off the table now, but I think it will have to be returned to.”
Brexiteers of a different persuasion — of which there are many — are hoping for an urgent change of direction, however.
“The vision of Brexit as ‘Davos on Thames’, only ever held by 10 percent of the Conservative electorate, is dead,” wrote Matthew Goodwin, an academic who has charted the rise of the populist right. “The only way forward for the Conservative Party now is to get back to what Brexit was really about for the 90 percent, and to reconnect with their 2019 electorate.”
But Bale, of Queen Mary University, believes the libertarian strain among Conservatives will forever lurk just beneath the surface, insisting their radical solutions to the nation’s ills have still not been properly tried.
“When the spaceship doesn’t arrive,” he said, “the cultists simply say ‘we got the date wrong’, and that it will be coming in two years’ time.”
Additional reporting by Annabelle Dickson.
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1994 – As a university student, Truss calls for abolishing the monarchy at a Liberal Democratic conference, “We do not believe people are born to rule.”
1996 – Truss joins the Conservative Party.
1996-2000 – Works for Shell, eventually becoming a commercial manager.
2000-2005 – Economic director at Cable & Wireless.
2006-2010 – Councillor in the London borough of Greenwich.
May 2006 – A Daily Mail article exposes an extramarital affair between Truss and MP Mark Field, who had been assigned to her as a political mentor. The affair is thought to have ended in June 2005.
2008-2010 – Deputy director of Reform, a think tank.
2009 – Truss is selected to be the Conservative MP candidate for South West Norfolk. After a demand by some local party members that she end her candidacy, citing her past affair with Field, Truss survives a vote and remains the candidate.
2010 – Elected MP for South West Norfolk.
2012 – Co-authors “Britannia Unchained: Global Lessons for Growth and Prosperity,” a book that describes the British people as ‘among the worst idlers in the world,’ who ‘are more interested in football and pop music’ than working hard.
September 2012-July 2014 – Parliamentary Undersecretary of State for Education and Childcare.
July 2014-July 2016 – Secretary of State for Environment, Food and Rural Affairs.
February 20, 2016 – In a Twitter post, Truss announces that she supports the “Remain” position on Brexit.
July 2016-June 2017 – Lord Chancellor and Secretary of State for Justice
June 2017 – Truss is demoted to chief secretary to the Treasury. She serves in the position until July 2019.
October 11, 2017 – Truss tells BBC2 she would now vote to leave the European Union if the Brexit referendum were to be held again, “I have changed my mind….I believed that there would be major economic problems. Those haven’t come to pass and I have also seen the opportunities.”
July 2019-September 2021 – Secretary of State for International Trade and President of the Board of Trade
September 2019 – Is appointed minister for women and equalities.
December 2019 – Is appointed chief post-Brexit negotiator with the EU, tasked with settling the Northern Ireland protocol.
September 15, 2021 – Is appointed foreign secretary.
October 14, 2022 – Truss says she is scrapping plans to reverse a rise in business taxes, a move that will save £18 billion ($20 billion), after a revolt by investors and members of her own Conservative Party worried about the impact of soaring government borrowing at a time of decades-high inflation. Truss also fires finance minister Kwasi Kwarteng.
October 20, 2022 – Truss announces her intention to resign just six weeks into her term after a growing number of her own Conservative Party’s lawmakers say they cannot support her any longer. She will remain prime minister until her successor is chosen.
The U.K.’s Suella Braverman is resigning from her position as interior minister after just 43 days in the role, she announced Wednesday, citing a breach of rules as well as concerns over the direction of the government.
She will be succeeded by former Transport Secretary Grant Shapps, Downing Street confirmed roughly an hour after her announcement. Notably, Shapps did not back Prime Minister Liz Truss in this summer’s leadership race and has criticized some of her policies.
In a resignation letter posted to Twitter, Braverman said, “It is with the greatest regret that I am choosing to tender my resignation.”
In the letter, she said she had sent an official document — a draft written ministerial statement that had not been published — from her personal email to a parliamentary colleague in order to get support for her policy. This, she said, “constitutes a technical infringement of the rules.”
Braverman said that she had realized her mistake and reported it to official channels, but that resigning was the right thing to do.
In a letter to Braverman posted on the Downing Street website, Truss wrote: “I accept your resignation and respect the decision you have made. It is important that the Ministerial Code is upheld, and that Cabinet confidentiality is respected.”
The departure is the latest surprise turn of events for the U.K.’s Conservative Party, whose government led by Prime Minister Liz Truss has come under increasing fire for throwing markets into turbulence and drastically changing policy plans within the span of a few days.
Braverman ran against Truss for the Conservative leadership race this summer but was knocked out in an early stage. She has held past roles as attorney general, from 2020 to 2022, and in the “Brexit” department in 2018.
In her short time as home secretary, beginning with the Truss government on Sept. 6, she has made headlines for outspoken comments on reducing net migration, affirming the controversial policy of deporting asylum seekers to Rwanda, and just on Wednesday morning defending the government’s Public Order Bill.
It comes at a hugely turbulent time for the government, with Truss under intense pressure to resign just two months into her premiership after a budget on Sept. 23 sparked chaos in financial markets.
On Friday, Truss fired her finance minister, Kwasi Kwarteng, over the incident, despite having campaigned on the program of tax cuts which set off the chaos.
Kwarteng was succeeded by former Health Secretary Jeremy Hunt, who on Monday proceeded to reverse the majority of the economic policies laid out in the government’s mini-budget announced on Sept. 23. Brought in in a bid to calm markets and project an image of stability, Hunt has provoked rumor of being more in control of government than Truss and even a potential successor.
Shapps, Braverman’s successor, was not initially given a so-called front bench role by Truss. He was also among the Conservative voices who criticized elements of her tax cut program, saying that the removal of the top rate of income tax had “jarred for people in a way which was unsustainable.”
In her letter, Braverman referred to the wider government, adding that it was “obvious to everyone that we are going through a tumultuous time” and said she had “concerns about the direction of this government.”
Braverman said she was concerned about the breaking of key pledges to voters, though did not specifically highlight the recent U-turn on fiscal policy, instead citing pledges to reduce overall migration numbers and small boat crossings to the U.K. Truss and Braverman had been reportedly clashing behind the scenes on revising U.K. migration policy as the nation faces acute worker shortages.
In what could also be read as a message to the embattled prime minister, Braverman said: “The business of government relies upon people accepting responsibility for their mistakes. Pretending we haven’t made mistakes, carrying on as if everyone can’t see that we have made them, and hoping that things will magically come right is not serious politics. I have made a mistake; I accept responsibility; I resign.”
DUBLIN — Brexit has inflicted deeper opportunity costs on U.K.-EU trade than previously estimated, according to a new Irish study that compares the weakness of actual post-2020 goods flows to a parallel universe where Britain stayed within the single market.
The Economic and Social Research Institute (ESRI) in Dublin found that Britain’s exit has cut the potential value of goods exports to Europe by 16 percent, while EU exports to the U.K. were even more sharply lower, representing a 20 percent loss in potential sales.
The ESRI authors from Trinity College Dublin used a hybrid model that combined U.K. and EU data. They made a central assumption that, had Brexit not happened, U.K. import and export levels with European partners would have closely mirrored the EU’s relatively stronger internal trade performance last year.
The ESRI found that, instead, trade suffered in both directions — but in significantly different ways.
While many U.K. firms producing goods on low profit margins have stopped shipping entirely to the EU, goods flows into the U.K. largely have continued but at reduced volumes. The ESRI said this reflected the contrast in post-Brexit border regimes. While the U.K. has imposed few if any post-Brexit regulatory constraints on EU imports, British exports now face full EU customs and sanitary checks that increase costs and delays, making low-margin products unprofitable.
The ESRI found that U.K. exporters were losing opportunities and market share in most EU countries, most strikingly in their closest trading partner, Ireland, where the value of British goods last year slumped by 40 percent versus the no-Brexit model. Other sharp fallers included Spain (32 percent), Sweden (25) and Germany (24).
The lone EU member to record any U.K. import gains in the ESRI’s model was Luxembourg, up an eye-popping 76 percent. While the ESRI didn’t detail any reason why, the U.K. government pinpointed power generators as its top 2021 goods export to the diminutive duchy.
In the other direction of trade, only two EU nations managed above-expectations gains in exports to Britain: Latvia (38 percent) and Cyprus (33). Several others noted no discernible post-Brexit decline, including food and drink powerhouse Ireland.
But exporters in most EU states last year pruned shipments in line with what the report identified as the reduced appeal and certainty of the U.K. market.
The estimated 2021 value of those exports, compared to the report’s scenario where Britain stayed an EU member, was down most sharply in Malta (46 percent), followed by Finland (33), France and Greece (29), the Netherlands (27), Belgium (26), Poland (21), Portugal (20), Spain and Sweden (19), Germany (14) and Italy (12).
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Britain’s Scotch whisky industry was expected to be one of the biggest winners in the long-awaited Indo-UK free trade deal which now won’t be meeting the much-anticipated Diwali deadline.
It was former UK Prime Minister Boris Johnson who had set the Diwali deadline for the trade deal with India. However, new UK Trade Secretary Kemi Badenoch recently said that her country was no longer working to that deadline. She further said that it makes sense to focus on the deal itself rather than the date.
While the date doesn’t matter for the new administration in the UK, it certainly does for the whisky industry there as it will miss out on another Diwali party here in India – the largest whisky market in the world.
Alcohol consumption during Diwali is very high in India and capturing this season would have made huge commercial sense for the Scotch whisky industry which accounts for 2 per cent of the total Indian whisky market (production of 2.4 billion bottles annually).
Indian whisky production is over two and a half times the total volume of total Scotch whisky production. In 2021, India was Scotch whisky’s 8th largest export market by value worth £146m (£102m in 2020), and second largest by volume, with the equivalent of 136m bottles exported (95m bottles in 2020).
For the UK, the deal would have secured jobs and increase the industry’s contribution to the economy by more than £300 million to nearly £6 billion. Unlocking tariffs into India could potentially boost revenue to the Indian government, both at the Centre and the states, by £3.4 billion annually.
Scotch Whisky Association CEO Mark Kent has called the ongoing negotiations a once-in-a-generation chance to give more Scottish distillers the opportunity to do business in India. He, however, said that the industry wants to see a deal agreed upon, but not any deal.
“We want to see a deal agreed, but not any deal. To deliver for the industry, any agreement must open up the market to more Scotch Whisky producers, which will in turn generate hundreds of new jobs across the UK, hundreds of millions of pounds of additional exports, and boost investment and revenue in India,” he said.
Kent also said that securing a deal with India to reduce the 150 per cent tariff on Scotch whisky was the industry’s top international trade priority.
Industry insiders from other sectors also want to tread with caution, especially after the reports of negotiations hitting a roadblock post UK Home Secretary Suella Braverman’s comments on Indians over-staying their visas.
The Ministry of External Affairs confirmed the deal is being worked upon so did the UK Trade Secretary.
Organisations working incessantly for a long time since the deal was announced in January 2022 now want to walk on the side of caution.
In Brexit Britain when the economy is on a downward spiral and the government in constant turmoil, the Indo-UK trade deal would come as a jewel in the crown.
Any new idea automatically faces the opposition of the establishment, said former Member of the European Parliament, Nigel Farage, on a panel at Bitcoin Amsterdam on Thursday.
That argument served as the introduction to Farage’s point throughout the conversation, as he drew parallels between Bitcoin and his experience pushing the then-unpopular idea of Brexit, the exit of the U.K. from the European Union.
“I led a political insurgency, I took on the establishment,” Farage recounted. “What I think is happening with Bitcoin is we’re seeing a similar type of insurgency, an economic insurgency that is being driven and led by people who are worried about the sheer size and scale of big government.”
The subject was ignited by fellow panelist and “What Bitcoin Did” podcast host Peter McCormack’s initial question. “What are you doing at a Bitcoin conference?”
Farage concluded that because of the links between his past experience and the Bitcoin movement today, it was “a perfect and natural place to be.”
The politician expanded on his argument, detailing more of his views of the establishment and why it can be difficult to challenge it. Those who are part of and maintain the establishment, he argued, “own and set the status quo, they are very comfortable… and they don’t want anything to come along and disrupt.”
“And I think Bitcoin is seeing that.”
The parallels between Farage’s past leading the Brexit movement and the present reality of the burgeoning technology kept being expanded upon as he began to discuss liberties and freedom. Farage commented on the EU Commission and its relationship with lawmakers, claiming that the fact that bureaucrats are the ones steering the ship doesn’t paint a pretty picture for the EU in his mind.
“I believe in freedom, I believe in liberty, and I believe the nation-state represents the best way to do it at the moment,” Farage said. “I’m absolutely proud of campaigning for Brexit, achieving Brexit, and I believe it is the first brick out of the globalist EU world.”
Similarly, Farage believes that bitcoin can help individuals take back control of their finances and ultimately their lives.
“Governments cannot come near [Bitcoin],” he reasoned. “They cannot tell me what I can and cannot do with bitcoin and, in that sense, it is the ultimate freedom, it is the ultimate liberty.”
Another reason Farage believes in Bitcoin is because “the technology has been proved to work, and it’s getting better.”
In order for Bitcoin to reach its full potential, Farage argued, citizens should encourage lawmakers to properly understand the technology and its implications so they can craft appropriate legislation.
“If we work cleverly, with lawmakers…there’s a good chance in America, the U.K. and perhaps South America too, that we can actually get a sensible level of regulation.”
The challenge, Farage explained, keeps being education as he recounted when he was young and saw lawmakers voting on pieces of legislation on subjects they weren’t well informed about.
“The level of knowledge of those who will be regulating [Bitcoin] is very, very low. Lawmakers need some real education, and that’s not an easy thing to do,” he said.
The lack of proper understanding is probably what leads so many world leaders to consider CBDCs, which he said is one of his main fears. “[They] will take away our economic freedom.”
But don’t feel discouraged, Farage said, referring to Mahatma Gandhi’s famous saying that “first they laugh at you, then they fight you, and then you win.”
“You know you’re winning when they really start getting nasty,” he said.
Disclaimer: Bitcoin Magazine is owned and operated by BTC Inc, the organizer of Bitcoin Amsterdam.
Harvey Blackwood survey reveals possible outcomes of Brexit negotiations.
Press Release –
updated: Oct 31, 2017
SHANGHAI, October 31, 2017 (Newswire.com)
– The probability of a messy Brexit has increased but is not enough to prevent the Bank of England from hiking rates for the first time in 10 years. According to a survey by Shanghai, China- based wealth management firm, Harvey Blackwood, economists believe that a rate increase would be a grave mistake.
According to economists, there is now a 30 percent chance that the UK will exit the EU without any trade deal when negotiations spanning two-years reach their conclusion in March of 2019. This figure is up 5 percent from a survey of economists conducted by Harvey Blackwood in September.
Economists at Harvey Blackwood believe that it is in the interests of all parties to come to an agreement regarding the terms of Brexit by 2019.
Theresa May, Britain’s Prime Minister, gained some traction last week when EU officials indicated that they were ready to push forward with discussion in the coming months.
According to the vast majority of economists surveyed by Harvey Blackwood, the most probable result of the Brexit negotiations is still a free trade agreement with a possible transitional deal.
If this is not the case, economists believe the second option is that Britain will likely depart without a deal and will revert back to trading under the basic rules of the World Trade Organization.
The third option would be that Britain would pay a fee to continue to enjoy unrestricted access to the European Union’s single market but would have no right to contribute to its structural policies.
The most unlikely option was that the UK would change its choice to depart from the European Union.
Press Contact: Asia News 247 – 76, Lane 478 Lujiabang Road, Shanghai, China. info@asianews247.com
Heidelberg, Germany, June 29, 2017 (Newswire.com)
– Due to recent political events in the U.K. and the U.S., Germany has become more attractive to international students. “Both the Brexit and the presidential election of Trump originated in stricter immigration controls,” says Tanja Ward, Director of Schiller International University Heidelberg. “Our business school, where only 5-8 percent of the current MBA class is German-born, is currently recording a growing number of international applicants.” Mrs. Ward acknowledges that Germany insists on students owning residence cards at an extra cost, but it offers visa-free entry not only to students arriving from the EU but also to applicants from the U.S., Canada, Australia, Morocco, South Korea and Japan. This is clearly an advantage German business schools have compared to the U.K. and the U.S.
Apart from the low entry barriers, tuition costs are another advantage to business education in Germany. The € 21.000 fee for Schiller International University Heidelberg’s one-year MBA programme is low compared with business schools in the U.K. which charge around €60-80.000. Besides, Schiller International University offers students the unique opportunity to transfer between four international campuses and earn a double degree in Europe and the U.S.
“Both the Brexit and the presidential election of Trump originated in stricter immigration controls. Our business school, where only 5-8 percent of the current MBA class is German-born, is currently recording a growing number of international applicants.”
Tanja Ward, Director of Schiller International University Heidelberg, Germany
Germany was known to underperform in business education until now However, charging students for degrees has been questioned by Germany’s publicly funded universities for a long time. And Germany has less highly ranked MBA institutions compared to the U.K. and France, Spain, Singapore and Australia, Schiller International University being among them. “The German higher education, historically focusing on the diploma, is part of the reason for this,” says Ward. The diploma took longer to complete than degrees in other countries but was seen as equivalent to a postgraduate qualification, like the MBA, in Germany. An expensive business education offered few advantages for those seeking promotion. But with the German education system radically changing, Germany is beginning to find its way and MBA recruiters are taking notice. “The future looks brighter,” says Ward. Applications at Schiller International University Heidelberg for the full-time MBA programme rose remarkably in the first quarter of this year compared to the last semester of 2016. And the fact that Germany has recently been attracting more international students looking to enter high-paying business sectors means that it will begin to compete with U.K. and U.S. business schools.
