Something will turn up: Britain's economy, past, present, and future
My review of David Smith's latest book - a personal tour through the last few decades of Britain's economic history
Anyone following the twists and turns of the current debate on deficits and spending would be well advised to look back at previous examples. What seems of vital and immense importance at the time can pale somewhat with the passage of time. Sometimes this is literally true. For example, what happened to the double-dip recession after the financial crisis? Look at the data – it has been revised away. Fears of a triple-dip recession, which were real enough at the time, now seem quaint. This book, by David Smith, economics editor of the Sunday Times, attempts to get things into perspective. It is really a personal memoir, taking readers through an economic history from the 1950s to the present day.
The title is taken from Charles Dickens’ Wilkins Micawber, who always believes that ‘something will turn up’ even when deep in indebtedness. The same attitude could be held towards the United Kingdom economy. So far, in many ways, at the macro level it has been true. Indeed, this is a refrain of Smith’s Sunday Times columns; he has a healthy approach to whatever the latest data release or economic controversy is. As with other accounts of governments, chancellors and the economy, it soon becomes apparent that a lot of the time leaders were operating in the dark, with inaccurate data. They also made decisions when the conventional economic wisdom was different to today. For example, the consensus that joining the exchange rate mechanism was the right thing for the country to do, or the complacency before the financial crisis.
Through it all, the economy has proved more resilient than people have feared. This has proved true even during the strained times of the 1970s and 1980s. Smith notes that the data shows the reforms of the Thatcher years from 1979 onwards appear to have boosted the trend growth rate. He acknowledges the hardships endured at the time, with some scars still not fully healed. Indeed, he starts and ends the book (apart from an update for events since the 2015 election) with reflections on the West Midlands where he was born and grew up and the changes that have taken place. However, he does not explore in any depth the alternative decisions that could have been taken. For example, how could the jump in income inequality experienced in the UK and elsewhere, and the devastation of communities, have been avoided or dampened? There is some sense, however, that hard decisions put off usually cost more. The government’s reaction to the oil price shock after 1973 was not to manage the adjustment (equivalent to a one-off tax hike) but to accommodate it with the result that ultimately we required assistance from the International Monetary Fund.
The book is deliberately written to be an easy read. Perhaps unsurprisingly Smith is optimistic, with a certain faith about the future of the economy. Despite the levels of debt and uncertainty over an ageing population, the economy has continued to be resilient. The lesson is that, ‘however bad it seems, something will turn up, though sometimes only for it to disappear again later.’ We do rely, however, on our leaders at the very least not doing their best to make things worse.
Something Will Turn Up: Britain’s Economy, Past, Present and Future David Smith
Profile Books | 288pp | £14.99
This article was first published by Progress, on 18 December 2015.