inequality“Blossom fails to bloom this season 
Promise not to stare 
Too long (this is not America)”

 

 

 

The UK is becoming more and more of a basket case, with problems too numerous to write about here. Money might be the root of all evil, but it makes the world go around. If the electorate feels prosperous everything feels right with the country

 

In recent years, the feelgood factor has been the domain of the elite, rentiers, the majority just feel poor. Yet, today, under a Labour government that traditionally represent them, they are being asked to foot the cost of the governments’ economic policies. 

Statistics are often used to highlight how the wealthy subsidise the rest of the unemployed scroungers, for example: in November 2023, Hansard recorded that “the top 5% of taxpayers are projected to pay nearly half of all income tax in 2023-24; and the top 1% as much as 28%.” 

Whilst on the surface this seems as if rentiers are subsidising the majority, they have a disproportionate amount of the overall wealth. The Office of National Statistics reported that in “the April 2020 to March 2022 period, the wealthiest 1% of households held 10% of all household wealth in UK, the same as the proportion held by the least wealthy 50% of households combined”. 

Twenty-one percent, 14.3m, of people in the UK  were in poverty in 2022/23. Of these, 8.1 million were working-age adults, 4.3 million were children and 1.9 million were pensioners. To put it another way, around 20% of and 30% of children in the UK live in poverty. 

Source: “UK Poverty 2025” by Joseph Rowntree Foundation 

Despite this very clear inequality, the government still insists that those in need bear the brunt of their misguided austerity, and avert their eyes from the human costs of their decisions. 

Since the cutting of pensioners’ winter fuel payments last year, the government message has been devoid of hope, or even reassurance. This isn’t a Labour government, as this column has long written, they are Torylite, intoxicated with fiscal orthodoxy, with a message based on “tough decisions”, “kickstarting the economy” and an all-consuming quest to “bring stability to the public finances”. 

 

‘the government still insists that those in need bear the brunt of their misguided austerity, and avert their eyes from the human costs of their decisions’

 

Starmer may have once been Labour, but his chief of staff, Morgan McSweeney has convinced him that winning means being a closet-Tory. As to Chancellor Reeves, she doesn’t ever seem to have been Labour, the same applies to Wes Streeting. Angela Rayner has been neutered, and Starmer would love to deselect real left-wingers, such as Diane Abbott , if he could. 

Another group that could be contributing more revenue are the US tech companies who hide behind complex tax structures. The government had been planning to implement a £1bn-a-year digital services tax that would impact providers such as Meta and Amazon. 

However, this might now be abandoned as we bow down to the US in the face of Trump’s 25% tariffs on British steel. Chancellor Reeves has confirmed  that there were “ongoing” discussions about this, as the government collapses at the first sign of pressure. 

The chancellor said: “You’ve got to get the balance right”. Rubbish, it’s spineless surrender. Spineless can now be added to the governments list of attributes alongside, cruel, heartless, misguided, and miserable. 

Whilst there is clear opposition to Starmer’s government from some labour backbenchers and the LibDems, he is fortunate that the official opposition, the Tories, are in as much of a mess as Labour. As a result the two “main parties” offer next-to-nothing to the majority of the electorate. 

What opposition there is comes from the LibDems and, more worryingly from Reform. 

If Nigel Farage, their leader, was fully-focussed this might cause Labour real discomfort, however he seems more interested in Trump, and has made 8-trips to the US since being elected MP in July. In addition, he has spent > 800 hours on outside employment since being elected. 

The key point about Reform is, can they create a core of voters sufficient enough to be included in a coalition government, or to win an outright majority? 

Some 80% of its 2024 voters voted Tory in 2019, the left behind that Boris Johnson attracted. Their allegiance is dubious, they are disenfranchised, as likely to have migrated to the Tories from Labour as from the Brexit party. Whilst many 2024 Reform voters share similar authoritarian-leaning social values, their economic views are less cohesive: 42% of them oppose redistributive policies, while 33% favour them.  

Reform believe in shrinking the state, whereas former Labour voters are likely to favour a more interventionist approach. Reforms so-called “contract” with the electorate was based on tax cuts, estimated by the Institute for Fiscal Studies to amount to £90bn. This included cutting corporation tax to 10%, cuts to government departments, tax relief for users of private healthcare, reforms to the benefits system and the scrapping of employment protections. 

There is, however, the question of how important economic policy is to Reform voters? In 2024, 34% voted Reform due to their immigration policies, whereas only 2% for their economic policies. 

Perhaps, more to the point, is do policies matter to Reform voters? With so many Reform voters disenchanted with mainstream politicians, they are united not just by their socially conservative views but also by their apathy towards Westminster politics and scepticism of politicians’ abilities to make their lives better. 

The key will always be Labours’ ability to deliver on its commitments to improve living standards and public services, and cut net migration. 

In “Trump, Role Model or Last Year’s Model?”, I wrote about how the centre-left government in Spain had used migration to stimulate the economy. There is now another example for the UK to consider; Germany’s new “grand coalition” government of the Christian Democratic Union (CDU) and the Social Democratic party (SPD). 

The German economy has been undergoing the most prolonged period of stagnation since WW2 and, along with immigration, this has enabled the extreme-right AfD to become their second biggest party. In addition, Germany now has to contend with a US administration that is sympathetic to Putin’s Russia, and the dismantling of the transatlantic security guarantees that Germany, and Europe, has come to rely upon. 

 

‘Rather than looking to be keep the US onside, Germany is reinventing itself’

 

Rather than looking to be keep the US onside, Germany is reinventing itself. The Bundestag has voted to change the country’s Basic Law, the so-called “Debt Brake”, to allow historic levels of public investment in the form of a €500bn fund  to boost economic growth, infrastructure projects and military spending. 

Shares in defence companies and manufacturing giants such as Volkswagen are already up, alleviating fears of deindustrialisation that were undermining previous governments and fuelling the rise of extremism. 

The SPD who had lost their sense of identity and purpose, and blue-collar voters were deserting them in favour of the xenophobic far-right. Berlin’s insistent advocacy of a fiscal orthodoxy was an example of a European-wide crisis of the political centre, which was being exploited by right-wing populists across. 

Now, following that groundbreaking vote, Germany has shown how countries such as Britain and France, both suffering prolonged economic underperformance, how to positively combat parties of the populist right.  

As I written numerous time in recent weeks, Germany, Europe, the UK doesn’t need to go war with the US, they don’t need to fall-out with the US, but they need to independent of the US. But, for this independence to work it needs to be coordinated at a European level. 

In the UK, PM Starmer should exploit this seismic change, and tell the electorate that we need to change, too. He will no doubt enjoy telling us of the painful sacrifices required to pay for rearmament. In addition, he needs to face-up to a supposed political taboo; reintegrating with Europe and the EU. 

Trump’s surrender over Ukraine and, at best, indifferent attitude towards NATO is leading Europe towards a new Atlantic alliance: a kind of Nato-minus America, supported by most of Europe, Britain included, potentially plus Canada. 

Trump’s actions towards Ukraine and Russia clearly highlight his intent to withdraw US support for defending Europe. In the face of US isolationism and the aggressive tyranny of Putin’s Russia, Europe together with Canada, now have to support the moral and political recasting of the world that took place after 1945. 

The first victim of Trump’s new order looks to be Ukraine, whilst they have been invited to the peace talks, it is in name only. There is an effective carve-up of Ukraine with territory being ceded to Russia and its minerals to Trump. 

 

‘a new Atlantic alliance: a kind of Nato-minus America, supported by most of Europe, Britain included, potentially plus Canada’

 

The security guarantee that Europe wanted for Ukraine have not been forthcoming, and, if the US cuts off military aid and intelligence, Ukraine’s ability to defend itself is greatly diminished. 

Washington can’t force Kyiv to accept a ceasefire, or force Europe to abandon Ukraine. Equally, Europe  cannot influence Trump, but they can decide how they respond to his actions. Ukraine is part of a bigger question; how does Europe proceed without US security assurances? Germany’s ditching of the debt brake to turbocharge military spending is a good start. 

As his action domestically show, Trump is happy to ditch the basic notions of democracy and freedom. By ignoring court rulings, people are beginning to question whether the US remains a society governed by the rule of law. As such,  trump is aligning the US with other rogue states who are equally at home with government sponsored laws that support the regime. 

An example of this axis is the actions of Israeli PM Netanyahu, who blithely broke the ceasefire agreed with Hamas, bombing Gaza and killing hundreds of Palestinians, safe in the knowledge that Trump won’t intervene.  

Netanyahu tweeted on Wednesday: “In America and in Israel, when a strong right-wing leader wins an election, the leftist Deep State weaponizes the justice system to thwart the people’s will. They won’t win in either place! We stand strong together.” 

We shouldn’t forget Trump’s own colonial ambitions over Greenland, Canada, the Panama canal and Gaza. 

All of this threatens long-recognised borders and the international rules-based order that has existed since the end of WW2, which are enshrined in article 2 of the UN charter of 1945: “all members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any state.” 

The White House is now occupied  by an imperialist president, happy to approve annexations. Ivo Daalder, the former US ambassador to Nato, declared that with “Trump in office, the rules-based order is no more”. 

This lawless expansionism harks back to the dark days of the 19th century, when force was the only measure. As the outgoing Canadian prime minister, Justin Trudeau, said earlier this month, Trump is planning to use tariffs to bring about “a total collapse of the Canadian economy because that will make it easier to annex us”. 

 

a total collapse of the Canadian economy because that will make it easier to annex us”

 

This might is right approach is empowering others such as Russia, China, and even Rwanda. Part of the reason behind this is technology, climate change and the demand for rare earth minerals 

There is much to admire in the actions of Germany and other European countries, and Canada in standing-up to, and speaking out against Trump and his methods. 

How the UK reacts is still to be seen. Starmer’s actions over Ukraine have been encouraging, but potentially backing-down to US tech companies to overcome Trump’s tariffs would be a backward step. 

This is Starmer’s chance to rejuvenate his government, and it would play well with the electorates anti-Trump views. 

The question is does Starmer have the balls to do it? I fear not. Recent history shows he prefers easier victims. 

 

 

“This is England
And we’re never gonna cry no more” 

 

‘This week we continue to explore the UK / US theme.

Clearly, at least I hope it is, Trump isn’t the normal president. The fact that almost as many voted against him, shows how divided the country is. I saw an interesting comment; “ The problem is not Trump. The problem is that 35% of America think Trump is a genius and brilliant statesman. That can’t be good for our nation.”

In the UK we have a similar problem which Brexit first highlighted; a similar percentage of the population are disenchanted with politicians that don’t serve them.

In both countries, inequality is largely to blame for this.

Whilst Trump might be the exception to the norm in the UK, Starmer is very much what has become the norm in UK politics. A technocrat, obsessed with self-imposed budget ceilings, pandering to the minority rentiers at the expense of the majority. Despite telling us that the burden will fall on those with the broadest shoulders he is happy to let others feel the pain. If in doubt, ask pensioners and disabled people.

MPs awarding themselves a pay rise shows their contempt for the electorate.

I had hoped that relations with the US and Ukraine would be a turning point in Starmer’s premiership. But, if we give in to tariffs and let the US tech companies of the proposed digital tax, I believe that is the beginning of appeasing Trump.

The big test will be Canada. Canada is a member of the commonwealth, and their citizens remain Commonwealth citizens in British law and are still eligible to vote and stand for public office in the UK. I doubt Trump will be able to annex Canada by any democratic methods, therefore an invasion would appear his only solution.

Time will tell.

Lyrically, we start with David Bowie’s “This is Not America”, and finish with the Clash and “This is England”

 

. All very prophetic.

Enjoy! Philip.

 

@coldwarsteve

 

 

 

Philip Gilbert 2Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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