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Britain on the brink


Nick Bryant


7 December 2011 11:21

'Africa rising' reads the headline in this week's international edition of The Economist, a cover illustrated with a small boy playing with a kite, fashioned in the shape of the continent, buoyed at last by the happy winds of change.

A less flattering cover, however, has confronted readers of the British edition. It shows a balloon emblazoned with the Union Flag drifting helplessly towards a cloud-strewn sky. 'Into the storm.' The headline writes itself.

The New Statesman's cover is still more alarming. It depicts a tornado ripping through what looks like a Home Counties commuter town, throwing up cars, houses and money in its angry wake. This whirlwind has a name: 'The death spiral.'

British sub-editors have always had a predilection for weather-related metaphors, but right now they seem especially apt. It was impossible, for instance, to walk through Whitehall last week on the day that the Chancellor George Osborne (pictured) delivered his autumn statement without concluding that the national mood matched the encircling gloom of the slate-grey skies.

The Chancellor warned of six more years of public spending cuts, higher unemployment (now expected to peak at 2.8 million or 8.7%) and what could end up being the biggest squeeze on living standards since the depression of the 1930s. He is also planning to borrow an extra £158 billion. This despite warning only a year ago that even borrowing a few more billion could bring Britain to the 'brink of bankruptcy.'

The Office of Budget Responsibility has also downgraded its growth forecast from 1.7% to 0.9%, but that figure is a predicated on some kind of resolution to the eurozone debt crisis. With some multinationals already making contingencies for the imminent break-up of the euro, a double-dip recession in the UK may be unavoidable.

The day after the Chancellor delivered his bleak assessment, public sector workers launched what was billed as the largest strike in a generation, with hundreds of thousands taking industrial action. Less then 24 hours later, the Governor of the Bank of the England, Sir Mervyn King, looked ashen-faced as he appeared before the cameras to warn of a dangerous spiral 'characteristic of a systemic crisis' that was not limited to the eurozone but would also affect the global banking system. Veteran financial commentators had never heard a Governor of the Bank of England speak in such apocalyptic terms.

The toxic suburbs of the sub-prime meltdown in 2008 have been superseded by toxic countries. Britain, one of only seven European nations to retain its AAA credit rating, is not one of them. But the talk still is of ten years of possible stagflation. A lost decade. It was no wonder that a diplomatic crisis with Iran, after students stormed the British embassy in Tehran, was completely overshadowed by this welter of economic woe.

British observers at last weekend's ALP conference in Sydney, meanwhile, were flabbergasted by the debate over whether to export uranium to India. To them it was a quandary of affluence. Party conferences in Britain are dominated by the economy.

The British Government has tried to link foreign policy much more closely with economic policy — David Cameron's 'trade, trade, trade' to Tony Blair's 'education, education, education' — and for obvious reasons the Foreign Office has been looking to reboot its diplomacy in the east and the south.

This time last year, David Cameron led a trade mission to China, accompanied by four cabinet ministers and 50 business leaders, in the hope of almost tripling UK exports by 2015. It followed a similar trip to India earlier in the year, which tellingly kicked off in Bangalore, its technological hub, rather than Delhi, the capital. Ahead of the visit, Britain lifted its ban on the export of civil nuclear technology to India, despite Delhi not being party to the Nuclear Non-proliferation Treaty.

Whereas the Commonwealth used to deal primarily with promoting good governance and democracy, Britain now wants it to focus more on trade. Also expect to see more ministerial visits to Australia, as Britain chases the sun.

The Arab spring has undoubtedly complicated this process. When David Cameron addressed the Kuwaiti parliament in February, he emphasised democratic reform more than trade. But Britain knows that the economic action these days is to be found in the far-flung corners of its former empire. It is not just Africa that is rising, and Whitehall mandarins do not need the front-cover of The Economist to tell them that.

Photo by Flickr user HM Treasury.