Speaking at a recent event hosted by The London Institute of Banking & Finance, Robert Peston, political editor of ITV News and the journalist who broke the story of the run on Northern Rock, argued that the UK “wasted” the financial crisis of ten years ago.
“We didn’t respond to reform finance or the way we run the economy so that people feel their interests are being properly served...We haven’t really addressed what I regard as fundamental flaws”. Among these, he said, was that it is the poorest in society who find it hardest to access affordable finance services.
Strength in numbers
Peston argued that “huge and problematic inequalities are tearing [the] nation apart” and that Brexit, though not necessarily a disaster, would have a cost in terms of economic performance. “What needs fixing about this country would need fixing in or out of the EU,” he said, adding that it will be very hard for Britain to heal what ails it in isolation from Europe in the face of a globalised economy. “Being the 6th biggest economy in the world is a bit like being Oxford United...it is irrelevant when we have such enormous political and economic forces out there….[the UK] had more heft as part of the EU.”
He believed one of the reasons for the Brexit vote was that politicians were naive about how strongly people felt about seeing industries gutted by globalisation and the loss of fulfilling jobs. It has for many, he said, “been the end of hope...and the despair is also for their children.” Peston wanted to see the balance of power between labour and capital shifted back towards labour. “It is literally a scandal that many of the people who go to food banks have jobs,” he said.
"Change will happen"
Given the harsh economic backdrop for many, Peston said, Brexit could pave the way for profound political change in the UK. He said that the way in which the Brexit negotiations were consuming the attention of Westminster and Whitehall - “we have a terrible situation where Brexit is crowding out everything that matters” - meant that many people did not feel they were being represented in politics any more. “This is one of the great tectonic shifts moments in politics,” he said, though he added that it was hard to move the tectonic plates in a first past the post system and that what will decide the timing of change will be “how loyal people are to the Labour and Tory brands...but change will happen”.
He saw a particular political danger in the difficulties that a Brexit UK faces in trying to marry conflicting expectations - such as those of Brexit Tories and multinationals that want access to the single market. The outcome, he implied, could be additional hardship for many particularly if Emmanuel Macron delivers real reform in France and works closely with Germany to drive forward European growth while the UK is outside the union. “If people [who voted for Brexit] discover that things have not got better, but got worse, that could be a threat to democratic life. [They could be] seduced by considerably worse demagogues than we have seen previously.”
He did not believe that the EU will change its rules to allow the UK to have an open border between Northern Ireland and the Republic of Ireland. If nothing else, the EU will want importers to adhere to their standards. “There is one thing the rest of Europe is clear about is that they do not want chlorinated chicken in their coq au vin,” he said.
What can the UK do to make things better?
Peston argued that monetary tools, such as funding for lending and tweaking the capital requirements of banks in disadvantage regions could funnel money to parts of the country that need it most. He also argued for wealth taxes and a new approach to managing the disparity in wealth between the generations. Employees, too, he says, could support each other in pressing for better conditions for labour - and without reliance on the traditional union movements organised around large workforces in single industries - by using new technology.
Robert Peston was discussing his new book "WTF" with Peter Hahn. Find out more about our events.