The statement by Chancellor of the Exchequer Alistair Darling last week that the British economy is likely to go through its worst experience for sixty years, will probably have come as a shock to many within the country as well as to others in the international community. For it is not so long ago that a British government, then led by Tony Blair and with Gordon Brown as Chancellor of the Exchequer, could boast that with the assumption of office by a Labour government in 1996, Britain had seen a period of prosperity that had exceeded the expectations of most people.
Britain now seems to be experiencing a so-called credit crunch, with some of its private financial institutions faltering, and a crisis in housing mortgage payments similar, though not yet as deeply, as the United States. In addition the pound is now recorded as falling to a two-year low against the euro, and a record low, in recent times, against the dollar. And predictions are that it is likely to continue to fall.
Yet, not so long ago too we were being told that the nature of the expanded global economy today, with a variety of substantial drivers (none though as powerful as the United States) meant that there could be a diversification of exports so that when the United States economy sneezed, other countries would no longer be bound to catch colds. If the increasing evidence that is appearing before us is correct, then it seems many of the big powers were living in a land of illusion, fascinated by a temporary phenomenon, and the capitalist system retains its characteristic of period booms and slumps.
The developing gloom about the slide of the economy coincides with what appears to be a considerable political gloom within the ruling Labour Party government about its future. Contrary to the reputation which Prime Minister Brown had developed as an economic wizard and political tactician during Mr Blair’s reign, the British public’s estimation of his capabilities in both spheres seems to have fallen disastrously. Not only do the polls show his and his party’s standing persistently falling, but the more valid tests, recent by-elections, have shown the same. The last by-election in Scotland, rock-solid Labour ground and Mr Brown’s homeland, saw Labour squarely defeated. And in the face of Mr Darling’s statement on the economy Mr Brown seems to have been letting it be known that he is displeased that his Chancellor has been so vocal and direct on the issue of the future of the economy.
In the meantime, Mr Brown’s tenure cannot be said to have brought much improvement in Britain’s relations with the European Union. He dithered over the signing of the Lisbon Treaty designed to institutionally strengthen the EU, and then has continued to dither over how and when the United Kingdom will give its assent to the treaty. In a sense, fortune smiled on him with the defeat of the Irish government in its recent referendum on the treaty, but that has not prevented the Conservative opposition from maintaining its harassment of the government over its intentions. Commentators are now contrasting Britain’s posture to European integration with that of the active leadership of France under President Sarkozy as President of the Council. Mr Brown’s obviously lukewarm attitude to further integration of Europe is not likely to gain him particular sympathy from his larger European colleague states, though they probably have to take into account that the Conservative Party, at least as it is currently in opposition, is even less sympathetic to some of the changes that they would like to see. And now, in the face of all of this, Brown is perceived by the public as dithering over when to call a general election which he had been hoping to do much earlier, to get, as they say, a mandate of his own.
The decline of the British economy – there are no estimates yet as to how long it might last – when coupled with the difficulties of the American economy, do not bode well for us in the Caribbean. A real threat exists of significant declines in the tourism arrivals to the Caribbean as often happens during a European recession. And likely to exacerbate this are possible cuts in air transportation to the region as a result of the pressure of oil prices on the British carriers. Secondly, there is some evidence already of a slowing down of remittances from Caribbean residents in Britain, at a time when for some countries, Jamaica foremost perhaps, these constitute a significant source not only of foreign exchange, but also of daily living at a time of a certain slowing down of some Caribbean economies. The fall of the pound, which not long ago was running well against the dollar, will not help us in the Caribbean either.
How this will further affect our Caribbean is a matter for some speculation. We have already known for some time that Britain’s preoccupation with the Caribbean is not as strong as it was, say, two decades ago. It is true that Mr Brown has shown a certain consistency in the councils of the Group of Eight industrialized countries in asserting more aid to the developing countries, and particularly to the least developed of the African continent. It is also true that British Labour Party representatives within the European Union, led in particular by Mrs Glenys Kinnock, wife of a former British Labour leader and senior member of the European Parliament , have generally taken a favourable position towards the Caribbean, as some are currently doing today in respect of the need, in their view, for some revision of the Economic Partnership Agreement. (But of course the EPA is a construct of the EU Trade Negotiator Peter Mandelson, a former ministerial colleague of Prime Minister Brown, and a former key political adviser of Tony Blair.)
The fact of the matter is, however, that Britain, and other major European countries, are turning their medium-term eyes to the larger continents that show promise of being good locations for investment as well as sources of needed raw materials. Undoubtedly, as China and India turn to countries in Africa in particular in this regard, Britain’s efforts to maintain her place in that competition will induce relatively more attention to them than to us. It is noteworthy that Britain was, like the other main European countries, supportive of the decision of the EU to lower the tariffs on bananas from the Latin American countries, as a means of gaining their concurrence, and therefore a conclusion, to the Doha Development Round negotiations. Our objections fell on deaf ears.
The conclusion for us is that there is an evolution in Britain’s place in the world. There can be no doubt that her economy has gone through a substantial restructuring induced by Mrs Thathcher’s policies. At the same time, in part, the British economy has benefited from migrant labour from the old Eastern Europe in recent years, and from new developments in the financial services industries. But there is no doubt that the conditions of domestic liberalization that gave her some competitive advantage during this period have become available to other economies; and that the German economy which had suffered some decline over the last two decades, has now regained a degree of competitiveness. In that context, whether under Labour or under a new Conservative government, the British are likely to be more self-centred, responding to countries from which they can gain substantially in return.
That leaves us, as far as that part of the world is concerned, to pay more attention to the European Union as a collectivity, and to organize a diplomacy that gives us more visible presences in other European states. As the strength of our major ally diminishes, so we need, in order to maintain some leverage on the European continent, to diversify our relationships (a now somewhat hackneyed phrase in Third World diplomacy) and to find new medium-term allies on the Old Continent. But none of that absolves us from pressing ourselves on Britain, the country which is the homeland of many of our citizens and their descendants.
