Divided Kingdom

Print edition : June 15, 2012

Under the Cameron government, Britain today is a nation divided sharply into haves and have-nots.

in London

BRITISH PRIME MINISTER David Cameron desperately needs a "Plan B" to revive his country's economy as his "Plan A" of "cuts, cuts and more cuts" has clearly failed.-ANDREW COWIE/AFP

BRITISH visitors to India are constantly amazed by the contrasts India presents: grinding poverty existing side by side with obscene levels of wealth; slums festering next to luxury apartments; hungry and malnourished children begging at traffic lights while the newly rich whiz past in their BMWs and Toyotas; and the government splurging money on grand international events while essential infrastructure crumbles.

Who would have thought that one day Britain would have the same depressing effect on Indian visitors? Once dazzled by its booming economy and Cool Britannia image, they are these days more likely to ask Whither Britain? as they tut-tut over the devastating impact of the collapse of Britain's 1990s boom: a boom that transformed the once sick man of Europe into one of its most prosperous nations.

Five years into its worst post-War economic crisis, Britain looks increasingly ragged and exhausted, pulled down by poverty, and with crumbling public services and a widening chasm between the rich and the poor. And things are set to get worse. Even as this is written, the International Monetary Fund (IMF) has warned of more bumps ahead and the possibility of long-term damage to the economy if the recovery remains slow. In a blunt message, IMF Managing Director Christine Lagarde made it clear that the Conservative-led coalition government's current policies, centred solely on spending cuts and lacking any strategy for growth, were not working. There are as yet no signs of an economic recovery and uncertainties abound.

Growth is too slow and unemployment including youth unemployment is too high. Policies to bolster demand before low growth becomes entrenched are needed, Christine Lagarde said, echoing a widespread criticism of the government's mantra of cuts, cuts and more cuts to reduce the deficit.

In its annual review of the United Kingdom's economy, the IMF called for further reduction in interest rates, already at a historic low; pumping more money into the economy through greater infrastructure spending; and temporary tax cuts such as reducing the rate of value-added tax (VAT) something that the opposition Labour Party and independent economists have been advocating.

CHRISTINE LAGARDE, MANAGING Director of the International Monetary Fund, and George Osborne, the U.K.'s Chancellor of the Exchequer, in London on May 22. Lagarde made it clear that the current policies centred solely on spending cuts were not helping the country.-CHRIS RATCLIFFE/BLOOMBERG

The IMF warning came as the economy fell into a double-dip recession Britain's first double-dip recession since 1975 defying optimistic official forecasts. Economists saw it as a fatal blow not only to the government's credibility but, more critically, to the fragile revival of consumer and business confidence. Michael Saunders, head of European economics at Citigroup, called it the worst recession recovery cycle of the last 100 years... worse than the 1930s.

Yet, all that the Conservative Chancellor George Osborne, the bullish architect of the government's anti-recession strategy, could manage was that it was clearly disappointing news while insisting contrary to independent expert judgment that he was on the right track.

How much worse do things have to get before [Prime Minister] David Cameron and George Osborne finally take action? asked Labour's shadow chancellor Ed Balls, pointing out that their economic credibility was in tatters.

Balls is not a very popular figure even in his own party, but his view that the government is cutting too much and too fast without any regard for what it is doing to millions of ordinary Britons is widely shared. It is a view that was also reflected in Christine Lagarde's call for the government to come up with a Plan B as Plan A was not working.

The buzz in economic circles is that Christine Lagarde might have been even more critical but held back because of her personal friendship with Osborne.

BAKERS AND THEIR supporters protest opposite Downing Street in central London on April 26. Hundreds of British bakers wearing chefs' hats and carrying placards converged on Prime Minister David Cameron's official residence to say that his plan for higher sales tax on their products was half-baked.-

But, you can't help thinking there is a final reason why the IMF Managing Director held back today which senior fund officials privately acknowledge. That is that Madame Lagarde does not want to do anything to make life difficult for her friend George, wrote the BBC's Economics Editor Stephanie Flanders on her blog.

Mounting anger

The situation in Britain may not be as bad as in Greece and some other eurozone countries, but it is grim enough. Millions are unemployed (Christine Lagarde made a pointed reference to youth unemployment); businesses are teetering on the brink as banks, including those part-owned by the government, continue to refuse to lend money, especially to small and medium enterprises; dole queues are lengthening; and even the pampered middle class is struggling. Public sector workers, who are having to bear the brunt of the government's spending cuts, are seething with anger. A series of strikes and street protests have already been held and more are planned, raising the prospect of another year of discontent.

Health Secretary Andrew Lansley was booed by angry nurses at a recent conference and accused of lying when he claimed that cuts to the National Health Service had not affected front-line services or staff numbers. A few days later, his colleague, Theresa May, the Home Secretary, was greeted with jeers by police officers who, livid over cuts to the police budget, told her to her face that she was a disgrace.

Even senior civil servants, regarded as pillars of the establishment, are up in arms over suggestions to reduce the civil service to its bare bones by cutting staff by between 70 and 90 per cent and outsourcing most of the jobs to the private sector. Relations between top civil servants and the Ministers have never been worse, with many of the former openly questioning the government's obsession with cutting deficit instead of focussing on growth.

Public backlash on this scale has not been witnessed since the 1980s revolt against Margaret Thatcher's policies. The massive defeat for the Conservatives and the Liberal Democrats (Lib Dems) in the recent nationwide local elections, seen as a referendum on the government's performance, especially its handling of the economy, revealed the depth of popular anger. Today, Britain presents the picture of a divided nation characterised by the very same contrasts that once evoked the idea of India in the British public mind. The hype over the Queen's Diamond Jubilee celebrations marked by lavish parties (recently the Queen hosted a lunch for what was described as the largest gathering of world royalty) and the London Olympic Games, set to cost some 10 billion, sits oddly with the Prime Minister's daily lectures to people on the need for austerity.

Commentators have evoked the social and economic divisions of the Victorian era to describe the new, recession-hit Britain.

Writing under the headline Is There No Alternative to this Tale of Two Nations?, The Independent's Yasmin Alibhai-Brown related how recently she had lunch with a wealthy Conservative figure in a packed upmarket fish restaurant where the recession was further than the farthest, unseen orb.

The very same day I went to a small flat where people lived in fouler conditions than I ever saw in Uganda, my birthplace. We have become like divided Victorians again but without the conscience, she wrote.

Surveys have shown that such is the effect of recession-related stress on ordinary people that calls to mental health counselling lines have gone through the roof registering a 100 per cent increase in the case of one such charity. Life expectancy in poorer areas such as parts of Manchester and Liverpool is 70 years compared with 85 in affluent areas such as Surrey and Berkshire.

Swingeing cuts to welfare benefits on the back of tabloid-led campaigns that everyone on benefits is a scrounger have hit the most vulnerable single parents, pensioners, the disabled. The government has slashed the welfare budget by 18 billion by imposing a cap on housing benefit and restricting disability allowance, which, charities say, will make the lives of the already squeezed working class more difficult even as bankers and hedge fund managers continue to be rewarded with obscene bonuses.

The state of modern Britain has reminded some of how a working-class character in Benjamin Disraeli's 1845 novel Sybil, or The Two Nations, describes his country : Two nations between whom there is no intercourse and no sympathy; who are as ignorant of each other's thoughts and feelings as if they were dwellers in different zones or inhabitants of different planets; who are formed by different breeding, are fed by a different food, are ordered by different manners, are not governed by the same laws.

Disraeli too was a Tory, but unlike his heirs Cameron and Osborne he was not an apologist for laissez-faire market economy.

Ominously for Cameron, opinion polls have started to shift, and for the first time since he came to power two years ago, his party is trailing Labour and his own personal ratings are down. Analysts argue that it is more a reaction against the coalition than a return to Labour, as The Times' Rachel Sylvester said, but does this really matter when the end result would be the same namely that if elections were to be held tomorrow Cameron might not return to power?

The government's line that the current economic mess is all down to the erstwhile Labour government's economic mismanagement and the eurozone crisis has started to wear thin, and people want it to take responsibility for what is happening under its own watch. Even a public as eurosceptic as Britain's (if there was a referendum 49 per cent would vote to leave the European Union, according to one poll) is finally able to see through the fog.

A Plan B that works cannot wait any longer unless Cameron wants to end up with Labour's Ed Miliband as an accidental Prime Minister.

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