This is one of those articles I could live to regret. Speculating on the future economic policies of a Prime Minister in power for less than a day is either bold, reckless or both.
We’re all in the dark, a bit like Ken Clarke, who said last week that he only knew in detail what her views were on the Home Office. As yet, it’s a lot easier to formulate questions than speculate on the answers. That said, what can we discern from the new Prime Minister’s limited economic statements to date? Here are five thoughts:
First, when she says “Brexit means Brexit” and “it must be a priority to allow British companies to trade with the single market in goods and services – but also to regain more control of the numbers of people who come here from Europe” it doesn’t as yet mean anything, given what we know of the EU’s potential negotiating stance. Right now, we don’t really know her thinking, and it seems she doesn’t either.
There is still everything to play for here in terms of the future model chosen – Norwegian, Swiss, Canadian, WTO, bespoke or whatever. The Prime Minister doesn’t appear to be wedded to any of them. So expect a titanic political battle over the coming months to win the ear of the Prime Minister on this.
Secondly, May has said that she wants to see an economy “which works for everyone, not just the privileged few”. These are the warm, fuzzy words of a leadership campaign. The Conservative Party is not about to embark on an expansive policy of income redistribution. Nevertheless, the Prime Minister’s rhetoric sounds a lot more one-nation Conservative than free-market conservative. There is no evidence to date of any zeal to shrink the state – quite the contrary.
Thirdly, as home secretary, May was not afraid to take on established institutions, such as the police. In economic terms, this could mean taking on big business. She has spoken of the need to reform corporate governance in big companies, with binding shareholder votes on executive pay, publication of pay multiples between the chief executive and average pay, and worker representatives on boards.
Expect a bit of nanny state here. But also expect a more aggressive competition policy to intensify market pressures on big companies.
Fourthly, you can expect more state intervention in other areas. While dismissing 1970s style corporatism, May has suggested some form of promotion of strategic industries might be possible. She has also indicated a desire to block takeovers in strategic industries.
Fifthly, there is a touch of manufacturing bias in her statements. She has criticised an over-reliance on financial services and stated that while London has boomed, many parts of Britain have suffered painful deindustrialisation. She has also displayed anxiety over the threat to British manufacturing jobs from low labour costs in Asia. This is not the language of a politician with strong free-market views.
But I remain uncertain. May is very precise in her statements. Maybe she is articulating concerns on specific problems, while retaining a positive view of the power of market forces. I don’t know.
My best guess is that a combination of Brexit, and the need to be globally competitive, will still lead to a lower corporate tax burden and more infrastructure spending. But this of course will quickly reveal another problem. Will the Member of Parliament for Maidenhead, under the flight path to Heathrow, agree to a third runway?