Britain is stuck in an economic doom loop. GDP shrank in October for the fourth month in a row, while debt continues to mount to unsustainable levels. Many Britons, fearful for their future, are voting with their feet and leaving the country. Worse still, the political class looks incapable of turning things around. The budget last month only added more borrowing, more taxes and further impediments to growth.
Matthew Syed – columnist for The Times and The Sunday Times – argues that nothing short of radical, transformative change can rescue the UK from its slump. He sat down last week with Brendan O’Neill on his podcast, The Brendan O’Neill Show, to discuss what a serious programme for renewal would look like. What follows is an edited extract from that conversation. You can watch the full thing here.
Brendan O’Neill: What do you think the budget tells us, if anything, about this government?
Matthew Syed: I think we are in a key period – geopolitical change, technological change, AI. It’s interesting to me that a couple of hundred years ago, Britain was perfectly placed to take advantage of the Industrial Revolution, partly because of our institutions and our cultural psychology. We became a dominant, ‘can-do’ country that shaped a great deal of the modern world.
If you look at the energy transition and the potential of AI, it feels similar today. I was pretty dubious about AI at first, but looking at the rate of change, it’s truly transformative. I also think some of the companies are overvalued – these are not mutually exclusive views. You can think something is transformative and also a bit frothy.
The problem is that none of the main parties is thinking strategically about energy, AI or the systems we need to deploy to get into the vanguard of this change. If we miss this chance, we could enter an even longer period of decline. One thing I didn’t anticipate is how well China is doing, despite its very different political and economic system. It’s at the forefront of emerging technologies and is a genuine peer competitor to America. I’m a big admirer of America – the economy, the dynamism, the frontier spirit – although I’m very worried about political dysfunction and corruption in both US parties.
For me, the big questions are not about taxation or interest rates. They’re about shifting the energy system, removing planning constraints, reforming bureaucratic obstacles, and freeing a society that still has incredible collateral in the rule of law. Judicial review has become another obstacle to real change. I would do some pretty radical things if I were running the government now.
Nigel Farage’s recent speech on the economy was interesting; he talked sensibly about state reform, fiscal responsibility, bringing in outside expertise. I agree with the idea of reforming the state and taking bold action. Now is the time to be radical.
O’Neill: You recently ‘switched sides’ to the Conservative Party this year, having previously stood as a candidate for Labour. What was your motivation for that?
Syed: I’d lost faith. On economics, there’s no doubt New Labour benefited from a booming economy in the 1990s. I remember standing at a selection meeting in 2001 and being asked about the marginal rate of tax. I said, ‘Under Callaghan and Healey, the top rate was 83p in the pound, with a 15 per cent surcharge on investment, so effectively you paid 98 per cent on dividend income’. That was absurd. By contrast, the highest marginal rate under Blair was 40 per cent, the same as the last period of Thatcher. Nigel Lawson and Geoffrey Howe had already brought down the top rate. There was no triple lock; pensions were rising with prices, not earnings. I argued that with an ageing society, continually increasing pensions would make it very difficult to reverse debt, which was about 30 per cent of GDP at the time – now it’s over 100 per cent. I didn’t approve of everything (in Blair’s second term, the Iraq war was a mistake), but I stood on that manifesto proudly.
Over the subsequent decades, British politics changed completely. Conservatives, Labour, the Lib Dems, the Greens have all been outflanking each other to the left, pushing for more spending. I remember the oil spike in the 1970s, and even left-wing governments were saying we just had to wrap up warmer.
My view is, if you keep pushing costs on to the future, the pain just accumulates because you won’t be able to afford interest payments. During the pandemic, I approved of furlough, but the scale was enormous. The energy bailout under Liz Truss was initially envisioned as even bigger than furlough. Labour, of course, was saying, ‘go further’.
What strikes me now is that very few people enter politics with a genuine sense of what needs to be done. And I’m not sure that if you did articulate the tough decisions required to get on a growth trajectory, you’d get elected today. I joined the Conservatives because Kemi Badenoch, at least, was saying that we need to reduce the size of the state to sane levels, get on top of debt, and simplify the tax code. Look at the budget: it’s ridiculously complex, adding a deadweight burden on society. Badenoch understands a lot of this.
O’Neill: There is also a lot of fear about the rise of the ‘far right’ and a return of racism. Where do you think Britain is heading on these issues?
Syed: I went to Epping recently and walked around – just fantastic people, absolutely brilliant people. I must have spoken to 20 or 30 people, all of whom were absolutely wonderful. I’m half Pakistani, and nobody gave us grief about that; they could see I love this country and want to make a contribution. Did I suffer racism growing up? Yes, a bit. But Britain has moved on so much. Of course prejudice exists, but most people abhor it.
Look at former prime minister Rishi Sunak – from India, a Hindu. That shows how far we’ve come. There’s a fundamental difference between feeling a sense of common purpose and hating people outside the nation. At the 2012 Olympics, we cheered for British athletes, but also applauded others when they won. Sport is about competition – healthy competition – not hatred. Federer and Nadal, for example, are great friends and competitors. That’s the world I want to see. Cooperation, especially with nations that share our values, is crucial.
Of the people I met in Epping, waving flags, of course a few were racist. But most weren’t. Most of them were like my cousins – genuinely good people who give back to the community.
Most people who come to live in the UK are pitching in. My mum stacked shelves, my auntie worked in the NHS, one of my cousins is a cleaner. They pay their taxes. Yes, some people are on welfare and gaming the system, but there are far more who are working incredibly hard in low-paid jobs, doing their bit. Most Brits understand that these migrants are the majority.
Matthew Syed was talking to Brendan O’Neill. Watch their full conversation below:
