The 2008 financial crisis casts a long shadow over UK politics

Written By: - Date published: 3:58 am, November 16th, 2019 - 2 comments
Categories: Austerity, Brexit, capitalism, economy, Economy, Financial markets, uk politics - Tags: , , , , , , ,

Originally published on Nick Kelly’s blog.

During the 2019 UK general election there will be new issues and developments on a daily basis. But there is a major issue this election isn’t new, but remains highly relevant. The 2008 financial crisis and the subsequent policies of austerity the followed it continue to heavily impact on peoples lives

To really understand what happened in this crash, I recommend watching The Big Short.  This film manages to strike the difficult balance of explaining how the banks and big business caused a major financial crisis in the first decade of this century, whilst still being entertaining.

The short term thinking of banks and major corporations caused a massive economic crisis. Governments world wide were forced to bail out banks and financial institutions that were considered too big to fail. Having been bailed out, senior executives and boards of directors used the money to pay themselves massive bonus whilst forcing many to sell their homes, and forced people who hadn’t caused the crisis to pay for it.

The 2008 financial crisis casts a long shadow over UK politics and society. 

One thing that struck me moving to the UK in 2017, was how much harder the crisis hit here compared with New Zealand. Both in terms of the initial crisis, and the austerity policies that followed, the global financial crisis has cast a long shadow over the UK and Europe.

This will be the fourth UK general election since the crisis hit. In terms of politics the crisis has eroded public confidence both in politics, financial institutions and the ruling establishment in London. Many believe that the financial crisis and austerity in no small measure influenced the 2016 Brexit referendum result. In terms of politics, the landscape has been far less stable in the UK since 2008. Two of the last three elections produced minority or coalition governments (something that the First Past the Post Electoral system is suppose to avoid).

The Conservative Government took power in 2010 under David Cameron. This party has blamed the previous Labour administration for what happened to the UK.

To support Momentum campaign for a Corbyn led Labour Government in the UK you can give your support here.

2 comments on “The 2008 financial crisis casts a long shadow over UK politics ”

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  1. Nic the NZer 1
    16 November 2019 at 12:11 pm

    I observed this first hand. When the austerity policies were announced the BBC commented correctly that George Osbornes strategy (in trying to contract the fiscal deficit the UK was running at the time) risked a 'double dip' recession e.g the economy returning to recession and so causing a significantly worse outcome than just maintaining (or increasing) the government spending until the economy fully recovered. Later a 'double dip' recession was recorded by the UK (originally this was recorded as a triple dip recession). The austerity policies implemented were both catastrophically bad and entirely unnecessary.

    One would think that Labour would have taken advantage of this and pledged to take the opposite tack, however they instead setup a still standing party policy called fiscal responsibility rules which would maintain that the government should not engage fiscal policy until the Bank of England decided monetary policy has become ineffective. Through the entire period from 2008 to the present at no stage has the Bank of England suggested their policy resources are no longer able to be effective. So the Labour policy amounts to more of the same policies but with a less mean face to them.

    This and the role played more directly by Brown and Blair is probably the main cause of ex Labour voters who now simply don't vote.

  2. Dukeofurl 2
    16 November 2019 at 1:14 pm

    Ask the rest of Europe how they faired under the Euro's even stricter austerity rules. Best thing ever for the UK to keep their pound and control of monetary policy, second only to opt out of most of the Open Borders. No wonder the full Brexit seemed to be a solution for those parts of the England outside London and other elite cities.

    Brexit , even the process was supposed to bring calamity to UK , and yet the country that has its toes in the recession bath right now is Germany. Technically they have just scraped by , but their 'trophy' manufacturing sector certainly is.