C (2:32)

It's a pleasure to be with you.

A (2:33)

Galen, great to have you. And David Runciman is an honorary professor of politics at Cambridge and the host of the Past, Present, Future podcast. Welcome, David.

B (2:42)

Nice to be back.

A (2:44)

It's great to have you. So, as I mentioned, I was in Parliament yesterday and it was a Wednesday, so members of Parliament got to press the primaries minister on the issues of the day, and for the uk, that is the economy and Labor's proposed budget. When we used to talk about Brexit, one of the arguments for it was more potential economic dynamism that might come with being outside the rules and regulations of the European Union, whether related to Brexit or not. I want to start by hearing you describe the. The British economy today. Has any of that panned out? I guess we'll start with the professor of Political economy. Helen, how would you describe the British economy today?

C (3:27)

Well, I don't think anything's panned out in terms of any hopes that anybody had of Brexit making the British economy more dynamic. I'm not entirely sure how many people deeply, really believe that in the first place, but nonetheless, it is not the case that the British economy has become more dynamic. I would say that the British economy is in a worse position now than it was back in 2016, and it's clearly in a worse position. I don't think that's really a function of leaving the European Union. I think there's two things that have come to the fore. The first is the UK's fiscal position, which is why there's been so much attention, not just on the budget since it's being delivered, but in months of buildup to this budget and the UK's high energy costs. I think that that has very much come to the fore in the way in which the British economy is now perceived, particularly because there are some, at least within the Starmer government, who would like AI to be the thing that relaunches the UK economy. And yet the UK's exceptionally high industrial electricity costs make that really a losing proposition. So I think that the overall sense about the British economy is that it's. It's stagnant and that there's considerable risk around it in relation to the financial markets. And that at the moment has concerns about the bond markets, but we can see that it can quite quickly turn from the bond markets into the foreign exchange markets. That's what happened to Liz Truss, after all. That's what destroyed her premiership in about six weeks back in the autumn of 2022. So it's a mixture of a stagnant economy where growth is concerned without a growth strategy, and some, I think, quite significant risks around the financial markets.

A (5:13)

David, you asked me before we started recording if I was in the UK for some disaster tourism. Based on the kind of coverage that you might read in the New York Times about Britain and the British economy. I responded that you read the same kind of coverage in the Wall Street Journal and even the Financial Times. And so I'm curious, do you think concerns about the British economy are overblown or do you think that the country's in a pretty rough spot?

B (5:40)

I think the country's in a pretty rough spot, but I think a lot of countries are in a pretty rough spot. And I think in a way there are two things going on. As Helen described it, There's a long story here. It's not just Brexit, it precedes Brexit, and a lot of it has to do with sluggish productivity. The absence of dynamism in the British economy is not just a pro Brexit phenomenon, though, as you say, maybe if there were expectations things would improve, it looks more acute. But there's a, a long term slow burn story. And then there's this specter that hovers over British politics, which is of a financial crisis. And I can't remember a time in British politics in which there has been, I don't want to say public awareness because I think one should always be careful of assuming that the public are interested in these things. We might be, but it doesn't translate necessarily. But in that space that's occupied by journalists and commentators and pundits and so on, a preoccupation with how the markets might react on a day to day basis. And this is partly because Britain is in an unusual position that we have not just a lot of liabilities, but certain kinds of short term liabilities, which means we're slightly more vulnerable. But I don't know if this crossed the Atlantic. There was a day in which the Chancellor of the Exchequer, Rachel Reeves, wept in Parliament. We're meant to believe it was because of things going on at home. It was a private matter. But it moved the markets. And it moved the markets in actually a significant way. It signaled that there was a fear that were Keir Starmer to get rid of her and replace her with someone from the softer left of the Labour Party, the markets wouldn't like it. And that day to day, almost hour to hour, actually in that case it was minute to minute. It was during Prime Minister's questions. The event that you watched yesterday it was over that half an hour as Keir Starmer was answering questions, Chancellor sits behind him. And she wept. And it was dramatic. But the fallout was extraordinary. And we'd been living in that period of British politics since the buildup to the budget, had a preoccupation with this. Some of the people who were mooted as potential replacements of Keir Starmer, one of them, the Mayor of Manchester, Andy Burnham, wanted to signal that he wasn't going to be in hock to the bond markets. And it was blown up into this. Imagine being Prime Minister of Great Britain and not thinking that your first concern should be the bond markets. So there's this weird double dynamic, a slow burn decline and a feeling that day to day, hour to hour, something could happen that could tip. And then as Helen says, in a way, the neglected story is energy and energy prices. It doesn't have the same traction in the coverage of British politics, although interestingly, there's been a bit about it today. But thinking about the things that are likely to A, agitate the voters, but B, give the opposition a chance to have a go at this government. Because all governments are in hock to the bond markets, but this government has a particular strategy on energy. I suspect that that is the story that will become more and more significant over time.

A (8:45)

Yeah. To expound on what I was saying, reading the Financial Times and the Wall Street Journal, you get this perspective on British economic growth. It's near zero. I think there's some concern that it could tip into a recession, but a lot of hope on the part of the labor government that there will be growth. It's not exactly clear why there is that hope or what economic circumstances could change that could create that growth. And you talk to folks and I've heard, you know, things are bad, but. Well, they're not so bad. It's not the 1970s, there aren't blackouts in London. But I'm also, I've also been talking to folks in London, which is the most economically well off and most labor inclined part of the country. And so I'm curious what the picture looks like. You know, London only makes up. I was surprised to learn, I thought it would have been more but only about 20% of economic productivity in the UK. What does the rest of the country look like?

C (9:45)

Well, I think that one of the problems that's gone on really for the last two governments, and I'm just treating the Conservatives having three prime ministers as one government for the moment, is that this hope that they invested in that actually the Energy transition would be the way of re industrializing the British economy, which is another way of saying making the British economy less London centric, less financial services centric has not been vindicated really in any shape or form. I mean, Britain's not alone in this. I mean, I would argue that actually the inability of the Biden administration really to move the dial on that is an important part of the reason why Trump is back in power in Washington. But given that Britain was one of the most, if not perhaps the most deindustrialized Western economy, where the political implications of that started showing up pretty quickly is that it's pretty problematic if Britain makes no progress in this area and there isn't any evidence that it is. And I think if you then like add in the decisions that are made under fiscally tight circumstances about infrastructure investment, particularly transport investment, and you look at the decisions that are made, they look like they're much more London friendly than province friendly, particularly in regard to the North. And so I think that this politics of place in which that there's a kind of country against London in some respects, even though that that massively simplifies what the reality of many people's lives are in London, has got legs. And it's interesting going back to what David said about Andy Burnham, who's the mayor of Greater Manchester, the week or so leading up to the Labour Party Conference, he was projecting himself as an alternative prime minister. It was very much as, look, I'm from the north. That was his number one credential, the mayor of Manchester. Manchester's growing more quickly, it would seem, than perhaps even than London. It's not entirely clear that it's got anything to do with Andy Burnham's mayorship, but that's another matter. But the two things that he was framing his candidacy around effectively were, as David said, I'm going to say no to the bond markets and I'm from the North. And what we've got is a London centered government. And that's a problem. It's a problem for the country and it's a problem for Labor. And I think if you go to other parts of the country, particularly in the north and the Midlands, and you experience public transport, it's a world of different than what you experience in London and the Southeast. I think it's a really quite serious fault line in Britain's politics. The transport inequality, the public transport inequality that is now not just in play but really on public display.

B (12:35)

And it's interesting that. So I don't want to say what the rest of the country is like. Because I don't live in London, but I live in Cambridge, which I'm not going to claim that living in Cambridge gives you a wider perspective, particularly than living in London. But it is interesting that it's probably true. British politics has got the rest against London dynamic to it. But part of the rhetoric that comes out of those people who are claiming to speak for the rest is what a hellhole London has become. I mean, that's actually part of the New York Times narrative that you were talking about, too. It's not just Trump, actually. There is also a version of it which says that in London you get a glimpse of a future and it's a bleak future. And it's interesting, and I think you're right. I'm sure you're right.

A (13:17)

He has been miserable.

B (13:18)

Hated my time as a visitor to London. You come over, you don't think in London what you're seeing is the worst of the British disaster zone.

A (13:28)

Well, I come from the famous hellhole New York City. So, you know, and this is a.

B (13:32)

Story, you know, Helen, you know, this is a dynamic that goes back hundreds of years, right? The people both saying London is an absolute cesspit and also complaining that London has all the advantages. And of those two things, actually, at various points in history, they probably both have been true. Cities are often terrible places to live for people at the same time as being the engines of economic growth and where the people are making the money. I don't think this is one of those times where London is a terrible place to live, notwithstanding the fact it's an engine of such growth as there is. I think London is actually, as Helen said, particularly in relation to certain kinds of services, better off.

A (14:09)

Yeah, don't worry. I have seen the musical Oliver Twist, so I'm familiar with what a rougher time period for London once looked like. But we're talking a little bit about some of the comparisons here between the UK and the United States. And I looked at the polling this morning to get a sense of what the most important issues facing the UK are today, and they look pretty similar to the United States. Number one, the economy. Number two, immigration and asylum. Number three, health. Four, crime, and then taxes and welfare benefits. You know, for a largely, although not exclusively, American audience, about 5% of our audience is actually British. How would you compare the political circumstances of the two countries today?

C (14:54)

There are certain political similarities in the sense that the political system, as it was two decades ago, has broken down. It's just the way that that Manifests in the two countries is really different because there is no equivalent of Trump, there never has been. And there's no equivalent of Brexit in the US case, because I think that being a member of the European Union structured British politics quite profoundly until we left in 2020. The reason why I say I think that the British system has broken down, though, even though there is in power one of the two main parties and it has a thumping majority, at least on paper, is because there's been a kind of set of accelerations, I think is the best way of describing it, that began probably with the 2017 election, where we went from a situation where it looked like Theresa May's government was going to win a landslide to Jeremy Corbyn running her, like, very close. And then you have the 2019 election where the Conservatives win a significant majority for the first time since 1987. Really, if you look at it in terms of, like, size, and people are talking about a realignment, but actually, within five years, Labour is winning a huge majority on a relatively. A very small share, really, by historical standards, like Optavote, and has quickly become pretty much the most unpopular government ever. And I think it's fairly clear, I mean, I thought this at the time, and don't think I was, like, wrong, is that Labour won in 2024 simply because it wasn't the Conservatives. The system was supposed to switch to the opposition party at the point when the governing party is that terrible and so obviously not fit for governing. But neither was the opposition party fit for governing. So you just very quickly then accelerate through a demonstration of its incompetence, and then you get the projection onto the next thing, which this time is outside the two main parties. It's onto the. Onto reform. Now, I don't think that they can actually hold that together in terms of being in the lead in the opinion polls all the way to the next election. Not this, because nobody's ever been capable of working with Nigel Farage for very long. But it means that what happens next is unknown in a quite deep sense that I think now. I don't rule out the possibility that there can be some kind of patching the center together one more time, maybe in a grand coalition between the Conservatives and Labor to keep Farage out. But I still don't think that that's particularly likely. So I think that the ways in which the old party system could structure democratic political conflict in the United Kingdom, that's over. And it's a venture into the unknown as to what happens now.

B (17:42)

And Gay. And you say, if you look at the polling, what people care about, it looks similar, you can translate it across the ocean. And also I think if you try to make sense of those responses on a broader. If we can still say left right, but in the way in which we tend to divide up politics into big blocks, we're a divided nation, just as the United States is a divided nation and we are divided in relatively similar ways. But the huge difference is party polling, because those issues might register the same. But the two main parties are currently, depending on which polls you read, both polling below 20%. So imagine an American political system in which Republicans and Democrats were Both polling under 20% and British politics is now, depending on where you are. If you're in Scotland and Wales, it's a six way split. If you're in England, it's a five way split. Say reformer on 28. And then you have five or six parties bunching up in the low teens. Maybe that makes British politics profoundly unstable for the next period. Not socially unstable. We're not on the brink of, I would say relative to the United States, maybe there's considerably less potential for social breakdown, but political breakdown, because I don't think anyone knows what's going to happen. You have on the right a contest between the Conservatives and Reform. On the left, you have a contest between the Labour Party, the Liberal Democrats, broadly speaking, the Greens, if you're in Scotland, the SNP if you're in Wales, Plaid Cymru. And this is still a first past the post system where small movements produce these remarkable tips and you just don't know. I think it's extremely unlikely that the Green Party will poll ahead of the Labour Party at the next general election. But two points, three points, movement in those poll ratings can make all the difference in the world. And on the right, like Helen, there's a long way to go to another election and Farage has to hold his position. He's probably at the ceiling of it. It could tip the other way. The Conservatives are not out of the game if you think that there are roughly 40 plus percent of the voters to compete for between those two parties. If one or other of those two parties can coalesce that side of the vote, they will be back with a majority. That makes Starmer's majority look small. Labour could at the next election do anything, depending on how it pans out, from win another majority to more or less disappear. And that is not true of the United States. All sorts of things could happen, but I don't think either of the two main parties are at risk of simply either disappearing or cleaning up. But that is true of British politics and it's never been true before. Never been true before. I mean, there have been periods of instability in the 20s and 30s and the 19th century is another story. But this version of it where a first past the POST system 2, 3, 4% movement between the different parties could be the difference between oblivion and being in government. We've never been there before.

A (20:51)

Yeah. I want to talk a little bit about the rise of the populist. Right, but before we do get to that, can we talk about why Keir Starmer is so unpopular? I was looking at the average of polls in Politico Europe's poll of polls. His approval rating is 21%, which, like I said, gets us at net negative 52 percentage points. You know, for some historical context, it is often the case that British prime ministers experience lower lows than American presidents do. You know, you have the monarchy, which is where a lot of your patriotism can be directed for royalists, at least for monarchists. But, you know, in the United States we have more sort of celebrity style politicians who capture. Who try to at least capture a lot of that patriotism. And since we only have two parties and the nation is pretty divided, you're always going to. You have maybe a higher floor than you do in British politics. But even considering that Keir Starmer is pretty unpopular, why?

C (21:53)

I mean, I think two things, really. First of all, he's a terrible politician. I mean, I think he's always been a terrible politician. I think a lot of people talked him up during the Brexit years, really, because he was the person who was trying to push Labour in the direction of being a second referendum party, which he, he succeeded in doing to the party's detriment, in my view, in the end. But I don't see any evidence during that period that he actually was making either forensic attacks on Brexit that were undermining of the Conservative government's ultimate ability to do Brexit, to get Brexit done, to use that phrase. And I see nothing since he's been Prime Minister that suggests some hidden ability from those years. But I think, and this goes to the core, I think, of what's going on at the moment is, even by the standards of politicians, he is remarkably indifferent to the truth, I mean, is. And I think this budget issue, you know, has brought things like, to the fore. I mean, he is willing to say really whatever he thinks needs to be said in any particular moment. You could see that in the way in which he won the Labour Party leadership in the first place. Campaign to the left. It was going to be. He was going to be Jeremy Corbyn, minus antisemitism and not liking the ira. And then he ended up as the Labour leader who was expelling Jeremy Corbyn from the Labour Party and was moving off to the right. He was taking that position still, really, for the first part of his premiership, but again, the last, really. Since some point in the summer, he's been repackaging off to the left again. I think it's very hard to believe for anybody to believe what he says at any particular moment. There was another moment in the summer where he'd given a speech, clearly written by his chief of staff, Morgan McSweeney, on immigration, that was decidedly to the right, to appeal to people who were going off to reform. And then a few weeks later, he was giving an interview saying that actually he hadn't really read the speech before he gave it and he didn't mean it. And that, I think, is par for the course for him. So I think that there is something like structural in the sense that all the recent British Prime Ministers after Cameron have looked deeply incompetent because they've been unable to deal with the structural problems that they were confronted with. I think that Cameron wasn't particularly good at it either, but he was better at disguising that. He wasn't very good at it. The others have not succeeded in disguising their inabilities. But I do think there is something about Starmer himself that actually explains the depth of the unpopularity, beyond the fact that his Cabinet haven't really got any idea how to deal with the situation in which Britain finds itself.

B (24:36)

I think it is a good question, though, because it is really striking. Lots of politicians are unpopular. How much? Almost everybody seems to find something in Keir Starmer that they really detest. So I remember he'd only been Prime Minister for a few months. I went to a football match in Cambridge, so Cambridge United supporters, this is not. You know, again, I don't want to say Cambridge is anything other than the posh end of the country.

B (25:06)

These aren't scary football hooligans. But at the end of the match, I was amazed. I didn't really know that this was already a thing. After their team had lost, they consoled themselves in their hundreds by marching down the road chanting, keir Starmer's a liar. And I thought, he's only been Prime Minister for three Months. And it was a settled view.

A (25:25)

And presumably he didn't play any role in the football match.

B (25:27)

He didn't play any role in the football match. And after all, most people think all politicians are liars, right? So there's something about him. And if you probe people, why they don't like him, I can't think of another word for it. I think the one thing in the Venn diagram that would all overlap in the middle is people find him intensely annoying. And he's not a, you know, he's not a particularly good public speaker or orator. He, he uses this slightly, not just robotic language, but there's an emptiness to the way in which he communicates. But again, this is true of lots of politicians. I often find myself when watching him and feeling so annoyed that my skin is crawling. Why is he so annoying? And it is partly, I think that he has the failings that Helen has described and he, he seems oblivious to them, which is a really annoying human characteristic. He's sanctimonious and he's self important and people who know him say he's also vain. I mean, he thinks he's great and he believes his own publicity, including he believes, he says regularly to his cabinet, we are all sitting here because of me and Morgan McSweeney. Anyone could have won that election and anyone would have won that election. And a politician who is that lacking in self awareness and then has the failings that Helen has described is actually quite rare. I mean, so there must be something about him that's unusual. Not just that he doesn't tell the truth, not just this, not just that. There's something about the combination, but it is really noticeable. And he is also, I think, unpopular because there is a worse politician in British politics and that is his chancellor, Rachel Reeves, who I think is really, really unusually ill suited for the role that she has. And they are yoked together. So actually that double act is also quite unusual.

A (27:19)

Today's podcast is brought to you by you, the listeners. Without paid subscribers, GD Politics wouldn't be possible. Your support means that we can continue making an independent podcast guided by curiosity, rigor and a sense of humor. Paid subscribers also get about twice the number of episodes, access to the videos and can join the paid subscriber chat. You can also connect your personal feed to your favorite podcast player so you get every episode wherever you listen to podcasts. Also a reminder, we now have merch, so head over to GDPolitics.com merch for that and GDPolitics.com to become a Paid subscriber. See you there. Can we put a finer point on what the budget issue is? I mean, what I have come to understand it as after just a few days in the UK is that labor campaigned on not raising taxes and now they are raising taxes. So like a George Bush senior type issue where he said at the convention, read my lips, no news. Taxes got into office. Raise taxes. Is that the crux of it or is there something else going on?

C (28:26)

I think in a specific sense that is the crux of it. But I think that in a way that is also just symptom of two things. The first of them is Labour was able to benefit from the Tories being so useless and the sense that actually not just that they were useless, but that having them been in power for so long and being useless that there would be something wrong with the democratic system if they were allowed to continue. And so that's why Labour had to replaced them because it would have been democratically wrong to allow a government so unfit as the conservatives were to continue in office any longer. And to be the beneficiary of that, then enough voters had to believe that what they were voting for when they didn't really want to vote for labor was some version of early Blair and Brown, that is labor that didn't threaten them. They might not like it, they might not choose it, but they didn't think they were voting for a party of the left because they'd seen that Keir Starmer had shafted the left after he'd been elected and that Rachel Rees was going on and on about how the most important thing was there was no repetition of the Liz Truss moment, which there could be much meant there could be no fiscal risks that were taken. So when you see then that the response of the Starmer Reeves team is to move to the left and to increase taxes and actually having failed to cut public expenditure on the welfare state, which is what they promised to do, use tax increases to in part at least increase welfare state expenditure. That seems, I think like quite a profound betrayal to many voters. I think in sometimes it's beyond the. The George Bush read my lips, no new taxes. Because it says something both about the fact that the party is governing to the left economically where they want to be, but also the serious cynicism of it. And that goes back to the point of how cynical I think Starmer is. I mean I said that at the time and I'm sure I said this like on talking politics at some point is I thought that at the time and I still do that. There was no more cynical politician through the Brexit years than Keir Starmer in terms of how he used the issue for his own personal advantage. And his Chancellor behaved, I think, extremely cynically over the economic decisions that they've taken over the last months. And it's very transparent that they have. And then when you add into that this person, as David said in the Chancellor, who is so unfit for the job and has had this series of stories earlier in the year, maybe they started in 2024, about untruths about her professional life prior to becoming an mp, plagiarism in regard to a book that she wrote. It adds up to the impression of people who are cynical and are interested in themselves and they're not interested in trying to deal with the first and foremost with the major economic problems that Britain faces.

B (31:28)

The other thing to say about the budget is that it was presented in the run up, with all of the leaks and comment and endless speculation about it as being a budget that was framed by the fact that it is just a brute fact of political life that governments have to think about the markets, particularly the bond markets, first. And it turned out to be a budget in hock to the parliamentary Labour Party, because Keir Starmer is worried, and he's right to be worried, that they may turn against him and he may be out of a job. I mean, I don't know if that's going to happen or not. I don't think anyone knows, but certainly it's a serious risk and they are the people on whom his job depends. His job, actually the Chancellor's job might or might not depend on the bond markets, but Starmer's job depends on the parliamentary Labour Party and he did become leader of the Labour Party and then fight a general election more or less off the back of his disdain for the kind of people to whom he is now in hog. And in sort of broad political terms, in the way the voters might think about this, they wouldn't think about it in those terms, but the way it comes across is basically this is a budget where taxes go up to pay for benefits for welfare. And this can be presented by the opposition not simply as maybe something that people do not particularly want, but more particularly the one thing this Labour government said it was not in office to do. And so that shift is part of the reason why, even though the budget, in broad terms, it's not a hugely significant event. I mean, all budgets matter. But this was dressed up as the sort of fate of Britain hung On it, it didn't. But in political terms, it probably does mark a watershed, because as Helen said, it signals, actually, and these are both politicians, one of whose mantras is country before party. Well, it's not just party country, it's job, their own jobs before country. And I think that is going to be hard for them to shake off. Even if AI comes to the rescue or whatever the plan is, that's going to mean in the end they don't have to put these taxes up because they've been backdated. I think that memory and this budget will probably stick, and it's one of the reasons why neither of their jobs is remotely safe, I think, as well.

C (33:40)

Gail and there's this moment as well where she called this press conference. I can't remember exactly when it was either, late September, I think it was maybe early October, where essentially she said that she'd been told by the Office of Budget Responsibility that the situation was worse than it had seemed. And that was the framing for what we're going to be at that point. Income tax increases, Income tax increases in the rate, as opposed to freezing the thresholds. And that was the mindset that prevailed in the media in discussing what was going to be in the budget, what it was influencing, what was happening to the yields in the bond markets. But there was some. We can argue about how much of an untruth that there was in the way in which that was presented, but the fundamental narrative that was presented was untrue. You can try and justify little bits and say, oh, maybe if you just read the subtext. It wasn't quite supposed to mean that, but the narrative that they were happy to convey turned out not to be true. And the reason why, as David said, is that the decisions were then made as that they were, was to save their jobs. And you can argue that that's what politicians like do, but you have to be much better at disguising what you're doing than these two are capable of it. It's just so obvious that that is what they were doing, and that's why I think they can't recover from it.

A (35:01)

You know, it reminds me a little bit more of the politics of the early 2000 teens in the United States, where there is more of a focus paid to tax rates and public spending. You know, we've entered an era of American politics where the Republican Party is more willing to spend and the Democratic Party feels like it's electorally advantageous, and it probably is to promise tax cuts. And so we've gotten to a place in the United States where we've seen more public benefits with also lower taxes. And so to even hear, you know, well, we have to raise taxes because this is what the budget looks like, et cetera, et cetera, et cetera hasn't been part of American politics almost for the past decade. Now, with interest rates rising, that could become a part of American politics again. And obviously, you know, Trump's tenure will end, there will be a new election, and the debt and deficit could take on an important role in American politics again. But we've sort of had a decade without these kinds of debates almost in American politics.

C (36:06)

Well, I think what's interesting about the United States is that in several respects here is there are alternatives to the debt problem. And one of them is your president screaming very loudly that interest rates should be, like, 3 or 4% lower. I think he said something like the other day about, you can just sign a piece of paper and we'd save ourselves hundreds of millions of dollars in interest payment. Trump is very willing to have a confrontation with the Federal Reserve. He's obviously going to be able to appoint a new Fed chair, and he hopes that that will make a difference to the fiscal position, that under a new Fed chair, the interest rates will be lower and that will take some pressure off the debt situation. He's obviously also had ideas. I think that they're rather incoherent and unlikely in the end to work, but they're there. As stated by Stephen Mirren, when he was Trump's advisor in the Mar A Lago Accord, about how he's going to force effective restructuring of the US Debt on foreigners, tie it to security protection, tie it to the provision of dollar swaps, and that is the way in which that the US can again pay less interest on its debt. Now, I don't think that one's going to work, probably will get some latitude from a new Fed chair, but it's very difficult to imagine, particularly given the kind of person that Rachel Reeves has presented herself as, that Rachel Reeves is going to go on some mission of declaring war on the bank of England, and certainly not in a position to start saying to foreigners, oh, you're going to accept less interest on our debt because we've got some big fiscal problems and you need to help us out. So in that sense, I think that the U.S. even if it weren't for Trump, has some luxuries, considerable luxuries that Britain doesn't have. And it has in its president a leader who is not at all afraid of A confrontation between the monetary policymakers and the democratic policymakers. And I don't think we're there yet. I think we will get there in British politics. I don't think that we'll get there under this government.

B (38:02)

But it's also true that it's a reflection of Britain's relative impotence. Some of these threats coming from the United States and the President of the United States have teeth and there's almost nothing that we can threaten anyone with. And these are two very, very different political economic situations. Britain is pretty stagnant. The United States is at the heart of the industry. That may or may not affect the transformation of all of our lives. And it's possible to believe in that thing and off the back of that belief have a vision of the future, which in the British case is just not there. If the Labour government is hoping that AI will save is a hope based entirely on factors beyond its own control. It's simply a sort of act of God coming in from the outside. We are not a particularly powerful or dynamic country. And in those circumstances, your vulnerabilities are laid bare in your politics, for better and for worse.

C (39:04)

I mean, it's also, we just cannot be an AI power because we have too high electricity costs. I think that is increasingly understood than the people who would like AI to drive the British economy forward. But there is no AI strategy without an energy strategy, without a different energy strategy than an electricity strategy in particular than the one that we have now. And you can say, okay, there's some responsiveness from Keir Starmer that he's now seems keener on removing impediments to building nuclear power reactors than he was. But they're not going to deliver nuclear power reactors anytime soon, many nuclear power reactors anytime soon. And by which time Britain could be left well behind in AI.

A (39:45)

Okay, so I want to get on to talking about the populace. Right, but quickly, what do you think is the expiration date on Keir Starmer's prime ministership? Are we talking months? Are we talking years? Like, how dire is it? Seems like you've painted a pretty dire picture.

B (40:01)

So I think just. I mean, he has got some things going for him. He is in post. The Labour Party is not good at getting rid of its leaders. One of the dynamics of British politics that complicates it is parties choosing their leaders is now in the hands of the members of those parties. And in the case of Labour, this is a particularly complicated dynamic because Labour's membership would like someone to the left significantly, probably to the left of Keir Starmer. But actually I think his two most plausible replacements were Streeting and Shabana Mahmud are not obviously to his left. Even the fact that there was a rumbling recently that Wes treating supporters want there to be no contest, just a coronation because they know it's difficult to get the members on side. So for all of those reasons I think Starmer may actually survive beyond May because just the mechanics of getting rid of him and the strategy. It's not a party that's shown itself to be particularly good at this kind of strategizing. The strategy needed to get rid of get your person in place. If it was just a straight in or out, surely someone could do better than this guy. He would be gone tomorrow. But it's not that unfortunately. I would say if I was a Labour MP I would be tearing my hair out at the fact that he could still well be leader in two years time.

C (41:19)

Yeah, I think he won't be leader in two years time. I see a scenario for David's reasons in which he could be. But I think it's unlikely. I wouldn't be surprised if he were gone very quickly. I'm not saying I think that that is what will happen but it wouldn't in the slightest bit surprise me if that were the case because I think that there's a point when the number of examples of his the problem that he poses for labor there are just so many of them and there's just so much despair that it induces in the people around him that even if it's not a thought out strategy for how to replace him that something will get set in motion. That.

A (41:58)

Okay, so we mentioned earlier on what the voting intention polling looked like in the UK that's reform with an average of about 27% which is the populist right party that used to be known as the Brexit party. Labor at 17%, Conservatives at 16%. Greens 13%, Lib Dems at 11%. Now this makes the UK somewhat similar to the other large economies in Europe. So the alternative for Deutschland leads in the national polling. In Germany, the populist right party same in France with the National Rally. And then in Italy, of course the fourth largest European economy. The populist right is already in power and actually unlike most of the governing parties in Europe, they are actually popular. So they the Brothers of Italy, which is the ruling party in Italy also leads in the polls. So this is a moment where the populist right is popular. The most popular of the options on the table right now Why?

C (43:02)

I think that the running thread through each case is the migration issue, migration and asylum issue, and the really serious economic problems that European economies have faced, really since the crash. There has been in Europe ultimately a failure to recover from the crash. It was slower to show in Germany than in other countries, but at least since 2018, you might even say that Germany's become like Exhibit A of the difficulties, because it's now experiencing a deindustrialization that I don't think it really had before, in the same way in which the others have. So if you have, at best, stagnant living standards, and for many people, something significantly worse than that, and you have this issue about migration that has always had the potential to divide what governments would prefer to do in that policy area from what the majority of voters would want them to do. That's a fairly lethal mix. And I think that what you can then see is that once you are in a politics where your party system in different ways can't really deal with that, and that obviously does manifest differently in Germany, France and Britain, you know, tends in Germany to lead to the grand coalition outcome. So you have the two parties becoming the two main parties, or supposed main parties becoming ever less popular, but ever more likely to be in government with each other as they become ever more unpopular. In France, you have effectively permanent minority government at the moment, which means it's not possible to pass a budget. So you get the chaos factor in the French case, which is beginning to come into the British case, because you wouldn't think that you can compare having a minority government in France with a government with a large majority in Britain. But actually, where the budget's concerned, they look pretty similar in the ways in which they are constrained by the legislature and all that side of it, like executives and legislatures not being able to agree anything. Then that becomes part of the sense of like, oh, does democratic politics really work? Because it kind of presumes that when it does work, that executives and legislatives aren't in loggerheads with each other, such that governing in a coherent way is impossible.

B (45:19)

Yeah, I think in a way, the interesting question in Britain is Nigel Farage been around for a long time. Before the Brexit Party, he was ukip, the UK Independence Party. And obviously his main issue was always Brexit or a variant on that, but immigration was somewhere alongside that. He's added to the mix deep skepticism about Green politics. And that's a big part of now what he stands for. But he is 10 points higher in the polls than he was at the last general election, actually more, I think more like 14 or 15. He's more or less doubled his support in this time. And it was always thought that the thing that made Britain different from the other countries you've mentioned, which is a first past the post two party system, effectively would freeze him out. The two main parties, in the end, even if one of them was in deep trouble, the other one would clean up. And it is, I think, the fact that we have gone through the cycle that Helen described early on in this podcast of failure, followed by failure in fairly rapid succession. So we've actually been through the traditional cycle. Don't like this lot, so we'll try this lot. Don't like this lot, so we'll try that lot again. And it's the aftermath of that, as well as the aftermath of the financial crisis and everything that follows from that. But it's the immediate aftermath of this period in British politics of five or six years where it looks each of the two main parties is as useless as the other that has effectively doubled his vote. So we are unusual in that respect. In his case, it's not a story of slow, steady, incremental increase to the point where he could well be the next Prime Minister. I suspect he won't be, but he could well be the next Prime Minister. And he could partly be the next Prime Minister for the reasons I gave earlier, which is under this system, actually once you get to 30%, depending on how other things pan out, you could do incredibly well. And that again makes it different. The one other thing I would say is that the Italian case is also interesting because Starmer is a useless politician, but Meloni is clearly not a useless politician. She probably is significantly better at her job than people thought. And apart from Helen, who saw it from the beginning, Starmer is significantly worse at his job than people thought. And that does make a big difference. Politics is an expectations game.

A (47:41)

Yeah. I mean, it's going to be some time before these countries hold national elections. For the UK, it may not be until August of 2029. It sounds like there's some skepticism that the popularity of reform and Nigel Farage will stick for three years or so. You know, of course you may have elections before then, but what are the downsides for reform and Nigel Raj? What could get in their way of becoming majority party?

B (48:11)

So I want to ask you a question, Galen, which is, what did you think of Kemi Badenoch in Prime Minister's Questions? Because some of it does depend a bit on her, actually.

A (48:21)

My sense is that she is a talented politician, but I don't know that much more about the context. Like good performance. I would say she stumped Keir Starmer, didn't she?

B (48:35)

So that performance yesterday got mixed reviews. She got very good reviews for her response to the budget, not least because it's always traditionally said the hardest job in British politics is to be leader of the Opposition. You have to respond to the budget. The second the Chancellor sits down, you have to get up and speak. And until the Chancellor sits down, you don't know what's in the budget. So they save surprises for the end. She had the advantage that the budget was leaked, so she had extra time to prepare. But lots of things are in play here. But one of the key questions is whether the Conservative Party can recover. Because given the squeeze that our electoral system places on voter choices, and it's true on the left as well, a Conservative Party in the state it was, frankly, even three or four months ago, it did look like people who did not want to vote Green or Liberal Democrat or Labour or Scottish National Party would be herded in the direction of reform. And that looks less clear now. There are all sorts of other things going on as well. So I think a lot does depend on the Conservative Party and its leadership. And I think the jury is out on Kenny Badenoch. But she's in a better position than she was. She may also not survive. It's a febrile time. Parties are looking for the thing that will rescue them because they face oblivion and they don't think they can risk staying with a leader who might not deliver it. But I think it's a little different than it was even a few months ago. And that is something that I wouldn't have said if we'd had this conversation in the summer.

A (50:09)

One of the things that this makes me think about is the debate that has raged in the United States about the emphasis on cultural issues versus economic issues. And it seems like Cami Badenoch has faced a similar time for deciding in a sense, where at times she's done the more anti woke politician type thing, which is a powerful message coming from a black woman in Parliament. And at other times she's focused mainly on the economy and tried to maybe fashion herself as more of an heir to Margaret Thatcher's Conservative Party. And I'm curious if there's a sense in British politics of which is stronger, which is more appealing. I think at the end of the day, we know from looking at the polling that people say they're voting principally with their pocketbooks but this identity stuff is still quite powerful.

C (50:59)

I think that the Conservatives can't really ride the cultural questions to power, certainly not by itself. I think though that there's a economic difficulty and this is why I'm still somewhat skeptical about her, even though her parliamentary performances have clearly quite radically improved. Is I can see how there is a space aided, it must be said, by the budget to sort of try to be the mythological because it's not really true version of Margaret Thatcher and talk about reining in public expenditure and tax cuts and some anti welfare state rhetoric. I think that there's legs in that in terms of the position for the Conservatives to take, particularly as I say, given the budget. I think there's legs from the point of view of winning votes from her turning the party against net zero, which she clearly has done. What I think there's just not legs in is sort of the full Thatcherite, if we're going to call it that positioning where it's all markets are good and the state is bad and that the state needs to be a lot less involved in the economy. I just think that the whole big picture geopolitical and economic world is so radically different in this respect from the 1980s. I'm not even sure the 1980s is like they were constructed at the time. But let's leave that aside for a moment is that a party of the right, wherever they are, has to engage with the way in which China has radically changed economic competition. And just saying that market's going to take care of the China issue and China's size as a manufacturing like superpower just isn't going to cut it. And so that's the point where I think that in some ways that where Farage has been trying to position before is more of the world, worldly in that sense, politically worldly than where she has. I just think the problem Farage has got, as I said before, is really to do with him and then the absence of any people either of real quality around him, but also people he could actually work with because he just doesn't seem capable really of working with anybody. So it's very easy to see how you can have an election where there's just constant questioning about who is going to be Nigel Farah's chancellor. And you do that against the backdrop of febrile bond markets and it could be pretty messy. And so I think that the way in which the different strengths and advantages in the current situation that reform and the conservatives have is really uncertain how that they can play out. I Think what I'm trying to say is I think there's a ceiling for both of them at the moment in which they can't really go past. And so something would have to jolt one of them into a different position, I think, for one of them to get a proper, clear advantage over the other. Because I think reforms at the moment is a bit surface. But at the same time, I think that the good press that Kemi Badenok's had over the last month or so few months is a bit surface, too.

A (54:10)

Okay, let's talk about the relationship between our two countries. President Trump was here in September for a state banquet at the invitation of King Charles. If this has been the analysis of many, but if flattery is Trump's diplomatic currency, do you think the UK has figured out how to do business with him?

C (54:34)

Not really, no. I think that maybe the King has.

C (54:41)

But I think you can point at a few things like the trade deal and say, look, that that was relatively successful for the Starmer government compared to the trade deals that were offered to others, including the European Union. But has this government got a strategy for dealing with the priority that Trump, this administration puts both on the China question and on the Western hemisphere, and the determination of the Trump administration to end the Ukraine war almost on whatever terms are necessary, and then European states to take individual and for the European Union collective responsibility for Ukraine's future once the war is over? No, I don't see the British government having a strategy for that at all. And I think one of the places where you can see it again going back to the budget is Starmer's happy to make his speeches when he'll say, we understand that. Trump's right when he says that European countries, including ours, must spend more on defence. We have to face up to our responsibilities, blah, blah, blah. But actually, there's no mention of defence in the budget. There's no defence expenditure increases, despite the fact we're supposedly going to increase. I can't remember what the year is. We're supposed to be doing it by getting to 5% of GDP going on like defence. If you're just making some speeches that don't have anything behind them on that kind of issue with Trump, then he's going to see straight through that. I mean, any US President is going to see straight through that. And in Trump's case, he's going to be willing to comment upon it in public about how insincere what Starmer's got to say about the UK being a serious defense power. But the fact that the Trump administration is moving, as hard as it is to try to bring the Ukraine war to an end, is a massive headache, I think, for every single European country, including the uk.

B (56:45)

And there's definitely been a shift even in the time Starmer's been Prime minister. Just thinking about where he was seen pictured and with whom to start with. He was as often as he could be seen with Trump. And now the main image one gets is of him at one or other of these, increasingly, it seems to me, inconsequential international meetings with Macron and Metz and others. And it does not feel like even in his own calculus that he thinks the early strategy particularly paid off. But I have no idea what the current strategy is except a kind of self promotion. His international.

B (57:32)

Standing, the way in which, and one of the complaints about him is he spends too much time abroad. The way in which he does want to see himself being seen at various international gatherings. I couldn't tell you now what he thinks it's for. I genuinely couldn't tell you what he thinks it's for.

A (57:48)

You know, if you read in particular newspapers on the left in Europe, you read a lot about how the United States has become an unreliable partner and that Europe has to figure out how to chart its own way forward. But it's obviously in a difficult spot because it's at the same time facing economic stagnation. And so you could say, well, China is the obvious answer here, you know, both to try to boost economic growth, have more trade partnerships and the like. There's also quite a bit of skepticism towards China. And so from a diplomatic perspective, it seems like the continent and the UK are between Iraq and a hard place. And by default relations with the United States have been much stronger, are much stronger, and it ultimately leads leans in that direction. Even if there is a lot of dissatisfaction with Trump's behavior and skepticism about the American political system going forward, is that a correct perception? Or do you think there's increasingly a real likelihood that the continent turns towards China?

C (58:56)

I mean, I think that Europe is just stuck and in the sense that there are just no good options. Because if you say the response to Trump's confrontational demands is turned to China, then you run into the fact that it's China that's primarily responsible in a sort of straight, if you just think of it as a zero sum game for making it very difficult for the European economies to re industrialize. And in Germany's case, it's China that is pressing its de industrialization so to get closer to China. To deal with the US Issue is to accept really deep economic dependency upon China and to do so at the very time in which you have any numbers European government saying that what Europe needs is to be less dependent. I mean, we had the, I can't remember which of the ministers it was yesterday or the day before saying that Britain needs to be much less dependent upon China for critical minerals. No strategy of course, for how that was going to come about was just another piece of like rhetoric. But if that is what your position is, and we shouldn't, you know, we should remember that when it comes to this rare earths embargo that has inflicted so much trouble on the United States, it's also inflicted so much trouble on Europeans economies as well. Dependency upon China is not just an economic and a geopolitical, but it's a political problem. I think in European countries now you may have some sectors like the German car makers who still want to be competitive in electric vehicles and say actually China's success means we just have to be there. But that's not something that British companies are in the position because British companies don't compete in China in the way which German companies compete did for the past few decades. So I think that beyond the sort of rhetorical positioning that Starmer has begun to adopt of saying, well, we must treat China simultaneously as a security issue and as an economic partner, we're not going to see any decisive turn in the direction of alignment with China.

B (61:10)

I don't think Europe is just stuck. I think, I mean Europe, Britain, these are societies in decline. I mean they just broadly are in decline. And I think the prevailing mood is fatalism. I think until the choices are forced, and at some point they probably will be forced. And there's also a sense that in five years time, 10 years time, this could be a different world in all sorts of ways. Until the choices are forced, there isn't a strong incentive to force the choice on the part of the politicians themselves. So you get performative politics, which is what we have. And we have, I think as we've been discussing, we have an acute version of that in Britain at the moment. It is performative, our politics. And at the same time people are waiting to see what is the thing that will determine our futures. Is it AI, is it some international conflict? Is it a new pandemic? I don't know what it is, but the feeling that things talk about something's coming along that's bigger than us. And so given that, what's the point of us taking the really Tough decisions before we have to. And I think the kind of democratic politics we have is well suited to that fatalistic, performative mindset. And that's where Britain and Europe are at the moment. And I think we'll remain there until the thing happens. And I have no idea what the thing is. Yeah, but it'll be something for sure.

A (62:31)

This has been a bit of a, you know.

A (62:35)

Somber look at the state of British and European politics. I know that both of you take longer term views of the challenges of our time and I, and I just want to get, you know, wrapping up here. I want to get a sense of, to pair a positive with a negative. What keeps you up at night in this moment, but also what you're most optimistic about. If we can. I know this might not be very British, but identify some silver linings.

C (63:06)

Well, I'm just on the optimism one for a moment. I mean, I think that in a way it is optimistic. I am optimistic that the Labour government is such a disaster. I know that's because.

B (63:21)

It'S that kind.

C (63:22)

Of optimism because it speeds up the moment. Everything's about the acceleration, it seems to me, in British politics since probably since 2017. And everybody, including most of the political class themselves, know things can't continue as they are, but nobody knows how to get to what comes next except by letting the crisis dynamics like, play themselves out. And so in a way, if we'd had like sort of only partly useless government this time round, then the system could have maybe had like one more cycle to run through, but it's not going to be like that. And also I think that the growing awareness of the energy issues that Britain faces and the fact that they're now firmly tied to the AI question is also a good thing because it means that the moment in which we stop being performative about these questions and start being serious about these questions has to get closer. I think in terms of what might keep me up though, just kind of like, well, still, I can describe what I've just said quite abstractly about using words like acceleration and crisis. But still a set of human beings at some point have got to wrestle the. With the choices that really do have to be made. And it's difficult to see in this case in Britain who those people are and whether any of us are going to be able to be equipped to see a way forward, particularly given, as David said, is that part of this is about long term decline and part of this is about a period in which Europeans have, by historical standards, or, or West Europeans, perhaps I should say historical science has been very historically fortunate and that that period.

C (65:19)

Is like coming to an end, or has come to an end, I should say. And then that requires everybody to adjust their expectations of what is possible. And that isn't. And that's never an easy thing in politics. So sometimes I think those moments go, like, horribly wrong.

B (65:38)

So when I say the thing that's coming, I don't mean it's necessarily bad. I mean, I don't think it makes sense to be optimistic in that sense. And I never particularly like the question, which does get posed a lot. This is not a criticism of you, Kaylin, but that one is being asked to both enunciate and then choose between optimistic and pessimistic scenarios. Because my feeling is that most things have both faces to them, that all of the transformations that we are going through have good and bad aspects to them. The energy transition, what's coming down the line with AI These things are not going to be utopia or dystopia. They're going to have elements of both in them. And there may be opportunities, which again, I think in the fatalistic way that our politics now has, we're also waiting to see what the real opportunities are. If there is an AI gold mine at some point, if the energy transition goes better in particular ways for all of the things that Helen has said, so that the opportunity is kind of clarified for us, and in a sense we don't then have a choice. We have to take advantage of the. The good stuff that's out there, the things that I worry about. I've recently particularly become preoccupied with demographic questions because I hadn't thought about it much before, but I wrote an article about depopulation and falling birth rates. And when that's laid out, it's not just a long term problem. The speed of it is astonishing, it's remarkable. And the problems that it poses, no one's begun to grapple with. And they are just as acute, I would say more acute for China almost than they are for us. And they are happening absolutely everywhere except Israel. So there's that. What keeps me up at night, what keeps me up at night is the thing that kept me up at night when I was 8 years old, and that's nuclear weapons.

A (67:18)

All right, well, we've really run the gambit here from Brexit to the budget to China to AI to now, nuclear weapons. So with that, David and Helen, thank you so much for getting back together and doing this with me.

C (67:33)

Thanks very much for having us, Galen.

B (67:36)

It was fun if you like that.

A (67:38)

Kind of thing indeed. My name is Galen Droock. Remember to become a subscriber to this podcast@gdpolitics.com and wherever you get your podcasts. Paid subscribers get about twice the number of episodes and access to the video for the podcast. You can also join our paid subscriber chat and pass along questions for us to discuss discuss on the show. Also be a friend of the POD and go give us a five star rating wherever you listen to podcasts or tell a friend about us. Thanks for listening and we will see you soon.