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Vince Cable’s “After the Storm – The World Economy & Britain’s Economic Future”

October 6, 2015 2:38 PM
By Merlene Emerson in Liberal Democrat Voice

Wider in scope and more ambitious in its reach, "After the Storm" is the acclaimed sequel to "The Storm" published after the financial crisis of 2008. Having spent the last 5 years as Business Secretary within the Coalition Government (2010-2015), Vince has the added clout of first-hand experience introducing economic policies that have steered us out of the storm, not least an industrial strategy.

His professed motivation for penning a sequel were to update readers on the state of Britain's economy in "a climate of guarded optimism," and to share his insights, no longer bound by collective responsibility as Secretary of State at the Department of Business Innovation and Science. Whilst the US and UK are expected to record 3% growth this year, Vince's previous analysis of the underlying weaknesses still apply, such as UK's over reliance on the banking sector and on the housing market for recovery and growth.

True to form, Vince does not mince his words when it comes to the challenges he had faced in working with his Conservative colleagues in government. He was denied a place on the Quad that was led from the Treasury, whom he described as "institutionally arrogant, obsessively short-termist and deeply conservative". He also flagged up differences with the Chancellor regarding, for example, RTB (right to buy Council and housing association properties) and on the direction and sale of RBS (Royal Bank of Scotland).

However what is clear from the outset is that the new book has a distinctly internationalist perspective. The first half of the book is devoted to setting "The Global Context" and only in the second half does he deal with "The UK after the Crisis". As Vince is not shy to point out, Britain only contributes 2% towards the world GDP and has less than 1% of the world's population. In a world that is inter connected, we are not invulnerable to the serious issues faced by the Eurozone nor by the fluctuations in international commodity markets. The economic centre of gravity has undoubtedly been shifting towards the emerging economies and it is now more apt to say that "when China sneezes, the world catches a cold".

Other recurring themes are ideological: free market versus socialism, of growing inequality (with the richest 1% owning a third of the wealth in the US, a quarter in the EU) and the dangers of aggressive nationalism such as seen by the rise of UKIP and SNP. He hints at wider issues such as those concerning internet governance, problems with large scale migration and global warming but could not pursue these in greater depth so as to avoid the book growing into one of encyclopaedic length.

Vince does however devote specific chapters to the "British Housing Obsession" and to "British Banking after the Banking Crash" and stresses the importance of getting the long-term fundamentals right. In Government, he had endeavoured to constrain the financial markets and make banks safer and more amenable to lending via the Vickers Rules and the Merlin Project. But it would probably have to be a future coalition of "progressives", combining idealism with practical policies to break from current short sighted if not calamitous housing policies, unfair welfare cuts and de facto deflationary economic policies.

With in-depth economic and political analysis from a key player within the Coalition Government, "After the Storm" is essential reading to policy makers, academics as well as thinking members of the public. In addition, Vince offers us a liberal/centre left political road map or should I say navigation chart. The storm may be over, but we are warned of some dark clouds in the horizon.

* Merlene Emerson is Chair of Twickenham and Richmond Liberal Democrats and is the Co-founder of the Chinese Liberal Democrats.