The economic chaos prompted by the 2008 financial crisis was a dominant narrative in the 2010 election, and the links between the financial services sector and government featured heavily in the election of 2015. But in a significant departure from the previous two elections, this year’s campaigns have seen little mention of the relationship between government and finance at all.
While the majority of mainstream journalists are of course limited by column inches and cognitive capacity in discussing anything but the most recent events in their political analysis, considering both that contemporary political discourses have been shaped by the fallout of the 2008 crisis and the structural significance of finance to the British economy, this issue surely deserves more attention. The omittance of haute finance as a campaign issue can be viewed as an intentional absence within the major parties’ campaign strategies, with both the Conservatives and Labour reluctant to discuss this issue for different reasons.
The toxic legacy of ‘dodgy Dave’.
Throughout this election campaign, the Conservatives have avoided discussing their relationship with the finance sector through an effective media strategy (aided by sympathetic journalists) centring the debate around Brexit, and more recently national security – as exemplified by the blinkered line of questioning in Paxman’s interviews on Monday. This is unusual for the Conservatives, the party of big business, who have traditionally blown the trumpet for their friends in the City of London to garner industry support and demonstrate economic competence to the electorate.
This changed following the 2008 financial crisis as the relationship between government and finance came under increased media scrutiny. Any subsequent political support for the City was tentative, as exemplified by David Cameron, who won successive campaigns in the 2010 and 2015 elections by championing the financial services sector as key to a strong economy whilst also talking tough on traders and bankers who acted recklessly.
Throughout Cameron’s leadership, no attempt was made to resolve the structural flaws exposed in the British economy by the 2008 crisis, and his tough talk proved to be merely lip-service. Cameron passively oversaw a succession of huge banking scandals which, along with damning revelations about his personal finances, saw his popularity wane, earning him the moniker ‘dodgy Dave’.
The full toxicity of the relationship between government and the City came to fruition during the EU referendum. Cameron’s pleas to the electorate to protect the interests of the financial services sector by voting Remain were rejected by the majority, resulting in his resignation. His successor, Theresa May, has distanced herself from the ‘metropolitan elite’ image associated with Cameron and his banker pals, in favour of doubling down on authoritarian and xenophobic rhetoric to appeal to burgeoning right-wing populism.
The private relationship between the Conservatives and the City remains largely unchanged, with Chancellor Philip Hammond regularly meeting industry leaders to assure them of government support. In public, however, May is so anxious not be derailed from her ‘strong and stable leadership’ campaign by difficult questions about this relationship that she refuses to mention finance in any public appearance. This Conservative blackout of finance as a campaign issue is clearly demonstrated by their refusal to mention finance or banking anywhere in their manifesto.
Corbyn is no Sanders.
By contrast, the Labour party does mention finance in its manifesto. Bold proposals to create a National Investment Bank and extended taxes on financial assets would transform the British economy. Yet it has been a deliberate part of Corbyn’s communication strategy to be relatively coy over these proposals, only mentioning them when questioned. This has surprised many who coupled the Corbyn phenomena with Bernie Sanders’ Democrat leadership campaign, framing both as populist backlashes to the cronyism exposed by tepid government responses to the 2008 financial crisis. Sanders was indeed successful in mobilising populist support, cutting through a hostile media with a simple and clear message of taking on Wall Street and the 1%. Corbyn has on occasion echoed this 1% rhetoric, but has adopted a different strategy to contend with the specificities of British patriotism. In order to communicate effectively with the electorate through a hostile press, which routinely ridicules and misrepresents what he says, Corbyn has consolidated his campaign rhetoric, focusing on inequality and funding for public services. Issues such as low pay and housing resonate with the lived experiences of the electorate in a way talking about derivatives taxes simply cannot. Moreover, where Sanders managed to appeal to a soft patriotism with his ‘Save Main Street’ campaign, Corbyn’s soft patriotism talks emotively about the NHS and the post-war Labour government which built the welfare state. After receiving criticism of his early communication strategy (or lack of one), Corbyn’s simplified message is proving to be a hit in the polls.
Another reason Corbyn is unable to weaponize anti-bank populism the way Sanders did is because unlike in America, where the 2008 crisis occurred under governance of the Democrat’s opposition party (George Bush Jnr’s Republicans), in the UK, this crisis happened on Labour’s watch. This makes it difficult for Corbyn to wax lyrical about financial reform without admitting to mistakes made by the previous Labour government. This leaves him open to attack from both the opposition, and also his own party where a hostile Blairite faction would take offense. After relentless attacks throughout his leadership from within his own party, Corbyn has finally managed to nurture relative unity amongst the parliamentary Labour party and would not want to risk further infighting at such a crucial time. Avoiding this contentious issue is therefore a sensible move.
The gaze of the City.
Finance industry leaders, many aware of their unpopularity, may actually welcome being off the political radar as this can make their lobbying more effective. Nevertheless, the City will be watching this election closely. Whilst the traditionally right-wing industry would find a socialist prime minister unpalatable, the enterprising capitalist should find Corbyn’s plans to invest in education and infrastructure appealing. However, modern finance is primarily concerned with short term profits which would be hurt by Labour’s proposed increases in corporation tax, while the planned expansion of taxes on financial assets sets an unwelcome precedent of state interference.
On the other hand, May is not the ideal candidate for the City either. Whilst tax cuts and close relationships to the Conservative party make her the obvious choice for the City, her recent disastrous meeting with EU commissioners has done little to calm Brexit anxiety in the City, and her ever-increasing xenophobia may push the City’s foreign workers to relocate overseas.
Whatever the outcome of this election, it can be assumed the City will lobby hard to ensure their interests are maintained over the next five years. Due to the vast amounts of capital located in the finance sector and its structural significance to the British economy, the incoming prime minister, whomever it may be, will have to break their vow of silence and develop a serious strategy for managing the relationship between the state and finance. How this relationship is managed will dictate the fortunes of the British economy over the next five years.