Britain’s Fantasy Economics 1530-2016: a short history

British governments from Henry VIII to David Cameron funded unaffordable aspirations by using other people’s money. This tactic is increasingly difficult to achieve as time passes. British politicians, nonetheless, are addicted to sources of revenue which are unconventional. They believe it’s a viable economic policy and avoids direct taxation. Boris Johnson’s, ‘I want to have my cake and eat it,’ summarises this long-term fantasy. And the outcome, in 2022, is

“…the total cost of servicing the Government’s £2.4trillion debt pile is set to hit an eye-watering £584billion over the next six years – or almost four times the annual budget of the National Health Service.”

The Brexit campaign, 2016, was fuelled by Conservative politicians claiming that they had ‘found’ a new source of revenue. These new funds would enhance Britain creating a globally important economic and military power.2

The dissolution of the monasteries

 Henry VIII spent the overflowing treasury inheritance his father left and then looted the monasteries who were,   

“…spectacularly rich…..[they owned] about one-third of all the land in England and Wales.3

Henry used this looted capital as revenue. Once it had evaporated, Britain was poor again. The Stuarts, 1603-1714, inherited a country which was poor and resistant to their taxation policies. Despite some very imaginative sleights of hand, which were temporarily successful, they provoked a terminal crisis.4

Forced Loans, 1626, and Ship Money, 1634

Charles I was despised by parliament who rejected his taxation propositions. They believed he was a Roman Catholic, manipulated by ‘evil’ advisors. Ingeniously, Charles by-passed parliament with Forced Loans and Ship Money. Both were more-or-less legal but were hated by the tax-paying gentry. About 30%  refused to pay, or organise their collection. This was a ‘Red flag’ situation, which Charles ignored.

Parliament became an implacable enemy and further taxation requests were refused. Civil war broke out, 1641, and eight years later he was executed as a ‘Man of Blood’.

Imperialism 1700-1900

Britain brutally exploited its empire. From 1763 the Caribbean sugar islands turbo-charged the slave trade.5 Slavery enriched British society, including the middle-classes. It caused moral questioning and the slave trade ended in 1806. (It was abolished totally in 1833.6) Shortly afterwards Britain became an international drug dealer. The Opium Wars7 forced China to import Indian opium, which enriched Britain. Chinese addiction was British economic policy from 1839. Slavery and drug dealing helped Britain to become the world’s ‘policeman’. It was simultaneously the wealthiest and most powerful nation until the two world wars. These catastrophes bankrupted her and demoted her to the second rank of countries.

North Sea Oil, 1979-present

Margaret Thatcher inherited North Sea Oil revenues in 1979. This cornucopia was squandered for short term political advantage.8 She followed Henry VIII’s template and the opportunity to stop Britain’s terminal decline was lost. Once again capital was converted into revenue and long-term investments weren’t made. Thatcher was addicted to quick fix ‘solutions’. She doubled down on her North Sea Oil disaster with privatisations of public assets. The failure of privatisation, as an economic policy, ended in 2016. The last throw of fantasy economics came when Conservative politicians9 orchestrated a win in the Brexit referendum

Conclusion

The post-Covid world exposed British economic fragility. Rishi Sunak, Britain’s latest prime minister, is trying to recalibrate British economic policy,

“…any possible benefits of Brexit, of which there have been precious few to date…were snuffed out by the Sunak-Hunt determination to put fiscal rectitude above everything else.10 (my emphasis)

A recalibration of economic policy will demand brutal spending decisions, starting with Defence. This will be fiercely resisted. The recognition that Britain has lived in an economic fantasy world for 100s of years will damage many egos. The electoral penalty for shattering delusions could be terminal as the public have been taught to believe in Rule Britannia. British politicians feel entitled to strut the world stage.

Notes

1 Britain to have the highest debt burden of any major economy as cost of servicing Government’s £2.4trn debt pile balloons (msn.com)

2 The British Army’s Global Delusions | Odeboyz’s Blog (oedeboyz.com) see also for the Royal Navy Thirteen Ships and Thirty-six Admirals: The Royal Navy, 2022 | Odeboyz’s Blog (oedeboyz.com)

3 How wealthy were the monasteries in England and Wales? – Search (bing.com)

4 1629-40 parliamentary civil war; 1641-49 three civil wars; 1649-60 regime change; 1660-88 regime change; 1688 civil war/invasion plus regime change Forced Loan 1626 – Causes and effects table in A Level and IB History (getrevising.co.uk) This is a revision crib for A level students and it’s very crisp. For Ship Money see Ship money – Wikipedia

5 Treaty of Paris (1763) – Key Provisions, Outcomes & Significance – World History Edu

6 How the first Black Community was formed in London after 1772 | Odeboyz’s Blog (oedeboyz.com) and see also the cost to the British taxpayer of abolishing slavery The Price of Virtue: Bailing out Slave-owners 1833 | Odeboyz’s Blog (oedeboyz.com)

7 opium wars – Search (bing.com)

8 The Ricardian Curse, Margaret Thatcher and North Sea Oil | Odeboyz’s Blog (oedeboyz.com)

9 Non-Conservatives also supported Brexit but the principal cheer-leaders were Conservatives.

10 The week Rishi Sunak and Jeremy Hunt killed the dream of any Brexit dividend stone dead  | Daily Mail Online The Mail is a right-wing Brexit cheer leader and this is shocking.

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