United Kingdom

   
 

Executive Summary

Brexit defining political environment
The political situation in the United Kingdom remains defined by the result of the “Brexit” referendum of June 2016. The most significant influences on governance in the last year were the triggering of Article 50 of the Treaty on European Union in March 2017 to start the process of the United Kingdom leaving the European Union and the outcome of the snap general election called in April 2017, demonstrating the practical irrelevance of the Fixed Term Parliament Act passed by the previous parliament.
Weakened PM
relies on allies
The loss of the slim absolute majority that the Conservative Party previously held has weakened the prime minister and left her able to govern only by relying on a “confidence and supply” arrangement with the Northern Irish DUP. This is likely to constrain the government in an area central to Brexit, namely the question of the status of Northern Ireland. While these developments exposed profound political divisions – as much within parties as between them – and Brexit will undeniably entail prolonged and difficult governance changes, the speed with which new governing arrangements were concluded compares favorably with other countries faced with similar electoral outcomes.
Party system failing
voters on Brexit issues
An emerging governance challenge is the inability of the party system to aggregate voters’ preferences on Brexit in a representative way. This risks engendering enduring divisions in British society, with unpredictable consequences for social cohesion. In addition, cross-party cooperation (which might be a suitable reaction in such a situation) continues to be an unattractive option in a system in which the dynamics and the logic of party competition are dominant. Shortcomings in preparations for Brexit have also been exposed, including a reluctance to spell out in a timely manner what the United Kingdom wanted from the negotiations, amid evident political disagreements among senior ministers.
Employment strong,
but growth weak
The economic situation in the United Kingdom is mixed. Job creation is robust and the headline total of people in work reached a new all-time high, but – although there has been a further fall in youth unemployment – it is around double the rate of older age groups. However, UK growth (previously at the higher end of the league table of larger economies) now lags behind and there are growing concerns about the economy’s weak productivity growth. There has been an uptick in inflation and, because nominal wages have not kept pace, consumers are likely to be squeezed by reductions in household spending power.
Brexit uncertainty
delaying investments
Investment remains a weakness and uncertainty about the eventual outcome of Brexit negotiations has led many firms to hold off making significant investments. There are also concerns about the impact of Brexit on the financial and business services sectors which are important both as net exporters and sources of tax revenue.
Health, education
remain sources of
contention
The public finances of the United Kingdom are still shaky, despite many years of supposed austerity and, in a number of areas, public services are over-stretched. In particular, health care, which was (as so often) one of the most salient themes of the June 2017 general election and its integration (or lack of it) with social care is an unresolved governance concern, accentuated by the responsibility of local authorities for the latter at a time when their resources have been cut substantially. The general election also prompted renewed disputes over the funding of higher education. Despite governance reforms at the center of government aimed at strengthening implementation, political indecision has stalled major infrastructure developments. For example, yet another postponement of a definitive green light for a new London runway was announced, prolonging a process dating back to the 1960s.
Brexit pushing other
policy issues aside
The United Kingdom has persevered with efforts to improve the openness of government and to communicate more effectively with stakeholders. The sheer administrative burden of Brexit and its dominance of the political agenda has, however, had a debilitating effect on other major policy initiatives resulting in them being stalled or inadequately thought-out. An example was a proposal for redressing inter-generational imbalances in meeting the costs of care for the elderly, initially put forward in the Conservative manifesto, was quickly dropped. No real alternative has since been proposed, despite the urgency of finding solutions.
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