The British economic policy debate feels more open than it has for a generation. Leaving the European Union last year knocked away a stout pillar of the old model that framed the debate for virtually half a century. The recovery from the pandemic-related collapse in output has seen politicians of all parties promising to “build back better.” The economic shock delivered by the banking crisis in 2008 and the political shock of the Brexit referendum in 2016 have left thinkers looking for a new political economy.
On the right some seek to revive a Thatcherite—or even Gladstonian—spirit, with talk of a free-market, buccaneering, “Global Britain.” On the left, there is much excitement about the possibilities, precluded in the last generation, to roll forward the economic borders of the state. Boris Johnson’s government—its majority built on four dozen seats won from Labour across the English north and Midlands and Wales—is a quite different creature from that of David Cameron. University economics, for so long a domain of desiccated models and cost-benefit calculations, pulsates with fundamental questions about what money is and whether public debt matters. Talk of “tough choices” and the prioritisation of deficit reduction now take a back seat to the rhetoric of “levelling up” and a proactive role for public policy in shaping markets and driving growth.