Normal island 📺

He’s game playing so much he thinks he’s on Love Island. The trouble is, Prime Minister, I’m reliably informed that contestants that give the public the 'ick', get booted out.

^{— Keir Starmer to then-Prime Minister Boris Johnson, Prime Minister's Questions, 15 June 2022}

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With Keir Starmer’s teary resignation on Monday, 10 Downing Street’s chief mouser has now, over the past decade, shacked up with six prime ministers. Include the Burnham bounce, and that’s seven PMs across 56 cat years. Britain has become a joke without a punchline.

Effective governance for much of British millennial adulthood has been absent, a legend relayed in hushed whispers. Living in the rudderless and sclerotic post-08 UK, with its mountain of problems nobody seems to know how to fix, things like growth and productivity have accrued a kind of mythic status among the under-40s. The permachurn – and its associated malaise – is all they’ve ever known.  

It’s Brexit wot did it

Brexit did something funny to this country. It wasn’t just a conscious uncoupling from the world’s largest single market but a new, binary way of interacting with democracy. Brexit made sudden, radical change the new baseline. Politics by red buzzer. The irony is, structural reform has never felt more remote. We have traded the real work of real governance for the illusion of radical action.

Some have blamed our political languor on the Netflixification or Footballification of politics, in which the demos has become a tribal prosumer, navigating a fragmented and interactive political entertainment landscape. But there is a world beyond these sunlit uplands. While, politically, Britain has become emerging market-adjacent, its financial core and legal architecture remain world-class. Despite the circus, the dough is still pouring in. 

I’m coming to get you!

It’s not just 2016 that scrambled Britain’s politics. Phones, too, and the apps on them, presided over by the most powerful people on the planet, have also played a huge part in Britain’s inability to commit. Through these devices, voters have become active participants in a perpetual national elimination game.

Modern British politics has videodromed with reality TV, merging with shows like Love Island and Big Brother. A general election victory is no longer a five-year mandate, but just one of many serial votes of confidence that must be endured before being kicked out of 10 Downing Street. 

Politics has shifted to the avoidance of the ick. To an increasingly capricious populace, not much else really matters. Certainly not policy. Those that prosper in this new world, whether that’s Farage or Polanski, Burnham or Johnson, know how to play the game. They understand the new ickonomics of algorithmic management and finely tuned vibes.

Text 'VOTE OUT'

Phones have cooked the machinery of government, too. Encrypted messaging networks allow backbenchers to coordinate and consolidate, and launch mutinies within hours off the back of some online crusade. Politicians can now bypass the hierarchy of civil service private offices, with backbench rebels organising “shadow whipping operations”. It’s government by WhatsApp. 

Britain’s modern political identity used to be one of slow, deliberate statecraft. A steady edifice, a stiff upper lip, with the wealth and wisdom to back it up. The preceding 40 years, from Margaret Thatcher's 1979 election to David Cameron's 2016 referendum defeat, saw a steady conveyor of six prime ministers. 

A prime minister with a significant parliamentary majority, such as Tony Blair in 1997 or Thatcher in 1983, could expect to implement not insubstantial reforms across infrastructure, healthcare, taxation, and more. But the Brexit fallout has dismantled the postwar paradigm. 

PR problem

The average stint of a British Prime Minister over the past decade is now roughly 17 months, shorter than the average tenure of a Premier League manager. Every new prime minister requires a re-allocation of departmental priorities and the onboarding of new ministerial teams. Sluggish public sector productivity costs the UK economy an estimated £80 billion a year.

Campaigners like Compass have argued that to fix the economy, you have to fix the politics first. The prescription: a pivot to proportional representation, which, at least in theory, could force longer-term compromise through coalitions and cure Westminster of its addictive, winner-takes-all mood swings. Burnham could be our most pro-proportional representation Prime Minister ever. Does he have the chops to make it happen? 

Idiot premium

International capital evaluates countries through the prism of the political risk premium. Investors demand higher yields on government bonds to compensate for risky and unstable countries.

Foreign Direct Investment (FDI) relies on multi-decade horizons. Anyone planning to deploy capital requires reasonable certainty regarding the tax and regulatory code for the next ten to fifteen years. When the executive leadership rotates annually that certainty disappears. Following the 2022 mini-budget under Liz Truss, international markets began explicitly pricing chaos into gilts, now even higher under this Labour government.

The UK market is cheaper for structural reasons too. Old-economy sector mix, weak domestic pension demand, thin growth listings, and the gravitational pull of New York. But political churn makes each of those problems harder to solve.

I ❤️ NYC

While investment remains resilient, London-listed companies continue to trade at persistent discounts compared to international peers, particularly the US markets.

This discount is partly down to the UK index’s heavy concentration in traditional industries, compared to the tech-heavy composition of the S&P 500. A whopping $160bn has bled out of UK equity funds since 2016, adding to the pressure on already cheap domestic public markets. 

When equities are valued at lower multiples, firms become vulnerable to foreign private equity buyouts, leading to a steady de-equitisation. We’ve seen this with buyouts of British fixtures like Hargreaves Lansdown and Royal Mail's parent company IDS, or tech crown jewels, like ARM, opting for New York over London.

Still got it

Away from the Big Top, Britain possesses systemic advantages that are hard to replicate. The English legal system is the gold standard for commercial dispute resolution. Our native language is the lingua franca of finance. And London, an Alpha++ world city, remains an unmatched financial centre. But while the capital is a brilliant place to manage other people’s money, Britain struggles to build homes, railways, reservoirs, labs, and power stations.

A serious country cannot thrive on frivolatility. The work Britain needs to do now is slow, expensive, and deeply unglamorous. None of it can be delivered by a political class permanently auditioning for survival. Before we erode our structural strengths forever, Britain must break up with breaking up.