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#studentviews: How does low trust in government affect the UK economy?

A series of political scandals and unpopular decisions have chipped away at public trust in the UK government. But improving economic performance will take more than just fresh faces: a new way of measuring prosperity and progress is both essential and overdue.

According to a recent survey, trust in government institutions is now less than 50%. The current UK government is seen to have mishandled a series of key political and economic challenges, the impact of which has undermined public trust in institutions and weakened economic progress. Spending cuts have choked public services, including the NHS, and many critics argue that the administration has neglected its duties in terms of boosting long-term productivity or meeting health and education objectives.

From 2016 onwards, the trials and tribulations of Brexit alone cast significant doubt on the state’s effectiveness. Two-thirds of the UK public now believe that leaving the European Union has damaged the economy. For small and medium-sized enterprises, which account for over half of all private sector income alone, it is felt that the impacts of reinstating significant barriers to trade were not considered thoroughly. Extensive queues at ports like Felixstowe and Dover were material evidence that Brexit was not going to be smooth sailing, as the Leave campaign had promised.

In 2019, when the tumultuous three years of leadership under Boris Johnson began, the new prime minister stepped into office with great confidence, pledging to ‘get Brexit done’, build 40 new hospitals, and keep energy bills low. During his term, many promises were broken. There were long delays on the Brexit negotiations, there was refurbishment (but no new construction) of just six hospitals, and around 18 million households’ bills rose to an average of £700 per year.

In 2020, the ‘partygate scandal’, as well as the then-health secretary’s violations of Covid-19 social distancing rules, led many people to feel that the incumbent administration was out-of-touch with the devastating reality of the pandemic. Following these episodes, IPSOS polling showed that the UK public believed the Labour Party would have been more competent in looking after people’s interests and economic concerns.

Things worsened in terms of public trust when Liz Truss took over as prime minister in 2022 and lasted in office for just 49 days (a record-breaking low). Like her predecessor, Truss resigned after a vote of no confidence by her own party, following the controversial ‘mini-budget’ of September 2022. The departures of both Johnson and Truss exacerbated public distrust by implying a lack of internal coherence within the ruling party.

With trust damaged most likely beyond repair, many voters feel that the country needs a change. Polling shows that almost 90% of voters – including 65% of Conservative supporters – feel that the UK needs new leadership. Since Labour have been leading the polls for over a year now, it seems that they might soon get what they want. But this change will not be an instant cure for the country’s economic woes.

By failing to meet expectations, the Conservative government has eroded public faith in leadership. When the promises made are not fulfilled, businesses and consumers start to distrust future policy commitments. And in times of uncertainty, people start to save more and cut daily and future spending. Firms also delay investment and hiring processes. Both groups then become less likely to respond to stimuli and policy initiatives, undermining the effectiveness of new government efforts.

Against the backdrop of the cost of living crisis, these effects are multiplied, as people try to manage rising bills and expenses, all while their money is not stretching as far as it used to. And as the disconnect between the public and government grows, long-run employment rates, investments in innovation and productivity growth could also suffer further.

Growth has typically been measured by calculating the value of all goods and services produced in the economy. But with this framework, policy-makers are restricted to a purely output-based perspective. Many other key indicators of inequality, education and productivity are missed, and this can give people a warped sense of how well the country is performing (further undermining trust).

While the economy has grown in 2023, strikes across multiple sectors and protests about the cost of living and the climate crisis suggest that there is increasing social discontent. To address these matters, any new leader should get rid of the tired idea that investing in public services and people is a ‘cost’, and instead view it as a long-term investment in building back trust as well as economic prosperity.

Author: Valentina Viazzani
Editor’s note: This article is from the University of Bristol’s communicating economics class of 2023-24.
Photo by BellPhotography423 on iStock
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