The election of Margaret Thatcher to leader of the Conservative party in 1975 ushered in a golden era of conviction politicians. Difficult decisions to control public sector borrowing became the centrepiece of the Conservative government’s attempts to contain inflation and bring down debt, after it took power in May 1979.
The rise of social media has spawned an era of consumerist politicians. They lack conviction and offer policies tailored to the equally fickle electorate. Difficult decisions are not courted: they are shunned. U-turns come thick and fast, as today’s politicians fret over short-term poll ratings.
The economy of 2025 is beset by deeper problems than even Ms Thatcher encountered. When the Conservative Party gained power in May 1979, public sector net debt as a share of GDP was far below today. Taxes as a share of GDP were lower too. The Labour Party inherited a debt-to-GDP ratio that demanded caution, not increased borrowing. The UK also faces a debilitating health crisis. Poor health puts intense upward pressure on public sector services – and welfare spending too.
Reform may well win in 2029. And then the cycle of raised then dashed hopes will be repeated, because this is the era of consumerist politicians. At some point, the Gilt market will convulse, and from the wreckage, conviction politicians – prepared to court unpopularity with hard choices – will emerge.
But in the 1970s, conviction politicians did not have to deal with the hype and noise generated by social media. Today’s conviction politicians may struggle. In that scenario, the UK (and other major western economies) will become ungovernable. Today’s real yields will then be a fraction of what can happen in a true political crisis. Stock market valuations will have to be much lower.
