An Illustrated Guide to the British Economy

Contemporary Review, Dec, 1998 by Edward Bradbury

Bill Jamieson. Duckworth. [pounds]12.99 p.b. 355 pages. ISBN 0-7156-2785-6.

For most people economics is a great mystery. They can understand the economics of their own affairs - the interest on their mortgage, the profit on their investments or the balance of their current account - but they find it difficult to understand their nation's economics. Economists, those high priests who serve at the altars of economics, do little to help with their talk of micro versus macro and stagflation versus inflation. They pretend to an Olympian detachment which is removed from their (unspoken) prejudices. Occasionally someone emerges from amongst the ranks of economists who has the ability to explain the mysteries of his craft so that the average man in the street can understand.

Such a man is Bill Jamieson, the Economics Editor of the Sunday Telegraph. He is a member of the Economic Research Council and a Fellow of the Royal Society of Arts. He is also publicly committed in his regard to the European Union. He has travelled widely and knows there is a world outside 'Europe'. His education tells him that since the sixteenth century Britain has found her role as a trading nation in the world, not in Europe. He does not pretend to an Olympian detachment but is honest in his views. To the shallow minded this might seem to undermine the value of what he says; to wiser folk it only confirms his honesty and grasp of reality.

By a generous use of charts and graphs the author 'sets out to provide a primer on the economy for everyone . . . I have tried to set out what the economy is . . . and the dynamics at work within the economy'. Mr Jamieson firmly believes that a picture is worth a thousand words and there are 288 graphs, charts and diagrams as a result. The book covers the economy over the last twenty years and highlights three areas not sufficiently covered by previous works. The first is the growth in public spending, in other words, the Welfare State which now runs to [pounds]100,000,000,000 (or [pounds]100 billion) a year.

The second highlight is on how the United Kingdom's economy performs 'separately from, and differently to, those of continental Europe'. (In other words our economic life is more influenced by America while European nations are more influenced by Germany.) The third highlight is on Britain's enormous 'empire' of overseas investment which Mr Jamieson estimates at [pounds]1,660,000,000,000 ([pounds]1,660 billion).

The author admits to being surprised at how well the United Kingdom has been doing over the past quarter century and at how much better off most of the Queen's subjects are than in 1975. He argues that the economic turn-round began in the mid-1970s, before Mrs Thatcher's election, and not as a result of it. It was this turn-round that put her in office. This growing national prosperity was reflected not only in increasing real personal incomes but in welfare spending by government and in foreign investment in the UK. On the international scale Britain does less well than Japan and better than America. The City of London remains the world's most important banking and financial centre despite the attempts by a German-led European Union to supplant it with Frankfurt.

How will all this be affected by the new Labour Government's claim that they will be able to abolish economic cycles? Mr Jamieson's answer is a clear one:

'As a general rule, the more economists give credence to theories of a lasting modulation in cyclical forces, the more likely it is that these very forces are doing press-ups right behind them'.

How will all this be affected by the Euro-fanatics' campaign for Britain to join European Monetary Union? Before answering this question Mr Jamieson reminds us that while entering would have profound economic consequences (mainly disastrous) the real question is one of national and economic sovereignty, not economics per se. This is something 'Europeans' know full well but which people in the UK do not, simply because they are told that it is 'only' a question of abolishing the pound. Britain remains within the American economic sphere, not the German. Our economy does not like fixed exchange rates: our time in the ERM proved that. Also, as a world trader, Britain would be tied into an economic bloc whose share in world trade is falling whereas Britain's has been rising. Monetary Union would, in Mr Jamieson's opinion, be a disaster.

There is a freshness, openness and honesty about this book, as well as an overriding clarity that should make it required reading for anyone for whom economics has hitherto been a mystery beyond comprehension.

EDWARD BRADBURY