What to expect from UK politics in 2016

Flickr/Chris Chabot

It was Harold Wilson who said “a week is a long time in politics”, and especially after the extraordinary events of 2015, including the result of the UK General Election, and the election of Jeremy Corbyn as Leader of the Labour Party, any predictions this early into the New Year would appear counter-intuitive.

Nevertheless, this article will provide general observations and analysis of the major forthcoming headline issues and events in 2016 for both the Conservatives and the Labour Party, as well as the potential consequences in the current political climate.

The EU Referendum

In 2016 the political landscape in the UK will almost certainly be dominated by the EU Referendum, which could take place between June and September, following the Prime Minister David Cameron’s renegotiation of the terms of Britain’s membership.

However, whilst David Cameron has secured general concessions from EU leaders, including greater competition and a British opt out from further political integration, the restriction of benefits to EU migrants for 4 years has proved problematic.

Angela Merkel and Francois Hollande have emphasised their commitment to “the core principles of European integration”, including “the principle of free movement and the principle of non-discrimination between European citizens”.

The actual impact of restricting benefits to EU migrants is unclear, as according to research undertaken by British Future, an independent think tank, “there is little to suggest this would be transformative” on EU migration, particularly when EU migrants come to work in the UK primarily for “jobs and better wages… not state benefits”.

Nevertheless, whilst such a policy might be purely symbolic, the Prime Minister’s failure to secure this specific concession could have repercussions. Indeed, an ICM survey for the Vote Leave campaign, which showed support for a Brexit at 41%, and 42% in favour of remaining in the EU, found support for Brexit would rise if no reforms to freedom of movement rules were secured (45% to 40%).

This risks exposing deep rifts in the Conservative Party, as demonstrated by Bernard Jenkin MP who described the renegotiation as “a sham process”, and Steve Baker MP, the co-chairman of Conservatives for Britain, who labelled any concession on EU migrant benefits as “a compromise too far”. These sentiments could easily increase amongst Conservative ranks, especially since the Prime Minister granted Cabinet colleagues the right to campaign for Brexit.

Consequently, the result of the EU Referendum is not beyond doubt, (far from it) which makes the next few weeks of David Cameron’s renegotiation all the more critical, for the Conservative Party and the future of the UK.

Labour’s Year of Discontent?

In 2016 the Labour Party potentially faces further rifts, particularly if the party fails to secure respectable results in the May Elections, which include Local Council, Welsh Assembly, Scottish Parliament Elections and the London Mayoral Election.

Certainly, after a week in which Jeremy Corbyn’s first Shadow Cabinet reshuffle lasted nearly 4 days and 3 Shadow Ministers resigned in protest, the possibility of a leadership challenge following the May Elections increases all the more.

In fact, a source close to Jeremy Corbyn recently revealed it could perhaps be the “beginning of the end” for the Labour leader if the party failed to secure 35% of the vote in these electoral contests.

However, given the Labour leader secured an overwhelming mandate (59.5%) from the party membership only in September, any challenge by Labour MPs must be with a single candidate who can appeal to a broader range of membership and the general public.

Still, the possibility of any leadership challenge is highly dependent upon the results in May and Jeremy Corbyn may still survive unscathed, especially if Labour secures a decisive win in the London Mayoral Election.

In the latest YouGov poll Sadiq Khan, the Labour Mayoral candidate, has a lead of 10% over the Conservative candidate Zac Goldsmith (55% to 45%) which, if maintained up until May, could further secure Jeremy Corbyn’s position.

However, even if Sadiq Khan secures the London Mayoralty, if results from across England, Wales and Scotland fail to reach comparable heights it could reinforce the view that Jeremy Corbyn’s appeal is limited beyond London.

If anything, what the May Election results will definitely mean for Jeremy Corbyn is the debate surrounding his electability will no longer be a matter of party opinion, but a matter of electoral evidence.

An Economic Slowdown?

As 2016 begins, the long term stability of the UK’s economy is increasingly uncertain. Recently George Osborne outlined what he described as “a dangerous cocktail of new threats”, including the slow growth in China, the recessions in Brazil and Russia and a substantial fall in oil prices against the backdrop of turbulence in the Middle East.

In his speech to business leaders in Wales the Chancellor stated, “the biggest risk is that people think that it’s job done”, an admission which was surprisingly lacking when George Osborne delivered his Autumn Statement in November.

In his Autumn Statement the Chancellor utilised an expected £27 billion windfall (according to OBR figures) to soften the impact of spending cuts across Whitehall, and withdraw from £4.4 billion worth of cuts to working tax credits – this led George Osborne to proclaim there was “a light at the end of the tunnel”.

However, the UK economy still faces a period of increasing uncertainty, particularly as a consequence of the UK’s economic growth primarily being consumer-led, as oppose to export and investment-led.

According to the most recent Bank of England figures, UK consumers borrowed an additional £1.5 billion in November, the biggest monthly increase in unsecured borrowing since before the 2008 financial crash.

Consequently, any interest rate rise would have financial consequences, particularly for mortgage holders, as was recently highlighted by the BBC Economics Editor Kamal Ahmed who reported “concerns in the Treasury”, due to the fact that a significant proportion of mortgage holders have yet to experience an interest rate rise.

However, even if interest rates remain static there is the risk that with “money so cheap, people could be encouraged to overextend themselves because they’re feeling ‘the economy is back on track”.

Nevertheless, from a political perspective, George Osborne’s message of avoiding complacency could be viewed as a clear attempt to re-emphasise key differences in the Conservatives’ and Labour’s economic approach. This further reinforces the Conservatives’ rhetoric of the dangers of Jeremy Corbyn’s anti-austerity message.

However, whilst this message might cut through to the electorate, if the UK economy begins to show signs of a slowdown George Osborne personally risks degrading his own economic credibility – which could have further implications in any leadership bid for the Conservative Party.

To try and predict the outcomes of the EU Referendum and the May Elections would certainly be counterintuitive, while the long term future of the UK economy is subject to far wider global factors. Nevertheless, even as the New Year begins, these particular headline issues mean UK politics in 2016 could be as just as unpredictable as 2015.

 

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