Politics by itself will not solve UK's problems

By Bobby Naderi

The UK's economic outlook has been downgraded from "stable" to "negative" by the ratings agency Moody's owing to political instability and high inflation. According to Moody's, the change in outlook was driven by heightened unpredictability in policymaking, amid weaker growth prospects and high inflation.

It establishes the fact that a major task for Britain's new Prime Minister (PM), Rishi Sunak, should be to face up to these massive challenges facing the economy. This requires the right partnership between business and political leaders to make the long-run investments and partnerships needed for prosperity and growth possible. It may include international partnerships between the public and private sectors to help deliver results in record time. 

At this point, however, it is hard to believe that Sunak has a united party to take the country in the right direction and to deliver on the promises made to those who elected him. Amid a profound economic and self-inflicted financial crisis, the reshuffle by the UK's third leader this year has changed the gender and ethnicity balance of the cabinet, but it may not help to fix the mistakes of his predecessors.

Six years into Brexit, and amid trade and conspiracy theories against China and Russia, Sunak, a hardcore Brexiteer, could be heading for the same fate as his predecessors as he proposes the same dire policies of the past. He and his fellow Conservative MPs want to increase trade with Europe, albeit with trade barriers, Brexit, and the Ukraine war. They seek outstanding trade deals with the world and for Britain's long-lost greatness, yet without cooperation with China and other major economic powers.

That's not how things work after six years of Brexit-induced economic turmoil. For the hard-pressed households and the most vulnerable, reckless policies and painful practices will make it challenging to return the UK to the global market. With a new government so far only referring to these challenges in words, energy prices will see further increases and families across the UK will struggle even more to heat their homes amid the cost of living crisis. It clearly means the fight Sunak needs to lead is economic and not political. It's the same mistake that forced former PM Liz Truss to resign after just a little over six weeks in office.

This is a warning of things to come. It serves no purpose for Britain's new PM inheriting an economic crisis to call U.S. President Joe Biden in his first day in office and say "we will work together" to compete with China and secure sustainable and affordable energy resources. It is an established fact that the energy crisis came after the UK played a central role in banning Russian energy exports and holding the Kremlin accountable for the Ukraine conflict.

This is a pipe dream. By rehashing China concerns, the U.S. and Britain cannot subvert the new international order being built and maintained by emerging market economies and powers. How about turning your rivals to your benefit by strengthening your political order and recognizing self-evident truths that are independent from false narratives?

At any rate, the UK is facing tough economic times right now and it is clearly in for some tough cuts ahead. According to EY Item Club, a leading UK economic forecasting group, Britain's economy is expected to shrink. This prolonged economic decline will result in a 0.3 percent fall in gross domestic product (GDP) for 2023. There is no doubt that the economy is experiencing a combination of high energy prices, surging inflation, rising interest rates, and global economic weakness.

Therefore, Sunak's time in office could be a great opportunity to grasp the need for a positive business strategy and engagement with China in the wake of a global economic crisis and increased political and security tensions between the West and Russia.

It's never too late to redefine Britain's expensive and inflationary trade strategy, push for closer trade relationships, and strengthen corporate supply chains from China. In a desperate battle to remain in power, it serves no national and economic security purpose to feature the issue of China's economic rise so heavily.

Being a China sceptic and inventing a security backlash will erode the platform of a UK grappling with rising interest rates and inflation needs to weather the self-inflicted financial storm, jump-start growth, and build new economic and trade opportunities. Its domestic vulnerabilities show the need for steady policymaking and economic strategy toward emerging and advanced markets like China.

Unlike reducing regulatory barriers in global trade and services, a British policy in lockstep with the U.S. will bring no huge benefits to the movement of goods and services. While Sunak says "we are facing a profound economic crisis" and as Moody's credit rating for the UK remains unchanged at Aa3, a reckless policy as such will undercut the much-needed trade partnership with China and make doing business within Europe harder.

Bobby Naderi is a London-based journalist, guest contributor in print, radio and television, and documentary filmmaker.