Why might government be weak?

Weak politics may make for good economics. This is contrary to the proposition that the Government presented to the British electorate, that the Government needed a strong mandate to negotiate Brexit. Now, among the myriad uncertainties facing the country there is one certainty. The UK will have a weak government, led by a weak Prime Minister. How could this possibly be good?

Let’s push Brexit aside for a moment and come back to it later. Were it not for Brexit the economic outlook would be unusually favourable. You might need a strong government to push through unpopular measures if the country were facing a serious economic downturn. But it isn’t. Unemployment is the lowest it has been since the 1970s, and still falling. Employment and labour force participation rates are the highest they have ever been. The fiscal deficit remains high but is under reasonable control. Inflation is acceptably low. The currency is undervalued, useful for maintaining competitiveness at least in the short run. And while there are long-standing issues about productivity – the flip side of the huge increase in employment – that is something that can be tackled swiftly by any government, however large its majority.

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