The Special Relationship has its downsides. There is no doubt that there is a special relationship between Britain and the United States. There are heavy steel chains forged through centuries that bind us genetically, culturally, legally, linguistically, militarily, politically and economically.

At the moment the political and economic links and similarities have a particularly strong downside.

Economically the rest of the world is OK. Not much more than OK but definitely OK. Planet Earth’s balance sheet is likely to grow by a healthy 3.5 percent this year and do even better—3.6 percent—next year.

China is the main reasons. Its growth forecast has been revised upwards from 6.6 to 6.7 percent. And the EU—which a year ago had been written off as an economic and political disaster zone on the verge of collapse—is actually doing quite well with growth up a healthy 1.9 percent over the previous year.

Britain and America are the only two big black clouds in this otherwise bright blue economic sky. This week the International Monetary Fund, who is responsible for making all these forecasts,  reported that the growth in  US economy is expected to shrink from 2.3 to 2.1 percent in 2017. The British are even worse off. A year ago they had one of the healthiest growth figures in the Western world—if not the healthiest. In 2017 the British economy is expected to grow only 1.7 percent.

But that is not all. In the past two successive months the Bank of England has issued  stiff warnings about the danger of rising household debt. Wage rises are stalled. Nearly a decade of government austerity policies are cutting living standards and the queues at the foods banks are growing.

The public are acutely aware of the dangers of increased mortgage borrowing. That lesson they painfully learned in 2008-2010. They are not borrowing against their homes. Instead they are effectively borrowing against their credit cards by delaying payments.  Credit card debt in the UK has risen by ten percent this year.

And, because they don’t have the cash, they are taking out unsecured loans with finance companies to buy their cars. In fact, over the past ten years the number of cars bought with 100 percent loans has risen from 30 to 90 percent of all new car purchases.

Of course whatever Britain does American can do bigger and better. US household debt is back up to where it was in 2008 at a staggering $12.6 trillion. Last year saw the largest increase in household debt in over a decade– $460 billion.

The American methodology is very similar to that of their British cousins. Mortgages are now sacrosanct. The number of delinquent mortgagees has dropped to 5 percent. However, credit card  debt is up $32 billion, followed by student loan debt up by $31 billion and car loans up $22 billion. Like the British, unsecured borrowings.

There are political similarities as well. Both countries are lumbered with leaders who have created a climate of suspicion, uncertainty, weakness and an atmosphere of crisis.  In the case of Britain the roots are in the 23 June 2016 Brexit vote.  In its aftermath Prime Minister Theresa May attempted to project the image of a strong and stable leader. Then she  lost her parliamentary majority in an unnecessary election; lost control of her cabinet and singularly failed to climb over the first hurdle in negotiations with the EU or to present anything remotely resembling a coherent negotiating strategy.

On the other side of the pond, Donald Trump is his own twitter-fed crisis. He has circled the wagons around the White House and is busily shooting tweets at Democrats, fake news, Hillary Clinton, Barack Obama, members of his cabinet and almost every one to whom is not related to at least by marriage.

Both countries need a special relationship with special leaders to solve  especially difficult problems. Neither have it.

Tom Arms is the Editor of LookAheadnews.com

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2 Comments on "Headaches of a Special Relationship"

  1. Ah, the good old IMF and their stellar economic forecasting. Last year their forecast was 1.1% for UK growth in 2017, in January they were forecasting 1.5%, in April it was 2% and now it’s 1.7%, they may get somewhere close if they provide a December 31st forecast. It is therefore entirely feasible that by the end of the year both the US and UK will be seeing higher growth than the EU. I say growth, I mean of course GDP growth, a measure which is increasingly seen as a very poor way of measuring economic progress and well-being. Don’t just take my word for it.

    https://www.weforum.org/agenda/2016/01/gdp/

    Of course if Britain and the US are so very disadvantaged by their poor leaders providing poor GDP growth, perhaps we should look to leaders who are providing high growth figures according to the IMF. Robert Mugabe is forecast to deliver 2.9% growth in Zimbabwe and Victor Orban is forecast to provide Hungary with the same figure. For a real “special” leader though, you need to look to Turkey, who have doubled the IMF’s early year forecast, growing by 5% so far under the redoubtable leadership of President Erdogan. I am considering booking my plane tickets to the land of milk and honey as I write.

    I do find it quite interesting that the author thinks that growth of 1.9% when applied to the EU is “healthy” while a superior growth rate of 2.1% in the US constitutes “a black cloud”. The eurozone unemployment rate is double that of the dark clouds that are the UK and US so I do fail to see how this can constitute “doing quite well”

  2. My late uncle was a senior British diplomat in New York and he had a very offhand view of the Special Relationship. He said it was a conceit that was wheeled out when they needed to prove everyone was still talking, but outside of that, it could be a very transient and unpredictable beast. Most of this seemed to be because of American loyalties to the “home country” of their ancestors. Despite a lot of UK connections, a huge number are European, but not UK. It is important that the second largest language (and the most broadly spoken language allowing for it being very common as a second language) is Spanish. And German and Italy also have very notable links, as do others. And then, there are massive cultural links with China and even Indian. Some very senior US politicians and game-changers have a much more obvious connection to countries that are nothing to do with us and are not really attracted to the special relationship.

    Sometimes I wonder if it really is simply a connection at two points – the City of London (which might as well be like the Vatican – a country in its own right) to Wall Street, and the NSA to GCHQ.

    Taking the special relationship for granted is dodgy. Some accuse Obama of being less keen, but in reality, he was just more honest about the status quo – it is always like that, despite grinning platitudes from certain egocentric characters.

    Another side of this is the relative sizes of the economies. I am not sure how much of a black cloud over the world the UK can ever cause (leaving Vatican-London out of the mix). We are the sixth(?) largest economy, but when you look at the graph, the reality of that chart position is not like the Top Ten countdown.

    If the graph was the height of a room, then the US is on the ceiling, the Chinese are around the light switch, and the rest of us, India, Germany, France et al, are clustered together just beneath the skirting board, leapfrogging each other from time to time like annoying insects, but really not threatening the position of the two leaders.

    At least, not individually…

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