The Debate: Should Brits be more optimistic?
Pessimism is a great British tradition, but some think it’s holding the economy back. Should Brits be more optimistic? We look at the case for and against in this week’s Debate
YES: Talking down the economy will become a self-fulfilling prophecy
I think that Britain’s economic problem is not a lack of investment; it’s absolutely a crisis of confidence. The UK is still one of the world’s leading economies and we compete globally in the service industry, and we have a seriously high concentration of top quality SMEs. However, we do persist in talking ourselves down, and the industry press is consistently framing every challenge as proof of decline.
I believe that this narrative is important because when the industry press consistently talks the economy down, it will have an impact on the sentiment of business leaders and investors. Pummelling them with negative narratives will make business owners more cautious about investing, hiring and expanding than they otherwise would be.
In business, sentiment drives behaviour. When the conversation is relentlessly pessimistic, then companies become defensive and hiring is delayed or expansion plans are shelved. Investors are exactly the same, even in some cases applying a discount to British assets not because the fundamentals are weak, but because belief in the future is. We end up pricing in failure before it happens.
This is so very different to the US, where they specialise in “selling ambition”. That’s not very British though, is it! Our reserved nature leads us to worry more about execution and saving face, but the reality is that capital follows confidence. In the UK our culture tends to treat optimism as naïve and success as something to be cut down. That is, from an economic perspective, self-defeating.
This is not an argument for blind optimism or ignoring structural challenges. We do obviously have real issues to address in our economy, there are infrastructure problems and skills shortages. But there is a difference between realism and self-sabotage, if we are constantly talking down the UK economy, then it becomes a self-fulfilling prophecy.
If Britain wants higher investment, we have to address the cultural issues surrounding confidence and become more globally competitive; we need to back ourselves.
Jason Tassie is a UK business commentator and founder of Know Your Business
NO: Our inability to accept downsides is getting in the way of fixing Britain
Optimism is not my natural state. The fact that I was once described by a former colleague as ‘Monday morning personified’ should be enough to convince you of that. So yes, when it comes to ideas to fix Britain, I think there is hope – the intellectual tumult around public policy today is more exciting than ever. The problem comes from our lack of willingness to accept downsides.
In Britain, we – the public and the politicians – have no appetite for trade-offs.
The three biggest elements of public spending – healthcare, welfare and pensions – are all on track to grow faster than the economy itself. What can we do about that? Perhaps the state pension age needs to rise or the triple lock should be relaxed. But OAPs won’t accept that and politicians on the right aren’t brave enough to make the case. The structure of the NHS may need to be reformed. Here, it is politicians on the left who lack the courage.
On housing, there is a growing acceptance of the need to build up, build out and build on green belt land. But too many politicians are still afraid to tell their voters they might have to put up with some construction noise, that their rural view might not be protected, or that their property might not continue to skyrocket in value.
There is almost no policy change worth making that does not negatively impact someone somewhere and we lack the voices willing to make the case for the bigger picture. It isn’t enough to minimise discomfort, it must be eliminated.
Ultimately, I’m optimistic that we have the ideas to fix Britain. I just don’t believe we actually want to.
Emma Revell is external affairs director at the Centre for Policy Studies
THE VERDICT
For all our virtues, Brits are not the cheeriest bunch. And we’re increasingly being scolded for it. Just take a sample of recent CityAM headlines: ‘Self-deprecation is damaging UK economy’. ‘Reeves must cure British pessimism disease’. ‘Britain is too pessimistic to succeed’. The UK, such proponents say, has an attitude problem. But would a smilier disposition really solve our woes?
Mr Tassie says so, and his arguments are well reasoned. Doom and gloomerism is certainly not the most motivating for would-be entrepreneurs, and it’s true that the UK has a bad case of tall poppy syndrome that makes ambition a faux pas. But, as Ms Revell argues, amid genuinely troubling economic data, realism and honesty are arguably more noble – and, crucially, suited to the British character.
Fake it til you make it works for the Americans but, let’s be honest, it doesn’t look so good on us awkward Brits. And it doesn’t mean we’re miserable. Defensive pessimism – setting expectations low so as to be positively surprised – has been lauded by psychologists as a perfectly healthy coping mechanism. Plus, when the numbers are bad, we should say so. That’s called accountability. Verdict: complain on.