Column

WHEN GOOD NEWS IS BAD

Despite a strong economy, Tony Blair remains strangely unpopular

DONALD COXE May 10 2004
Column

WHEN GOOD NEWS IS BAD

Despite a strong economy, Tony Blair remains strangely unpopular

DONALD COXE May 10 2004

WHEN GOOD NEWS IS BAD

Column

Despite a strong economy, Tony Blair remains strangely unpopular

DONALD COXE

OH, TO BE IN BLAIRLAND (now that April’s there). London’s stock market—one of the strongest in the industrial world. Residential real estate prices—the strongest in the industrial world. Inflation—a mere bagatelle. The pound—strong. Unemployment—lowest in three decades years. Popularity of Tony Blair’s government—oops. With the kind of economic performance that impresses even Thatcherites, why isn’t Blair riding high? Is it just Iraq?

One of the country’s leading playwrights and social critics, David Hare, grapples with that issue in the guise of a critique of the once-revered British railway system in his latest drama, ThePermanent Way, now on tour after I saw it last month at London’s National Theatre. Hare is a long-time Labourite, so his disturbing documentary play naturally begins by blaming Blair’s predecessors, Conservative prime ministers Margaret Thatcher and John Major, for the botched privatization of the rails. Perhaps surprisingly, his real fury is directed at Blair’s government. People from all classes stroll the stage, asking questions such as, “Why can’t we make trains work? The French can.” Family members of those killed in crashes recount the failures of managements and the government to make the system safe—as a result of inadequate inspections that did not use existing modern safety and warning devices.

STILL, Blair is the most charismatic of the G7 leaders, and there’s no doubt he is trying to show that he’s responsive to an aroused electorate

But Blair is widely denounced these days for more than an inability to make the trains run on time. The National Health Service is a mess. Delays for MRI examinations are up to 18 months. On a recent visit, I was told that you are not permitted to book an appointment with your doctor in advance: you call when the switchboard opens in the morning to try to get scheduled that day, usually meaning lengthy delays on the phone until you are finally informed the doctor is fully booked.

People of all political stripes gripe about the government’s relentless spin operations. Blair is seen as just too slick for his own—or the nation’s—good. There’s no doubt he’s being hurt politically by backing the U.S. in Afghanistan and Iraq. But unfolding revelations of terrorist cells among Britain’s large Muslim population have voters convinced that the threats are real. The British can’t accept the French and German attitudes that Washington is a greater menace than Islamic terrorism.

Blair’s stunning announcement that he will submit the proposed new European Union constitution to a referendum next year has received grudging praise from many Blairskeptics I met. They cite it as new evidence of his slipperiness, because he had been resisting all referendum calls for years. However, they acknowledge his U-turn has wrong-footed the Tories and blunted the challenge to his leadership from Chancellor of the Exchequer Gordon Brown. The EU constitution, which would restructure the politics and economics of Europe, runs to 341 pages, a Times letter-writer gripes, compared to 12 for the U.S. Constitution and “two centuries of amendments.” (He didn’t comment on the length of EU rules all new members must accept: 80,000 pages.)

Blair’s biggest problem could be that booming housing market. Torontonians and Vancouverites who fret about local housing bubbles should look to the motherland where, according to some surveys, house prices have doubled since 1999, with the rate of gain increasing in recent months. Homes in Wales saw their values leap 57 per cent last year, according to one mortgage lender. As for London...

Among the stories locals were marvelling at was a sale of a stately home in Kensington for 70 million pounds to an Indian steel entrepreneur. What seems to be happening is that Arabs and other Asians are moving money from their homelands and from the U.S. to Britain—and London has become the capital city of the world for the capital of highly capitalized Muslims. One reason is that well-publicized investigations of Saudi-backed “Islamic charities” in the U.S. that funnelled money to al-Qaeda have caused other Saudis to send their U.S. money to safety in London and Switzerland. (The Swiss get the bank accounts, and British real estate brokers get the commissions on megamillion-pound homes.)

The International Monetary Fund last month took the rare step of warning Britain of a house-price collapse once interest rates make their inevitable trip back up to normal levels. The Bank of England was the real object of the IMF’s warning, and it is caught in an unenviable position. The pound’s strength is hurting British manufacturing (the weak spot in an otherwise unblemished recovery) and, in a bizarre twist, the boom in speculation by people acquiring properties to use as rental investments has actually driven down rents—a key component of the consumer inflation statistics. And Blair knows full well that a real estate crash helped finish off Margaret Thatcher. When the Englishman’s heavily mortgaged castle becomes a liability, the ruling party gets blamed (not speculators).

Still, Blair remains the most charismatic of the G7 leaders, and there’s no doubt he is trying to show that he’s responsive to an aroused electorate. Letting voters defeat the EU constitution would kill this advance in Euro-red-tape-osis, but it might also give Blair his third majority.

I wouldn’t bet against him. lül

Donald Coxe is chairman of Harris Investment Management in Chicago and of Toronto-based Jones Heward Investments. dcoxe@macleans.ca