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Abu Dhabi, UAESunday 23 September 2018

Decoding Britain's age of austerity through the tale of two towers 

Revolt is festering in Britain and the weakened government of Theresa May is ill-equipped to address it

Battersea Power Station is being redeveloped into retail, office and residential use. The nearby London One apartment block development will be kitted out by Versace. Toby Melville / Reuters
Battersea Power Station is being redeveloped into retail, office and residential use. The nearby London One apartment block development will be kitted out by Versace. Toby Melville / Reuters

The story of two London residential towers sums up the changing face of the British economy after a tumultuous year in politics.

One is the Aykon London One tower just south of the Thames at the edge of the Nine Elms development in Vauxhall. Glimpse into the site today and there is not much to see. The previous edifice, a decaying bond house, has been cleared away. Blue shipping containers have been stacked to use as site offices when construction gets underway.

Conceived as the building boom was emerging, London One was the glitziest of the sparkling new developments that stretch all the way to the high-profile Battersea Power Station revamp. London One's selling point was that it was the first-ever apartment block conceived and kitted out by Versace. Every room would be tailored in the Milan fashion house style.

Even when it was launched, the building appeared to stand apart from the Conservative government’s austerity drive and the dominant political catchphrase: “We’re all in it together".

The second building is Grenfell Tower, an hour away in north-west London. In the month since it was consumed in the flames that fed on flammable cladding, much has been made of the cheek-by-jowl nature of deprivation and prosperity in Kensington.

There was fury last week when the new leader of the Kensington and Chelsea council admitted that she had never been in a publicly owned high-rise building.

Until Grenfell, the prospect of serving as a councillor in Kensington and Chelsea was not a challenging undertaking. The council was proud of its role as an exemplar of efficient local government. It participated in the post-financial crisis budget cuts and returned surplus money via a rebate to its taxpayers.

The fire has seen a revolt against the hands-off style of government that made the council a trailblazer. The subcontracting of building regulations is widely blamed - possibly wrongly - for the vulnerable condition of Grenfell Tower and hundreds of other council-owned buildings around the country.

A mood of revolt is festering. It is one that the now weakened government of Theresa May is ill-equipped to address.

The tower fire has brought the angry resentment of Britain’s economic and social contract into the open. In truth, the Brexit vote and the general election that cost the Conservatives their majority last month were products of the same trend.

At the time of Brexit, Britain had the fastest growing economy in the G7 and was zipping ahead of its European rivals. It could build Versace towers and the world flocked to bid up the prices.

It has since slipped into slower growth and rising inflation. There is a fierce debate over how much the uncertainty of Brexit and the accompanying political turmoil will handicap the country’s prospects. The squeeze on real wages in the last year means that the money going into a worker's pocket every month has fallen to a level last seen 12 years ago.

Looking at the forecasts the stakes are huge. According to a report last week from the government’s own official watchdog, the office for budget responsibility, a fall-off of 0.1 per cent in annual productivity would reduce the size of the economy by 4.8 per cent every 50 years.

The Brexit-backing Spectator magazine took on the gloom mongers last week with an essay condemning the “declinism” that had seized the commentariat.

It said Brits were being browbeaten with talk that a post-imperial delusion was leading a small offshore island off the economic cliff edge. “We will be comparable, the declinists scoff, to Albania or North Korea,” it said.

Far better, the author wrote, to take into account soft-power and political influence and embrace the Cambridge academic Brendan Simms assessment that Britain is the third great power in the world after America and China. As Europe’s only true independent state after Brexit, the British will have the resilience to prosper, it concluded.

The hard realities of negotiating trade deals and maintaining investor confidence are likely to trump such mystical musing.

Reconciling the existential debate over Britain’s future with the very raw anger over the shrinkage of government is an almost impossible task. Wrangling over spending and the budget will intensify.

Politicians were already flailing for new means to grapple with the task of extracting revenue from the digital economy. It is hard to escape the thought that it will take a revolutionary new approach to properly tax changing activity.

These trends are being felt beyond Britain. Donald Trump seized the White House on the back of an American cry of anger. Emmanuel Macron is leading a new push by the so-called southern European states against the German straight-jacket of Eurozone austerity.

But it is London that has witnessed the clearest breakdown and where the trajectory is least certain. Much will have changed when the £600 million Versace-themed tower is built in 2020.

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