Donald Trump’s approach gives Britain food for thought on economic orthodoxy - David Blunkett

You might wonder why Donald Trump should trash the international markets when there is clearly a major impact on the value, and therefore trading price, of both American and global companies.

One insight might be that he and those around him have invested heavily in cryptocurrency. This is a form of gambling, because it invests in nothing, and creates nothing except artificial value and which can, when the price floats upwards, make people very rich.

The more the traditional markets are hit, the more crypto, or holding gold, becomes an attractive proposition.

Whoops! I am in danger of partaking in a conspiracy theory.

In one sense, it exposes what many people have railed against for years. Namely, that the global economy bears very little resemblance to their own day-to-day existence and can often be seen as a threat to particular jobs in specific communities at any one moment in time. It has created enormous prosperity and lifted millions of people out of poverty in the developing world, but it has its downsides.

This, in part, explains the likely low turnout in elections on May 1. In our area, there are elections for a newly created elected mayor for Hull and East Yorkshire; a city mayor and all-out election in Doncaster, and, across the Pennines, there is a Westminster by-election.

Whatever the outcome of these elections, we certainly shouldn't dismiss the underlying message. As the Conservatives found to their cost last July, once the electorate have got really cheesed off with you, it's extremely hard to pull it round.

The Government hasn’t done some of the more absurd things that happened over the previous 14 years, including the Liz Truss budget of September 2022.

Yet we have to presume that Rachel Reeves and her Treasury colleagues are concerned about how the financial markets continue to see the UK in the light of that event.

For me the issues are more complex and require a more confident approach, not least because quite a lot of behaviour on the international financial front is generated by the way algorithms work. One thing is clear: the Government has bound itself into its own fiscal rules; the ‘marking’ of those rules by three individuals making up the Office for Budget Responsibility, and whose reflections on the likely course of events over the next five years then have an impact on the financial markets and the rate of borrowing for the UK government.

What goes into their marking of the government's homework is entirely dependent on what the government provides to them. In the case of the recent scoring of likely outcomes of our economy, the OBR had several things missing from that equation.

One of those is the likely impact of investment – both public and private – in the forthcoming 10-year infrastructure plan, due to be published in the summer. Part of that, as I wrote in my column in March, is getting our act together east of the Pennines to ensure that our connectivity and investment in rail, tram and (where appropriate) roads, changes the nature of growth and productivity.

The second – and quite remarkably – is the delay that has taken place in producing a National Skills Plan (with appropriate devolution and implementation to different parts of the UK and in partnership with business), meaning that this key aspect wasn’t presented to the OBR either.

A plan for delivering skills for net zero, housing and for big infrastructure programmes is vitally necessary. Made up – as it must essentially always be – from insights within particular sectors of the economy and from devolved government. As this was missing as well, the likely projections for the next five years and beneficial results for the British economy have been massively marked down.

I appreciate that reforms, including the likely impact of artificial intelligence on the way we do things and the productivity that stems from it are extremely difficult to predict.

But they weren't presented, in any form, to the OBR either.

In other words, we make a rod for our own back, we create a system which inevitably is deflationary, ultra-cautious and, by its own lack of visionary aspiration, becomes a self-fulfilling prophecy.

You don't have to be a raving lefty to see that this is all crazy. We’re so bound by orthodox thinking that we can't break out of the bubble.

Which brings me back to Donald Trump. Whatever the absurdity of the current behaviour of the leadership of the United States, they are certainly thinking very differently, acting decisively and, crazy as it might be, they are shaking up not only business and society in the US, but the thinking of the rest of the world.

Now there's a thought.

David Blunkett is a Labour Party politician, and served as the MP for Sheffield Brightside and Hillsborough.