January 4, 2021

These are the dark days of a truly bleak winter, where the country has more than enough to worry about. So it may be surprising when I say that I’m worried about an excess of optimism in Britain in 2021.

Even amid rising case numbers, hospitalisations and deaths from Covid-19, it’s possible if you look closely to see the first chapters of a new story about Britain and its prospects in 2021 being written. It’s a story of a new Roaring Twenties, a time of national cheer, celebration and even indulgence.

It’s also a story that I find more than a little unnerving.

Ever since the first effective vaccine to the virus was confirmed, optimism about 2021 and beyond has been rising, with financial markets the epicentre of the outbreak. In the last couple of months, I’ve noticed that the closer a person is to the City and financial services, the more likely they are to be looking forward to 2021 as a year when the champagne starts to flow again and the fun resumes.

That’s a generalisation based on anecdotes, but it’s also borne out by wider evidence from the markets and their related industries. Depending on how you measure it, share prices are now as high as they’ve ever been and the gap between those prices and the actual earnings of the companies concerned as wide as at any point in history.

A lot of that comes down to the most important public policy that almost no politician talks about these days: central banks pouring cheap money into economies to keep businesses and households afloat. All that money has to go somewhere, which means higher share prices, more mergers and takeovers (private equity deals are now at their highest levels since 2007 ). A lot of City types will tell you, in terms, that There Really Is No Alternative to putting money into things like companies and property.

All this will inevitably mean more pay and bonuses for the people involved, money that will, in part and unevenly, cascade out through the economy: UK house prices are up almost 10% in 2020, and London estate agents are full of excitement about next year.

Economic exuberance isn’t wholly irrational. After all, as long as mass vaccination programmes go OK, there’s every chance of a return to some sort of normal economic life starting in the second or third quarter of 2021. Companies that have survived the long winter and make it to Easter may find a good number of optimistic customers with cash on hand and a desire to spend it.

Household finances are another thread in the story of optimism and hedonism in 2021. For some people, 2020 has been annoying and inconvenient but also quite financially advantageous: if you have the sort of job that involves sitting at a keyboard and talking to people on Zoom and you’ve kept that job through the pandemic, you’re probably better off than you were a year ago, because your costs have fallen. No more commuting, no more Pret sandwiches, no more drinks after work.

Andy Haldane at the Bank of England reckons that adds up to £100 billion in extra savings piled up, money that could start to flow in 2021 as the Zooming class starts to spend at least some of their week back in the office and start feeling confident enough to go out to dinner, buy a new car, take a holiday.

That’s the economics. The politics of the New Roaring Twenties are more obvious still, and start at the very top.

Boris Johnson is a booster. The Prime Minister thrives on, trades on, optimism. His life and career have been built on telling people — voters, colleagues, friends — stories of how things will be better, if they only just let him have his way. Throughout the pandemic, he has been visibly desperate to tell another story of the sunlit uplands that await us when the darkness finally passes.

So it is no insight to say that the PM will want to tell a story of a new “golden age” for Britain, with Brexit “done” and the pandemic fading in the rear-view mirror. His legacy, his possible re-election and his personality — a war between depression and exuberance — demand that 2021 is a year of celebration that buries the memory of 2020.

My suspicion is that a lot of voters will want to buy what Johnson will be selling next year. As I wrote here before Christmas, a fair chunk of the electorate has given him and his Government the benefit of the doubt during a bad year for Britain. Imagine what his ratings could look like in the summer if growth is rebounding, consumer spending is booking and the sun is indeed shining again.

The other significant players in the narrative of national happiness are found in the media. Fleet Street isn’t what it used to be, but it still matters, and some of its players are itching to tell their readers a tale about a new era of jubilation and consumer spending on stuff their advertisers sell.

So what am I worried about? What’s the problem with a national mood of optimism and good cheer? Well, to be very clear, I’m not making a political point here: I’m a tiresome, equivocating centrist who really doesn’t take sides in contests between parties. I have no view on whether the sun should shine on Boris Johnson rather than Keir Starmer. Nor am I a professional doom-monger, though I accept it’s rarely difficult to distinguish between me and a ray of sunshine.

No, what worries me is that the national story of the New Roaring Twenties won’t actually be a national story. It will exclude and overlook a significant number of people, and in so doing store up more trouble to come.

Simply, the fact that people who read upmarket newspapers, write for newspapers and get written about in newspapers will spend the second half of 2021 going out to dinner in restaurants again isn’t the same thing as a roaring recovery from an economic shock. Yes, it will make those people happy and make them feel like things are getting back to normal. Yes, it will be good for some people who lost their low-wage jobs in hospitality this year, who will find some of those jobs come back into existence. It is in no way a bad thing. But it will be far from enough to address the economic and social harms done by the pandemic and its consequences.

Those harms include unemployment, some of it structural, thus requiring people to move sectors and places to work again. That means scarring: the older someone is, the greater the lasting damage done to them by unemployment. Women who worked part-time in retail and hospitality, sometimes because they’d secured shift patterns that fitted around children and caring, may face some of the biggest challenges in the new UK labour market.

Low-income households won’t be adding to the release of “pent up demand” next year either. National aggregates for saving conceal big variations: the Zoom classes may have piled up cash, but people at the bottom of the wage ladder ate into their modest savings just to get by.

Poor children won’t see 2021 as a golden year either, even if ministers do the sensible thing and maintain the £20 a week uplift in their parents Universal Credit. Those kids’ educational prospects took a heavy blow during the first lockdown, meaning some will fall further behind better-off peers and never catch up. Some children took physical blows and worse too: some social workers and child protection officials fear abuse and neglect rose largely undetected during 2020.

The importance of place will only grow in an uneven return to “normal”. The experience of previous economic shocks is that bigger, more prosperous places tend to bounce back more quickly than smaller ones with fewer connections and fewer high-skill, high-wage jobs. It’s a statement of the obvious that the pandemic makes those nice-sounding promises to “level up” Britain’s lop-sided economic geography all the more relevant. That also means the cost of failing to deliver on those promises will be all the higher.

Sadly, there is little confidence among officials and expert veterans of regional and industrial policy that this Government has a plan to deliver the rebalancing that has eluded previous administrations. And while it’s perfectly possible that this expert establishment view is wrong, even the PM’s most optimistic fans should concede that his plans are unlikely to smooth out decades of uneven development in a few months, let alone months that fall immediately after the biggest economic shock in peacetime history.

There are all sorts of economic worries that will persist next year and beyond, including some I haven’t even mentioned yet: epic public debt; corporate debt that holds back investment; dismal and uneven underlying productivity; the ongoing search for a post-EU economic model.

But in the end, my fears about the new Roaring Twenties are social and political, about the way we talk and feel as a nation.

A 2021 where champagne flows in the more expensive bits of London and the PM talks about a new golden age will be a bitter year for a lot of people who feel far, far away from the exuberance of the better-off and better-connected.

In the past few years, such feelings of distance and disenchantment delivered economic and political disruption and outright rupture: Brexit; Corbyn; Trump. Those things, blended with the poison of social media, have created divided and divisive conversations, where both media and political voices take sides and damn those on the other side of the line.

Even from this distance, I find it all too easy to see a post-pandemic Britain where one side cheers and orders another round while scorning the gloomsters who talk Britain down. And between the two imposters of outright triumph and utter disaster, a country that feels less and less like one nation.