Since the 2008 crisis , anti-establishment forces have grown in strength across the Western world. In Europe, right-wing nationalist parties, such as the Alternative für Deutschland (AFD) and the French National Front challenged for power. Other groupings, such as the Austrian Freedom Party, the Lega Nord in Italy and Viktor Orbán’s Fidesz in Hungary, have assumed governmental office. Populist social movements and parties on the Left also grew in strength (Mouffe, 2018). Podemos, a left party which emerged out the 15-M anti-austerity coalition in Spain, rose to prominence in 2014. In Greece, Syriza became the government in 2015 with a mandate to resist the deep cuts which had been pushed on it by the EU . Beyond Europe, the rise of ‘populism ’ was symbolized by the election of Donald Trump to the White House in December 2016. Trump’s promise to ‘Make America Great Again’ was based on a programme which combined anti-immigrant rhetoric, protectionist trade policies and a break from the traditional network of alliances which had characterised American leadership throughout the twentieth century. The populist upsurge continues to reconfigure domestic politics across the West and even threatens to challenge the prevailing global order.

Britain’s parliamentary democracy is often presented as a model of constitutional stability , relatively immune from the recurrent patterns of political turmoil which grip its continental European neighbours. The post-crisis world has changed that. Britain emerged as one of the focal points in the rise of global populism (Blyth & Matthijs, 2017). Three post-crisis developments fundamentally reconfigured British politics. First, in June 2016, Britain voted to leave the EU . The vote for ‘Brexit ’ ended 40 years of European membership and sent shock waves throughout Britain and around Europe. Second, in the aftermath of the EU referendum, a new government under Theresa May emerged. The May government committed to a ‘hard Brexit ’, which meant leaving the Single Market and Customs Union, ending free movement and ending the jurisdiction of the European Court of Justice (ECJ). In its early stages, the May government combined this with a highly interventionist economic programme, designed to break with Cameron’s social and economic liberalism and to forge a new social compact across Britain (Pabst, 2017). Third, under the leadership of Jeremy Corbyn , the Labour Party underwent a process of radical reconfiguration. Corbyn led his Party into the 2017 general election on a populist left programme committed to reversing austerity , boosting mass public investment and re-nationalising key industries. Despite failing to secure a parliamentary majority, Corbyn’s Labour experienced a huge surge in the popular vote, securing its largest vote share since 2001 and a net increase of 30 seats. A new era of post-crisis British politics had emerged.

Post-crisis British Politics

The instabilities unleashed from 2016 onwards came as a shock because it seemed that the fallout from the 2008 crisis had finally been contained. By 2015, Britain’s finance-led growth model had effectively been re-established. Cameron returned to government with a majority in May 2015, promising to continue along the path of deficit reduction whilst consolidating the Conservative’s position as the leading force in British politics. Despite the depth and severity of the 2008 crisis , it appeared that British capitalism had been stabilised. The rise of Brexit , May and Corbyn blew this complacency apart. These developments took place against a number of long and medium-term structural shifts within British capitalism (Jessop , 2016). From a long-term perspective, each embodied a backlash against four decades of sustained neoliberal restructuring (Bailey, 2018; Hopkin, 2017). The collapse of Britain’s manufacturing base, rising regional inequalities, sustained real wage cuts and a steady increase in migrant labour all fuelled the conditions for a populist backlash in Britain. The long decomposition of democratic capitalism and the corresponding rise of post-democratic forms of governance had generated increasingly polarised polities (Streeck , 2017). Latent antagonisms between creditors and debtors and the ‘winners’ and ‘losers’ of globalisation proliferated.

The 2008 crisis intensified many of these trends. Brexit , May and Corbyn are all of course distinct political forms with their own unique histories and future trajectories. But, in a sense, they all embody a distinctive form of post-crisis politics in Britain. Each emerged out of the deep structural malaise of British capitalism which had set in during the post-crisis conjuncture . In addition, each sought to build its base of support by pledging to transform British capitalism. The campaign for Brexit drew heavily on a protectionist political economy, promising to radically restrict net migration into the UK whilst increasing spending on key public services (Hopkin, 2017). The May government’s early embrace of a ‘hard’ Brexit and economic interventionism consciously sought to break with Cameron’s liberalism and to carve out a new position for Britain in the world economy (Pabst, 2017). Labour’s left populist economic programme sought to reverse austerity and to radically reconfigure power relations in British society. The Coalition had presided over an orthodox liberal response to 2008, initiating a politics of deficit reduction and public expenditure cuts. The emergence of post-crisis British politics after Brexit began the unravelling of this project. The following sections trace the origins and development of Brexit, May and Corbyn , before considering their possible impact on the future trajectory of British capitalism .

The Politics of Brexit

The UK’s vote for Brexit was underpinned by a number of long- and medium-term factors. Historically, Britain had displayed an ‘exceptionalism’ in relation to the European continent, expressed through its distinctive common law system, its constitutional tradition of parliamentary sovereignty and its status as a (post-)imperial centre of global capitalism. Since the late 1980s, as the European integration process gathered pace, the Conservative Party became the main conduit for British Euroscepticism. Whilst the Thatcher government broadly embraced the prospect of increasing trade in Europe through the creation of the Single Market, large sections of the Party remained opposed to transferring sovereignty to Brussels. The eurosceptic challenge crystallised in the early 1990s over the Major government’s signing of the Maastricht Treaty (Buller, 2000). Major managed to face-off his backbench ‘Maastricht rebels’, securing an ‘opt-out’ from the EU’s ‘Social Chapter’ and from the future single European currency. However, with a parliamentary majority of only twenty-one and, Major’s authority was fatally undermined.

David Cameron assumed the Conservative leadership on a platform of ‘modernisation’. One of the central planks of Cameron’s modernisation project was that his Party needed to overcome its divisions over Europe. Cameron initially sought to appease his eurosceptic backbenchers by promising to veto the Lisbon Treaty and by withdrawing from the European People’s Party (EPP), the mainstream Conservative grouping within the European Parliament. However, like Major before him, Cameron soon found that he could not contain destabilising Euroscepticism within his own ranks. In December 2011, eighty-one eurosceptic Conservative MPs defied a three-line whip and voted in support of holding an EU referendum. At the same time, the UK Independence Party (UKIP) was making significant gains in the polls, threatening the Conservative’s prospects of re-election. In this context, Cameron felt he had no option but to commit to holding a referendum on EU membership in the following parliament. At his ill-fated 2013 Bloomberg speech, Cameron committed to holding an ‘in-out’ referendum in the next parliament.

Cameron unexpectedly secured a parliamentary majority in the May 2015 general election. Given the manifesto commitment, Cameron announced that a referendum on the UK’s EU membership would be held before the end of 2017, once he had sought to ‘renegotiate’ the terms of the UK’s membership with Brussels. After securing limited concessions from the Commission, Cameron confirmed in January 2016 that he would lead the ‘Remain’ campaign. The referendum campaign began in earnest. Remain deployed the strategy which had worked for the Conservatives in the 2010 and 2015 elections. This focused almost exclusively on the theme of the ‘economic risk’ which Brexit posed to the British economy. Osborne and the Treasury took centre stage in this approach, briefing that Brexit would lead to a sharp economic downturn and would result in every household in Britain losing £4300. Osborne, alongside former Labour Chancellor Alistair Darling , outlined the deep expenditure cuts which would be necessary if Britain voted to leave the EU , a move which critics branded a ‘punishment budget’. In addition, the Remain campaign organised briefings from business and global institutions which warned of the dire economic consequences of Brexit . Within the first day of the campaign, the CEOs of a third of FTSE 100 firms had written to the Times warning of the economic peril of Brexit. This was followed by numerous interventions by international elite institutions—including the IMF , the OECD and the US president—which cautioned against a ‘leave’ vote. This relentless focus on ‘economic risk’ led Leave campaigners to dub the Remain campaign ‘Project Fear’. Nonetheless, Remain stuck to its core economic message throughout the campaign, wagering that the British electorate would not vote to imperil its economic interests.

The official campaign to leave the EU —‘Vote Leave’—had the backing of six senior cabinet ministers and a large section of the Parliamentary Conservative Party . Its central theme was that Brexit would allow Britain to reclaim sovereignty from Brussels. This was immortalised in the slogan ‘Take Back Control’. This was not presented as an abstract appeal to reclaim parliamentary sovereignty, however. The Leave campaign focused on how Brexit would concretely allow Britain to assume control of its ‘money, its laws and its borders’, by ending British contributions to the EU budget, ending the jurisdiction of the ECJ and by limiting immigration , respectively. The official Leave campaign operated in parallel with the unofficial campaign, led by Aaron Banks and Nigel Farage. ‘Leave.EU’ put the issue of immigration front and centre, infamously suggesting that EU membership would lead to a flood of Syrian and African migrants entering the UK whilst stoking fears that Turkey’s accession to the EU was imminent. Initially, the official Leave campaign was reluctant to run a negative campaign focused on the issue of immigration , for fear of alienating floating voters. However, the lead strategist of Vote Leave, Dominic Cummings, was deeply aware of the potency of weaponising immigration as a core campaign issue. Cummings’ strategy was to not focus on immigration early on in order to ‘win the right to be heard by polite society’ (Shipman, 2017: 49). However, on 26 May the ONS published figures which showed that net migration to the UK had been 333,000 in 2015. In the following weeks, Vote Leave pivoted towards restricting immigration as their core message.

After six months of campaigning, on 23 June 2016, 52% of the British electorate voted to leave the EU . The result sent shock waves throughout Britain and Europe. Sterling plummeted and the Bank of England adopted emergency measures to shore up the British economy. Cameron resigned the following morning. Labour MPs, angered by Corbyn’s alleged lacklustre embrace of the Remain campaign, initiated an attempt to oust him as the leader of the Labour Party . In Scotland, which had voted strongly in favour of Remain, the First Minister Nicola Sturgeon suggested that Brexit could lead to a second independence referendum. The fractious politics of Brexit had begun. It would continue to consume the country for years to come.

The vote for Brexit was underpinned by a number of long- and medium-term factors. In each case, the context of the 2008 crisis exacerbated existing tensions and bolstered the momentum behind the Leave campaign. The first medium-term factor which lay behind Brexit was the issue of immigration . In 2004, the EU underwent a significant enlargement, drawing-in countries from Central and Eastern Europe, including Poland, Hungary and the Czech Republic. Existing member states had the option to impose transitional controls which would have limited immigration from the accession states for a five-year period. However, the Blair government eschewed this option (Thompson, 2017). This was driven by the calculation that allowing Eastern Europeans into Britain would increase labour market competition and help to contain wage costs. Furthermore, the Home Office had expected that labour in-flows from these countries would be as low as 5,000 per year (Evans & Menon, 2017: 14). The actual figure was ten-times higher. From the mid-2000s onwards, immigration rocketed as an issue in British public opinion and, increasingly, the issue of EU membership became linked to the issue (ibid.: 18). The rise in immigration and growing public dissatisfaction with the EU therefore predated the 2008 crisis . But the downturn in the world economy and the paroxysms which were to grip the Eurozone after 2010 were crucial in sharpening hostility to EU immigration in Britain. Between 2010 and 2016, growth and employment were consistently higher in Britain than in EU member states, particularly in comparison with the Southern and Eastern European countries. As a result, Britain emerged as the ‘employer of last resort’, along with Germany, for unemployed European workers (Thompson, 2017). The result was that by 2014, 1.5 million Eastern European workers lived in the UK. The 2008 crisis had played a key role in driving up immigration in Britain, creating the grounds for the backlash which crystallised with the Brexit vote.

The Coalition’s austerity programme also played a critical role in creating the conditions for the Leave vote. Public expenditure cuts under the Coalition had disproportionately fallen on lower income areas. Whilst local authority spending fell by 23.4% on average between 2010 and 2015, poorer areas experienced cuts of up to 46.3% whilst more prosperous areas experienced cuts of 6.2% (Becker, Fetzer, & Novy, 2017: 13). To take one specific example, the Welfare Reform Act resulted in a £914 cut per head in Blackpool compared to £177 in the City of London (Fetzer, 2018: 18). There is a strong correlation between areas which experienced high levels of public expenditure cuts under the Coalition and areas which voted to ‘leave’ in the EU referendum (Harrop, 2016). Indeed, one academic study based on an aggregate study of expenditure cuts and voting patterns in the referendum, concluded that Leave support ‘could have could have been up to 9.5 percentage points lower…had the austerity shock not happened’ (Fetzer, 2018). This wider context of austerity shaped the EU referendum campaign in two distinct ways. First, it weakened the ‘economic risk’ argument pushed by the Treasury and the Remain campaign. The warning that Brexit would result in a sharp contraction in living standards rang hollow in areas which had experienced close to a decade of falling real wages and deep public expenditure cuts (Watson, 2018). The Leave campaign also sought to capitalise on public anger at austerity, promising that reclaiming EU budget contributions would allow Britain to redirect funds to vital services such as the NHS . Brexit of course enjoyed support from more affluent areas and was shaped by numerous other factors including age, education and long-held social values. But the post-crisis context of sustained fiscal austerity played a key role in mobilising the Leave vote, ultimately facilitating the UK’s exit from the EU .

The May Government

On the morning after the EU referendum, Cameron resigned as Prime Minister. Within three weeks, Theresa May had taken the keys to 10 Downing Street. During the referendum, May had officially backed Remain but had kept a low profile throughout the campaign. This, along with her extensive ministerial experience and her perceived competence, allowed her to position herself as the ‘unity’ candidate, capable of bringing her Party and the country together (Quinn, 2018). May won the backing of a majority of MPs in the first stage of the leadership contest. After Andrea Leadsom pulled out, May assumed the premiership unopposed on 13 July 2016.

May’s social and economic programme, from the outset, embodied a distinctive form of post-crisis politics. Upon becoming Prime Minister, May initiated a decisive break with the legacy of the Cameron government. Osborne , whose position had been fatally compromised during the referendum campaign, was unceremoniously sacked. May began sharply differentiating her government from the Cameron era. This was exemplified both by her embrace of Brexit and her attempt to carve out a new governing narrative and economic strategy organised around a form of ‘post-liberal interventionism’ (Pabst, 2017). May consciously wove these two issues together, stating that, ‘the EU referendum result was an instruction to change the way our country works, and the people for whom it works, forever’ (The Conservative Party , 2017). On the steps of Downing Street, May framed the referendum result as the expression of deep dissatisfaction in the country. May’s economic interventionist programme pivoted on a critique of Cameron’s social and economic liberalism and the inequities this had generated.

May’s governing programme was profoundly shaped by the question of Brexit . Forty per cent of her parliamentary party had backed Brexit as had the majority of the Conservative membership. She set out to immediately quell eurosceptic unrest within her own ranks. In her first cabinet reshuffle, she promptly appointed prominent Leave campaigners to key positions. David Davis became minister for the new Department for Exiting the European Union , Boris Johnson became foreign secretary, Liam Fox trade secretary and Chris Grayling headed up the Department of Transport. Rhetorically, May underlined her commitment to delivering on the result of the referendum. In her speech announcing her candidacy for the leadership, May for the first time deployed a phrase which would be repeated ad nauseum in the opening months of her premiership: ‘Brexit means Brexit’. This phrase was at once purposive and ambiguous. It sent a signal to the Conservative party and the country that May was serious about respecting the referendum result. There would be ‘no attempts to remain inside the EU, no attempts to rejoin it through the back door, and no second referendum’ (May , 2016d). The phrase was also of course a tautology. It bought May valuable time to reconfigure her cabinet, unify her Party and shape her Brexit strategy without getting caught up in immediate turf wars over the precise form of her Brexit programme.

By October 2017, pressure on May to be clearer about her preferred form of Brexit mounted (Allen, 2018: 113). In Birmingham at the Conservative Party Conference, May delivered a speech which added important details to her Brexit vision, stating that ‘we are not leaving the European Union only to give up control of immigration again. And we are not leaving only to return to the jurisdiction of the European Court of Justice’ (May , 2016a). These words strongly indicated that May was committed to leaving the Single Market and by implication was committed to embracing a so-called hard Brexit. The direction of travel was confirmed in January 2017, when May delivered her Lancaster House speech. In this landmark intervention, May explicitly stated that her government was committed to leaving both the Single Market and the Customs Union, would end free movement and the jurisdiction of the ECJ and would negotiate a new free trade deal (May , 2017a). The broad contours of May’s Brexit programme were set. The government was committed to reclaiming British sovereignty over ‘money, laws and immigration ’, delivering on some of the key commitments which had been made during the referendum campaign.

The second plank of May’s governing programme involved the formulation of a distinctive ‘post-liberal conservatism’ which aimed to decisively break from the legacy of the Cameron years (Pabst, 2017). One core plank of Cameron’s ‘modernisation’ efforts had involved attempting to shift the Party towards the ‘social liberal’ values of key Tory target seats (Hayton, 2018). May positioned herself early on as a traditionalist Tory, bringing her in line with the bulk of her own backbench MPs and the Party membership (ibid.). In her 2016 conference speech, she took aim at ‘metropolitan’ politicians and commentators, telling the party faithful that, ‘they find your patriotism distasteful, your concerns about immigration parochial, your views about crime illiberal, your attachment to your job security inconvenient’ (May , 2016c). She continued, with the now infamous line, ‘if you believe you’re a citizen of the world, you’re a citizen of nowhere’ (ibid.). In January 2017, May built on this theme, decrying the ‘cult of individualism’ that had taken hold in British society whilst highlighting the pernicious impact which globalisation had had on social ties and communitarian values (May , 2017b). May stated that her government would therefore reject a ‘laissez-faire liberalism that leaves people to get by on their own’ (ibid.). In its place, an interventionist strategy oriented towards ‘righting the wrongs’ of market liberal society would be adopted.

May’s embrace of interventionism profoundly shaped her vision of the British economy. Osborne’s accumulation strategy had embraced a market liberal philosophy of deficit reduction, balanced budgets and private sector-led recovery . May sought to sharply distinguish her approach from this strand of market liberalism (Pabst, 2017: 501). Other forces within her cabinet—most notably her Chancellor, Phillip Hammond —represented the ‘Treasury view’. But in the early years of the May government, liberal orthodoxies were partially subordinated to her new interventionist programme. May’s economic philosophy was rooted in a critique of the excesses of globalisation. She pointed to how unbridled markets had eroded social ties and communitarian values. Building on the themes of her inaugural statement as Prime Minister, she framed her pitch in terms of the so-called left behinds of globalisation, stating:

If you’re from an ordinary working class family, life is much harder than many people in Westminster realise…you have a job but you don’t always have job security. You have your own home, but you worry about paying the mortgage […] over recent years these people have felt locked out of the political and social discourse in Britain. If they voiced their concerns, their views were shut down. Decisions made in faraway places didn’t always seem to be the right decisions for them. They saw their community changing, but didn’t remember being consulted – or agreeing to – that change. They looked at the changing world – the onset of globalisation and the advances in technology – and worried about what the future held for their children and grandchildren. (May , 2016b)

These concerns with unbridled globalism were not entirely novel. A strand of ‘Blue Collar’ or ‘One Nation’ conservatism which critiqued the destabilising social impact of markets had long informed elements of Conservative thought and political practice (Gamble , 2014). But what distinguished May’s interventionist ethos was that it was bolstered with a ‘more explicit political economy’ (Pabst, 2017). May advanced numerous policy commitments which flanked her emergent interventionist economic discourse. She called for workers to be represented on company boards, for limits on shareholder pay and placed the development of a new industrial strategy as the flagship economic initiative of her government (Allen, 2018). These policy commitments were flanked by a broader ‘attack on financial elites and tax-dodging multinationals’ (Pabst, 2017: 504). During her 2016 conference speech, she highlighted inequities which had emerged from the Bank of England’s policy of ‘loose’ monetary policy, pointing to its inequitable distributional effects. She stated that ‘change has to come’, a comment which was widely interpreted as an implicit challenge to the Bank’s independence. At the same time, May’s home secretary Amber Rudd floated the notion that businesses would be responsible for keeping lists of immigrant workers. Carolyn Fairburn, Director-General of the CBI, warned in the aftermath of May’s 2016 conference speech that the government was ‘closing the door’ on business.

May’s interventionist political economy was profoundly shaped by electoral calculations. For decades, large chunks of Britain’s ex-industrial periphery—in the North of England, Wales and the Midlands—had remained out of bounds for the Conservative Party . Brexit exposed deep divisions in Britain’s electoral geography. The vote revealed a cleavage between those who had been ‘left behind’ by globalisation and those in primarily metropolitan areas that were comfortable with the change it had wrought. In the wake of the referendum, a new pathway to power seemed to be opening up for the Conservatives. Two factors were critical here. First, in the aftermath of the referendum vote, UKIP was pitched into turmoil. May’s move towards a ‘hard Brexit ’ position early on in her premiership had deprived the Party of its central political purpose. UKIP collapsed into infighting and saw a rapid decline in its polling fortunes. UKIP had in the 2015 election secured second place in 44 Labour heartland constituencies. The Conservatives would aim to colonise the collapse of its vote and displace Labour’s dominance in its heartlands. The second factor underpinning May’s strategy was the perception that the Labour Party was vulnerable. Of Labour’s 229 seats held in 2015, 149 had voted in favour of Brexit (Heath & Goodwin, 2017). Furthermore, under Jeremy Corbyn , Labour appeared particularly vulnerable. A poll in August 2016 had suggested that may was more popular with Labour supporters than Jeremy Corbyn (Evans & Menon, 2017: 98). May’s pathway to enhancing her majority was to retain the seats which Cameron had won in 2015 whilst making significant inroads into the Labour vote (Heath & Goodwin, 2017). In early 2017, May’s pivot seemed to be working. During the fortnight prior to her calling an election, polls put the Conservative party on an average of 42.8% compared to Labour on 25.5% (ibid.: 345). But the expected electoral rout was not to pass. A third form of post-crisis politics—largely written-off since 2015—emerged as a bulwark against May’s advance. This was the Labour Party under the left populist leadership of Jeremy Corbyn .

The Corbyn Opposition

Since the 1980s, the Labour left had been effectively marginalised within the structures of the Party (Panitch & Leys, 2001). Tony Blair consolidated this process, concentrating policymaking and patronage powers within the leadership whilst removing some of the left’s core policy commitments, most notably ‘Clause Four’ which had committed Labour to the cause of nationalisation. During this time, Corbyn remained an obscure MP on the backbenches, alongside John McDonnell and Diane Abbot. The rise of Corbyn to the leadership of Labour was remarkable. Its immediate origins lay in internal Party rule changes which had been implemented under Ed Miliband. Traditionally, Labour leaders were selected under a ‘block vote’ system, whereby members, affiliated trade unions and MPs were involved in electing the Party leader. During his leadership, Miliband came under pressure from within the Party to shift to a ‘one Member, one Vote’ system. Miliband also moved to an ‘open primary’ model, whereby ‘registered supporters’ of Labour could pay a small fee and vote in leadership elections. This internal reconfiguration had ironically been pushed by the Right of the Party, who hoped that by widening Labour’s internal electoral base, the power of the trade unions within the party structure could be further eroded.

After Labour’s defeat in the 2015 general election, Miliband resigned and the new leadership rules were followed in the subsequent leadership election. In order to appear on the ballot, candidates required the support of at least 35 MPs. Corbyn secured the requisite number of votes to make it onto the ballot paper, in large part due to the support of MPs who did not support Corbyn’s leadership bid, but hoped to ‘widen the debate’ during the campaign. However, the ‘outsider’ candidate quickly emerged as the surprise front runner. Corbyn toured the country and galvanised a wide base of support amongst the membership. New members flooded into the Party—500,000 joined during the leadership campaign—enthused by Corbyn’s anti-austerity message and his commitment to move Labour firmly to the left. On 12 September 2015, Corbyn won the leadership election with 60% of the vote. An avowedly socialist MP, backed by an influx of new members and the organising muscle of the new grassroots campaigning force Momentum, had become.

The real battle had only just begun. Corbyn began by appointing his shadow cabinet, appointing ally John McDonnell to be Chancellor whilst drawing MPs from across the Party into his new leadership team. The first eighteen months of Corbyn’s leadership were tumultuous. A large section of the Parliamentary Labour Party was opposed to Corbyn’s leadership. Sometimes this was due to policy, for example, in relation to Corbyn’s long-standing opposition to NATO or his lukewarm acceptance of the EU . Other disputes revolved around the claim that Corbyn’s values were incompatible with securing electoral victory. Corbyn’s competence as leader was persistently questioned. Parliamentary opposition to the Corbyn leadership culminated in the aftermath of the EU referendum. The Leader’s office had not actively embraced the Remain campaign. There were even suggestions that Corbyn’s office, under the influence of communications director, Seamus Milne, had actively obstructed the ‘Labour In’ campaign. In the turmoil after the Brexit vote, Labour MPs moved and mobilised in a coup attempt against Corbyn . The bulk of his shadow cabinet tendered their resignations, in a coordinated attempt to maximise pressure on the leader’s office. A vote of no confidence was subsequently held and 172 MPs—80% of the Parliamentary Labour Party —voted in favour of the motion. Corbyn was under immense pressure. But he could draw on his the mandate and support which he had secured from outside the PLP, namely from key trade unions including Unite and the newly expanded membership. New campaign groups, such as Momentum, mobilised in his defence. A second leadership challenge, from Owen Smith, was comprehensively defeated. Corbyn secured 62% of the vote and re-established his mandate to lead the Labour Party . The first eighteen months of the Corbyn leadership had been shaped by a relentless fight for survival. Within a year, after the 2017 general election, the internal politics of Labour would shift dramatically.

The 2017 General Election

On 31 March 2017, May followed through on her commitment and triggered Article 50. The UK’s exit from the EU had formally begun. In its immediate aftermath, May focused her sights on domestic politics. Since the launch of her leadership campaign, May had ruled out an election prior 2020. In this way, she avoided destabilising speculation such as that which had damaged Gordon Brown at the beginning of his premiership (Theakston, 2011: 401). But by early 2017, the logic behind holding an early election was proving to be irresistible. Corbyn’s Labour, dogged by constant unrest amongst the PLP, was far behind in the polls. In March 2017, Labour was polling 25% compared to the Conservatives who were on 43%. Corbyn’s leadership ratings were poor, such that one poll in late 2016 revealed that May was more popular than Corbyn amongst Labour supporters. Two months earlier, the Conservatives had won the Copeland constituency in a by-election, a seat which Labour had held for decades. May’s team were also concerned that delaying an election until 2020 would weaken the government’s negotiating hand during the Article 50 negotiations (Shipman, 2017: 188). Furthermore, there were good internal party political reasons to push for an early election. The majority which May had inherited from Cameron was slim, meaning that she remained constrained by blocs of MPs—not least the well-organised group of eurosceptics under the European Research Group (ERG)—who could limit her room for manoeuvre. Buoyant in the polls and seemingly assured of a landslide electoral victory, the usually cautious May gambled. On April 18, 2017, she called a snap general election. It was a gamble which would backfire spectacularly.

May claimed that her choice to call an election was driven by a desire to secure a mandate for her vision of Brexit . But the central rationale behind her decision was the opportunity to decisively defeat the Corbyn-led Labour Party and to bolster her majority. In pursuing this objective, the Conservative campaign was organised around two central themes. First, seeking to capitalise on May’s personal approval ratings over Corbyn , the Conservative campaign focused intensely around the personality of May, deploying the slogan that only she could provide the ‘Strong and Stable’ leadership which Britain required. Second, the campaign built upon the themes which May and Nick Timothy had cultivated since her bid for the Tory leadership. This involved blending together an apparent commitment to a hard Brexit —prioritising immigration control over Single Market membership—with an interventionist economic programme designed to support those who had been ‘left behind’ (Lynch & Whitaker, 2018: 40). The Conservative manifesto sought to achieve this through a series of policy proposals, including ‘promises to cap energy prices, increase the national living wage, develop a new industrial strategy , support grammar schools, give workers more input into the governance of companies, and end the free movement of EU nationals’ (Heath & Goodwin, 2017: 347). This combination of an embrace of ‘hard Brexit ’ with an interventionist economic platform was designed to capture a large number of leave-voting Labour seats whilst retaining the seats which Cameron had secured in 2015.

The Conservative strategy quickly ran into serious difficulties. From the very beginning, there was an internal split within the campaign between Timothy , who wanted to present the election as one of transformation and ‘change’, and the approach of electoral consultant Lynton Crosby who wished to focus on the themes of ‘stability ’ and ‘continuity’. May’s effective coronation as Prime Minister meant that she had never been tested heading-up a political campaign. Doubts began to emerge early on about her skills as a political campaigner. The former home secretary struggled to connect with voters through her set piece speeches and policy interventions, earning her the unflattering epithet of the ‘Maybot’ during the campaign. A series of unforced strategic errors also served to derail the campaign early on. The Conservative manifesto, penned by Nick Timothy , sought to capture the political philosophy of Mayism, building on the themes which the Prime Minister had laid out early on in her premiership. But it was incredibly short on ‘retail’ policies which could appeal to the electorate. Worse still, the specific headline policies it did advance proved to be hugely unpopular. The manifesto plan for addressing the ‘challenges of an ageing society’, for example, required homeowners to sell their houses in order to finance the cost of their social care. This quickly became dubbed the ‘Dementia Tax’ by both the media and Labour, in reference to the negative impact the policy could have on elderly citizens suffering from the condition. May at first defended the policy but then was forced to U-turn, fatally undermining the campaign’s ‘Strong and Stable’ motif.

Labour was initially ill-prepared when May announced there would be a ‘snap’ election. The Party did not yet have candidates selected in many target seats, with the election only seven weeks away. There were also divisions within the Party machine in terms of how to fight the election. Party staffers, led by long-standing election chief Patrick Heneghan, sought to embark upon a ‘defensive’ campaign, concentrating resources in seats liable to swings in favour of the Tories. Sections of the leader’s office and the broader constellation of grass-roots campaign organisations, such as Momentum, countenanced a more offensive campaign where energies would also be focused on key Tory marginals.

Notwithstanding these internal difficulties, during the Easter parliamentary recess, Labour began to roll out its pitch to the electorate. Over 12 days, the Party unleashed a policy ‘blitz’, where it advanced eight distinctive policy ideas designed to build support for Corbynite initiatives. These included raising the minimum wage to £10 an hour, implementing universal free school meals for primary school children and raising the top rate of income tax from 45 to 50%. Polls revealed that these policies were popular with the electorate. The following week, Corbyn built upon this platform, launching the official Labour campaign. Corbyn’s speech positioned himself and Labour as underdogs, fighting an insurgency against entrenched economic and political interests. Mobilising a left populist rhetoric, Corbyn stated, ‘it is the establishment versus the people and it is our historic duty to make sure that the people prevail…we don’t accept that it is natural for Britain to be governed by a ruling elite, the City and the tax-dodgers’ (Corbyn , 2017).

Labour’s policy platform was outlined in the Party’s election manifesto, entitled For the Many, Not the Few, which was launched on 16 May in Bradford (The Labour Party , 2017). The manifesto’s core theme was that Labour would engage in a far-reaching programme of reform, designed to transfer social, economic and political power from elites to working people. Labour’s headline macroeconomic pledge was that seven years of Conservative austerity would be reversed. The manifesto promised an extra £30 billion for the NHS , equivalent to annual increases of 7%. £25 billion was set aside for the school’s budget, reversing Conservative cuts to education . On welfare, Labour was more constrained, but did pledge to scrap the sanctions regime and the ‘bedroom tax ’ and to reinstate housing benefit for under-21s. The Party also committed to putting 10,000 new policy officers on the street—a policy with which proved particularly potent in the context of two terror attacks during the campaign—at a cost of £2.7 billion. These spending commitments were to be paid for out of tax rises on the top 5% of income earners as well as increases in corporation tax. The Labour manifesto was underpinned by the ‘Fiscal Credibility Rule’—based on work by the economists Jonathan Portes and Simon-Wren Lewis and endorsed by McDonnell’s economic adviser, James Meadway—which promised to balance current spending over a five-year cycle, borrowing only to finance long-term investment. This allowed Labour to claim that its manifesto was ‘fully-costed’ and economically responsible whilst at the same time ‘radical’ in its ambition to overturn years of Conservative cuts.

Rebalancing the British economy was a central theme of For the Many, Not the Few, exemplified by the central place which industrial strategy assumed within it. The Party committed to setting up a National Investment Bank which would have capital of £250 billion to be invested over the following ten years. This would be supported by an underlying system of regional banks, charged with funnelling investment into local SMEs. On the back of this, Labour promised to ensure that 3% of GDP was invested and research and development by 2030, whilst at the same time committing to securing 60% of Britain’s energy needs in renewable energy in this same time frame. As well as ‘rebalancing ’ through industrial strategy , the manifesto sought to initiate a transformation in the ownership structure of the British economy. Privatisation of the major utilities was identified as a major policy failure. Water prices had increased by 40% since they had fallen into private hands (Blackburn, 2018: 14). The manifesto pledged to bring the private utilities—water, rail, utilities—back under public control. McDonnell claimed that this could be financed initially through borrowing at record low interest rates but that, over the long term, the overall cost to the taxpayer would be negligible since the utilities were profit-making entities. Labour’s commitment to reversing privatisation was flanked by complementary initiatives designed to produce a greater ‘democratic control’ of the economy. A growing body of thought within Labour pushed for ‘economic democracy’, whereby local authorities and cooperative groups would assume a greater role in the ownership structures and management of regional economies. This was exemplified most clearly in the ‘Preston Model’, an approach taken from Cleveland in the USA and pioneered by Preston City Council, which sought through the procurement process to support local businesses and cooperative groupings. This approach fed into to the Manifesto, which committed to double the number of cooperatives and to give employees ‘first buyer’ rights when the company they worked for went up for sale.

On the back of its left populist programme, Labour launched a ground offensive across the country. Drawing upon the 500,000 new members and supporters which had joined the Party since 2015, Corbyn toured the country and drew huge crowds to campaign events. This, coupled, with the implosion of the Conservative campaign and May’s poor performance on the campaign trail, led to a shift in the pre-election polls. Labour cut its polling deficit substantially. Corbyn’s approval ratings increased rapidly, albeit from a low base, as May’s plummeted. Nonetheless, polls immediately prior to the election still suggested that a Conservative majority was likely.

On the day of the 2017 election at 10 p.m., the BBC announced the result of the official exit poll. The projection sent shock waves around the country. Instead of enhancing her majority, the poll predicted that May had squandered it. The results which came in throughout the evening confirmed the exit poll projection. The Conservatives emerged as the largest Party with 317 seats, but this was 13 fewer than they had achieved in the 2015 election. Labour, on the other hand, increased its seats by 30 to 232 seats. This was enough to deprive the Tories of a majority and to bring about the second hung parliament in Britain in less than a decade. In the absence of an overall majority, May was forced into a supply and confidence arrangement with the Democratic Unionist Party (DUP).

The bedrock of the Conservative strategy was that the UKIP vote would collapse. They were right on this point. UKIP’s national vote share fell from 13.8 to 1.8%. However, this did not translate into significant gains which the Tories had expected. Large swathes of the UKIP vote did switch to the Conservatives, leading to big swings to the ruling party in key constituencies. However, Corbyn’s Labour Party managed to secure a significant proportion of these UKIP switchers and also successfully mobilised traditional non-voters. Labour’s three-line whip to vote through Article 50 had neutralised Brexit as an issue its heartlands. As a result, the swing to the Conservatives in these Labour constituencies was contained. On average, in constituencies which had voted for Leave, the Tories registered only a small swing of 0.8% compared to Labour (Heath & Goodwin, 2017). The result was that the Conservatives only gained six seats from Labour, a figure which was far short of the predicted surge. May’s pivot towards ‘hard Brexit’ also alienated voters in middle-class constituencies which had voted ‘Remain’ in the referendum. In constituencies where the Leave Vote was less than forty-five per cent, Labour secured a swing from the Conservatives of around 7%. This led to Labour gains in unlikely places such as South Kensington and Canterbury, as a large bloc of traditional non-voting groups, most notably the young, rallied to the Corbyn cause.

The fallout from the 2017 general election profoundly reconfigured the terrain of British politics. Theresa May had moved from a position of apparent unassailability to one of extreme weakness. Core elements of her early interventionist strategy were dropped whilst she was forced to sack her two closest aides, Timothy and Hill, who had shaped her path to power. The future of Brexit looked increasingly uncertain. On the one hand, the parliamentary arithmetic looked to favour a hard Brexit. The ERG could use its position to extract concessions from the now weakened May whilst the reliance on DUP votes further limited her room for manoeuvre. On the other hand, the election resulted in the re-assertion of the power of parliament where there was no overall majority in favour of a hard Brexit . Far from securing a mandate for Brexit, May was now fatally compromised in her ability to shape it. The huge surge of support for Corbyn had consolidated his position within the Labour Party . The ‘soft left’ of the PLP quickly fell into line whilst the staunchest opponents of Corbyn—the group of 40 or so MPs on the right of the Party—became increasingly marginalised. The Labour campaign had reshaped the national debate on the future of British capitalism . In the aftermath of the election, May is reported to have said, ‘austerity is now over’. The terrain of post-crisis British politics had been radically reconfigured. Navigating this terrain is now the central challenge for rival forces seeking to shape the future trajectory of post-crisis British politics.

Towards a Consolidation or Transformation of British Capitalism?

The 2008 financial crisis exposed the profound structural weaknesses of neoliberal capitalism . Deregulated financial markets had unleashed chaos throughout the global economy. Western states—far from being ‘powerless’ in an age of free capital flows—recapitalised their financial systems and transformed the downturn from a ‘banking crisis ’ into a ‘sovereign debt’ crisis (Burnham, 2011). In this context, many observers expected that a new policy paradigm might emerge which would displace the dominant neoliberal model. However, in the immediate aftermath of the crash, this shift did not materialise. Neoliberal ideas and practices proved markedly resilient across the West (Schmidt & Thatcher, 2013). In the Eurozone, creditor states doubled down on austerity , enshrining fiscal discipline in new supranational mechanisms. In Britain, the Coalition advanced an orthodox liberal policy of public expenditure cuts and deficit reduction, seeking to lay the foundations for a private sector recovery . The pre-crisis order had survived the crisis . Continuity had prevailed.

Or so it seemed. The history of capitalist crises can offer some important lessons here. The first relates to the temporality of structural change. It is true that the crises of the 1930s and 1970s generated far-reaching transformations across Western capitalism . But these shifts took a long time to materialise. The best part of two decades separated the 1929 stock market crash and the rise of the Bretton Woods settlement. The first signs that the post-war Keynesian compact was under pressure emerged in the 1960s, as profit rates began to stagnate and as Anglo-American finance escaped the fetters of national regulations through the Eurodollar markets (Green, 2015). However, the transition to a new regime of global neoliberalism took another twenty years to emerge (Coates, 2018). Expectations that 2008 would herald a rapid transition away from the neoliberal regime were therefore premature. The second lesson of the 1930s and 1970s crises is that domestic politics within national states is often a key driver of capitalist transformation. The 1930s crisis was exacerbated by the operation of the gold standard, which required rapid deflations—cuts to incomes and prices—in order to maintain stable exchange rates (Eichengreen & Temin, 1997). However, throughout the first quarter of the twentieth century, the organised working class had become increasingly powerful. National governments could only deflate their economies so far before they provoked bouts of destabilising labour militancy. This undermined the core operating principle of the gold standard. The lesson was that the quest for international currency stability could only push national democratic systems—and their newly enfranchised working classes—so far. This lesson fed into the design of the Bretton Woods settlement, which sought to insulate the policymaking autonomy of national states from the whims of the money markets. Domestic politics therefore played a key role in re-shaping the post-war global order.

These lessons can help us to conceptualise continuity and change in the post-crisis conjuncture . Whilst there is evidence of neoliberal continuity in the decade since the 2008 crisis , important reconfigurations have also emerged. Domestic politics across the West has been shaped by the rise of ‘populisms ’ of the left and the right. These populist upsurges have potentially far-reaching consequences for the global order (Blyth & Matthijs, 2017). As Gamble has written, ‘for the first time since 2008, the crisis has assumed a markedly political form, with a challenge to the political and economic assumptions of the international market order’ (Gamble , 2016: 119). The election of Donald Trump in December 2016 was emblematic of this shift. Upon taking office, Trump initiated a partial withdrawal from the network of strategic alliances with other Western states which had shaped US foreign policy throughout the twentieth century. Trump flirted with protectionist trade policy and sought to tear up multilateral trade deals which the USA had sponsored in the heyday of neoliberal globalisation. In Europe, the surge of right-wing populism has generated new problems for policymakers in Brussels, threatening the integrity of the Schengen zone, the principle of free movement and even the EU project itself. The central myth of the pre-crisis era—that ‘globalisation’ was both inevitable and universally beneficial—was directly challenged by the populist upsurge.

Post-crisis British politics should be understood in this wider global context. The emergence of Brexit , May and Corbyn fit into a wider pattern of populist upheaval across the advanced capitalist world. Each of these developments of course has its own distinct historical origins, as outlined in the previous sections. But each also emerged within the specific context of Britain’s post-crisis conjuncture. Deep public expenditure cuts, stagnant real wages and the proliferation of insecure work intensified the squeeze on living standards for broad swathes of the population. The ‘losers’ from globalisation—typically concentrated in Britain’s provincial towns, the UK’s ex-industrial regions and neglected coastal areas—endured the sharp edge of the Coalition’s austerity programme. Local government cuts and welfare restructuring disproportionately affected these areas. At the same time, a predominantly urban youth struggled with an increasingly precarious labour market and exclusionary housing market. Public sector workers had endured a sustained period of deep wage cuts. Schools and hospitals struggled in a context of severe spending constraint and growing demographic challenges. Small businesses faced tight credit constraints. The limitations of the Coalition’s ‘two nations’ legitimation strategy were emerging. Collapsing living standards and constrained economic growth had given rise to a large and volatile bloc of disenchanted voters.

Post-crisis British politics was increasingly shaped around the need to secure the support of this fractious social bloc. The Leave campaign’s focus on Labour’s ex-industrial heartlands, May’s pitch to the ‘just about managing’ working classes and Corbyn’s anti-austerity programme all sought, in their own ways, to appeal to this social base. In so doing, all three promised to initiate a sharp break with the trajectory of post-crisis British capitalism .

Two different pathways for British capitalism have now emerged in the post-crisis conjuncture . On the one hand, we could see a transformation of British capitalism. Forces associated with Brexit , May and Corbyn all agitate for different forms of transformation. What unites these disparate forces is a will to radically re-shape the British economy, albeit in markedly different directions. British politics has polarised and the electoral terrain is volatile. The conditions for a shift beyond Britain’s financialised growth model have arguably never been riper. On the other hand, attempts to restructure British capitalism face profound structural constraints. The prospect of a consolidation of British capitalism is another possible pathway out of the present conjuncture. In this scenario, the populist upsurge is contained, and Britain returns to its status quo position. This, itself, would likely be only a transitory solution, given the deep structural weaknesses of British capitalism . Nonetheless, a temporary containment of British capitalism’s structural crisis is possible. In the remainder of this chapter, possible future trajectories for Brexit , May and Corbyn are outlined. Whether these lead to a transformation or consolidation of British capitalism remains an open question.

Let us begin with the question of Brexit . The triggering of Article 50 confirmed that Britain would formally leave the EU in March 2019. But the shape of the future relationship between Britain and the EU was still to be settled. A number of future relationships were possible. The UK could formally leave the EU but remain in the Single Market and the Customs Union, via membership of the European Economic Area (EEA). This ‘Norway option’ would mean that the UK remained fully aligned with EU legislation which would ensure a high level of access to the Single Market. However, this would mean the UK would have to continue to allow free movement, would be subject to the jurisdiction of the ECJ and would still be required to pay contributions to the EU budget. May’s commitment to ending all three made this option highly unlikely. A second option was for the UK to formally leave the Single Market and Customs Union but to remain closely aligned to EU legislation across a number of key areas. This would be complemented by a free trade deal—often described as ‘Canada Plus’—which would allow significant access to the Single Market whilst allowing the UK to strike trade deals with third countries. This form of relationship was the favoured negotiating position of May which she brokered with her cabinet in the ‘Chequers agreement’ of July 2018. A third option was to embrace a so-called hard Brexit . This involves leaving the EU but with no free trade deal in place. In this instance, the UK would revert to WTO rules in relation to EU trade, which would allow the UK to strike independent trade deals but would mean a significant increase in tariff and non-tariff barriers between the two blocs.

At the time of writing, the ultimate ‘shape’ of the final Brexit deal, let alone its long-term impact on the British economy, is unknown. That said, it is possible to chart future scenarios and to assess the extent to which Brexit is likely to precipitate a transformation in British capitalism . The most ‘transformative’ vision advanced by Brexiteers is the ‘No Deal’ option. This would likely result in a significant shock to the British economy. The reversion to WTO rules would generate new tariff and non-tariff barriers between the UK and the EU . Access to the Single Market would be greatly restricted. In this scenario, the UK would need to strike comprehensive trade deals with countries outside of the EU. This would likely prove to be an incredibly difficult task. Brexiteers often point to the prospect of striking new trade deals with the ‘emerging’ economies such as Brazil, Russia, India and China. However, spatial proximity remains a key determinant of trade. Britain currently trades more with Ireland than it does with all the BRICs combined (Harris, 2014). A comprehensive free trade deal with the USA is often touted as a key opportunity presented by Brexit , but it has been calculated that such an outcome would add only 0.2% to Britain’s overall GDP (House of Commons, 2018). The ‘no deal’ Brexit option therefore comes with very significant economic and political risks.

However, for its advocates on the right wing of the Conservative Party , a ‘hard’ Brexit also presents a unique opportunity. ‘No deal’ Brexiteers argue that EU regulations, such as its environmental protections, it’s social and employment policy and product standards, act as a drag on the competitiveness of the British economy. ‘No deal’ advocates therefore embrace the opportunities which regulatory divergence would generate. Britain could pare back its social and employment protections and seek to regain competitiveness through under-cutting the regulatory standards of its EU neighbours. In this way, labour market competitiveness could be enhanced. The UK’s financial services sector could be made more competitive still by consolidating its position as a lightly regulated ‘offshore’ hub. The City of London could emerge as a ‘Singapore-on-Thames’ surrounded by a hypercompetitive and deregulated labour market regime (CITYPERC, 2017). Under this ‘no deal’ scenario, British capitalism would be transformed into a low regulation hub on the edge of the European market, integrated into global capital flows whilst unencumbered by regulatory constraints from its EU neighbours.

This ‘no deal’ scenario fits with the globalist wing of the Conservative Party which favours a return to Britain’s position as a great trading nation, unencumbered by the perceived protectionist bent of the EU . However, profound obstacles are likely to frustrate the deregulatory vision of Brexit . First, whilst the vocal ERG back the prospect of ‘no deal’ as a serious option, it is not clear that a majority of Conservative MPs agree with this position. Furthermore, it is unlikely that there is a parliamentary majority which would back a ‘no deal’ scenario. The other problem faced by this wing of the Conservative Party is that one central plank of the Brexit campaign was to appeal to lower income voters with promises of extra spending for the NHS and public services . The proposal to advance a deregulatory Brexit—eroding employment rights and environmental protections whilst loosening restrictions on the City—is unlikely to appeal to this social bloc. Any future government seeking to carve out a niche in the global economy through radical deregulation would be likely to face huge opposition. In addition, powerful forces within British society—not least the bulk of large, organised British business interests—has lobbied hard to avoid a so-called cliff edge Brexit . Immediately after the Brexit vote, the CBI made it clear that its preferred position was to retain a high level of regulatory alignment with the EU in order to avoid disruption. Together these dynamics suggest that the ‘no deal’ Singapore on Thames model is unlikely to succeed in the medium- to long-term.

A more likely outcome is that a high level of regulatory alignment with the EU will continue (Baker & Lavery, 2018). Whilst the UK’s membership will formally end in March 2019, institutional arrangements will be put in place which will de facto ensure continued alignment. The result, however, would be the UK moving from becoming a ‘rule-taker’, subject to EU legislation but unable to actively shape EU law in line with its interests. It is unlikely, then, that Brexit on its own will usher in a transformation of British capitalism . Instead, Britain is likely to remain partially linked to European structures, albeit with a lower level of access to the Single Market and lacking ‘voice’ in the formulation of EU policy. The overall impact of this is likely to be relatively constrained growth and a further weakening of tax receipts. In these conditions, Brexit is likely to sharpen the fiscal crisis of the British state. This in turn will reduce the redistributive capacity of British governments. A referendum which was delivered on the back of promises to the ‘left behind’ of globalisation is therefore likely to undermine their position further. Future bouts of political instability and conflict over the European question are the likely consequence.

Theresa May entered 10 Downing Street promising to fundamentally reconfigure the way the British economy operated. In its early guise, under the direction of Timothy , May’s approach purposively equated the vote for Brexit with the proposition that large swathes of the public felt excluded from Britain’s economic model. May’s early embrace of statist interventionism was designed to address these twin concerns. The economic and social liberalism of Cameron and Osborne were quickly and deliberately eschewed. In its place, new policy commitments were embraced in the spheres of industrial policy, executive pay and worker representation on company boards. May critiqued ‘rootless’ elites and put predatory employers ‘on notice’. These moves were flanked by a commitment to ‘hard’ Brexit , which would end free movement, the jurisdiction of the ECJ and budget contributions. This political philosophy drew on Timothy’s version of ‘blue collar’ Conservatism. But it was underpinned by a political strategy: to cannibalise UKIP votes and displace Labour in its own ex-industrial heartlands. However, just as May’s early stance was borne of politics, it died by politics too. The 2017 general election exposed the frailty both of May as a leader and of her early strategy more broadly. Labour was displaced in only six constituencies by the Conservatives whilst a surge of Remain voters punished May’s pivot towards a hard Brexit . A leader who in early 2017 seemed unassailable had within months slipped into becoming one of the weakest Prime Ministers in British political history.

The transformative promise of May’s early programme died on the election night of 2017. She was forced to sack Timothy and Hill, the two advisors who had facilitated her rise to the premiership and had shaped her early political programme. With no parliamentary majority and a perilously weakened mandate, May was put on notice by the Conservative parliamentary party. In the days following the election, May told a meeting held by the 1992 backbench committee of Tory MPs ‘I will serve as long as you want me’. Central planks of May’s interventionist programme were attacked and dismantled by members of her cabinet. Savid Javid, the Communities minister, reprimanded May’s economic policy platform, stating that ‘now is an opportunity to dump all those anti-business policies that we had in our manifesto’ (Javid, cited in Shipman, 2017: 458). May’s ability to shape the government’s position on Brexit was also hugely compromised by the election result. On the one hand, her weakened parliamentary numbers empowered the ERG. A small rebellion of Eurosceptic MPs could force her hand on key European issues and could even render her position untenable. Her reliance on DUP votes also hemmed her in on Brexit, as the Leave-supporting, Northern Irish Party had a number of key red lines on the issue. On the other hand, May had called the election as a mandate to ‘deliver’ her version of Brexit. The electorate decisively denied her this mandate, casting the future shape of Brexit into doubt. The post-election cross-party parliamentary arithmetic made it difficult for May to deliver the kind of ‘hard’ Brexit she had initially courted.

The transformation of British capitalism which May had promised early on in her premiership was now replaced by a quotidian fight for survival. Her one strength was that no obvious contender for the leadership was in place or had sufficient support from Conservative MPs. The March 2019 ‘Article 50’ deadline to leave the EU was fast approaching, meaning that holding a new leadership election would be incredibly difficult. Furthermore, the Tories feared that a divisive leadership campaign could lead to a general election and even a future Corbyn government. May therefore hobbled on in office. Had she enhanced her majority in 2017, the architect of her political philosophy, Nick Timothy , would have remained in post. It is likely that she would have sacked one key opponent of her interventionism—the Chancellor, Phillip Hammond —and would have set about implementing her ‘blue collar’ conservative programme. British capitalism may yet have been re-shaped in line with a re-vitalised nativist Conservatism. Instead, ‘Mayism’ as a political project became a ship without a captain. Suffice to say that perilous waters lie ahead.

Since the launch of his leadership campaign in 2015, Jeremy Corbyn set out to reconfigure the Labour Party internally and to fundamentally transform the structures of British capitalism . Corbyn’s headline economic policy commitment was to reverse over seven years of Conservative-led austerity . Large tax rises on corporations and the top 5% of income earners would facilitate greater funding for schools and hospitals. The major utilities such as water, gas and the railway system would be brought back under public control. Increased borrowing would finance a £250 billion National Investment Bank, charged with revitalising the country’s economic base. Alternative models of ownership, based on boosting the cooperative sector and encouraging localised procurement strategies, were floated as alternatives to Britain’s model of shareholder capitalism (O’Neill & Guinan, 2018). With the 2017 general election result, Corbyn consolidated his position as leader of the Labour Party . The prospect of Corbyn eventually becoming Prime Minister had moved from being unthinkable to possible. The former head of the Civil Service, Bob Kerslake, advised the Labour leader’s office on how to prepare for government. In the event that Corbyn did not stand at the next election or lost it and was forced to resign, the Left within the Labour Party had secured enough power to ensure that a future ‘Corbynite’ candidate could prevail.

The prospect of a future left populist Labour government has therefore emerged as a real prospect. However, a government of this form would face profound barriers to delivering on a left programme for government. A future Labour government would have to develop a political strategy for overcoming these obstacles. Two barriers to such a programme can be identified. The first barrier is internal and concerns the structures of the British state. At the heart of Corbyn’s economic programme is the objective of ‘re-industrialisation’. But cultivating a renaissance of export-led growth cannot be conjured out of a hat. Deep and sustained intervention by the state, in line with a comprehensives industrial strategy is necessary. The problem is that history teaches us that key centres of power within the British state tend to militate against programmes of this nature. In particular, the Treasury has time and again aborted attempts at state-led re-industrialisation. The NEDCs of the 1960s, the offspring of the Wilson government, were marginalised by the Treasury and its prioritisation of budgetary balance. More recently, as Martin Craig has demonstrated, nascent attempts to build a ‘Green Investment Bank’ were stillborn after intervention by 11 Downing Street (Craig, 2016). A future Labour government would therefore have to develop a political strategy oriented towards fundamentally reconfiguring the institutional architecture of the British state. There is not space to outline what such a reconfiguration might look like here, other than to highlight one proposal for Treasury reform which colleagues at SPERI advanced in 2017 (Berry, Gamble, Hay, Payne, & Hunt, 2016).

The second impediment to a future Corbyn government is external and is embodied in the structure of the world economy. The heart of McDonnell’s programme is broadly left Keynesian in orientation, insofar as it advocates borrowing to finance infrastructure investment and seeks to ensure that wages keep up with productivity growth. These policies would provide welcome relief from years of under-investment and punishing fiscal austerity . But Keynesian policies today face a radically altered international environment compared to when they were originally implemented during the post-war settlement. Successive decades of capital account liberalisation have created numerous ‘exit options’ for capital. Both the USA and the UK run huge current account deficits, which renders them vulnerable to outflows of foreign investment. Bondholders increasingly exert structural power over government policy. Ownership of the public debt has become increasingly concentrated in the hands of wealthy asset-holders, raising important distributional questions about the impact of expansionary fiscal policy (Hager, 2015). A renewed Keynesian drive today faces a structurally altered and markedly hostile international environment. Any left Keynesian strategy needs to take this obstacle very seriously indeed.

These barriers are not in principle insurmountable. Indeed, capital’s ability to ‘exit’ is often exaggerated, as earlier research by Hay and Rosamond has demonstrated (Hay & Rosamond, 2002). But there is little doubt that any future left government would face intense international economic pressures. A key strategic question, then, is how to deal with this hostile international terrain. A strategic response must operate on two levels. First, there is a need to develop a serious plan for countering the disciplinary power of an ‘investment strike’. One way to do this is to develop the institutional capacity to implement capital controls. Unthinkable in the recent past, the key role which capital controls can play in insulating democracy from the whims of international creditors is becoming increasingly mainstream on the centre-left (Blakeley, 2018). A Labour government would also have to cultivate support for capital controls at the ‘everyday’ level amongst the population at large. This is not an impossible task, but it requires serious work. The right has a powerful narrative on capital controls which conjures up images of tourists at borders having to deal with tight restrictions on their holiday money. One challenge for the left is to develop a compelling counter-narrative. There is historical precedent here. During the Bretton Woods era, there was a consensus that constraining ‘hot money’—volatile, speculative capital flows—was an eminently sensible thing to do (Frieden, 2006). A parallel contemporary narrative would emphasise the high social costs of allowing uncontrolled and destabilising rent-seeking into the national economy.

Corbyn’s Labour has identified deep structural flaws in British capitalism . Its central political premise is that an opportunity has opened-up since the 2008 global financial crisis to build support for a populist left programme capable of overcoming these structural weaknesses. But profound internal and external barriers continue to delimit the Labour Party ’s room for manoeuvre. The task for Labour in the coming years is to develop a political strategy capable of overcoming these constraints, whilst building and maintaining a wide social base of support. This is a difficult task, fraught with political danger. But it is one that will have to be executed if a successful left transformation of British capitalism is to be initiated.

Conclusion

Since the 2008 crisis , a populist insurgency has gripped the advanced capitalist world. Anti-establishment forces on the left and the right have destabilised domestic political systems. Collectively, the rise of these populist movements threatens to undermine the foundations of the global order. Britain embodies a pivotal sphere within this global reconfiguration. After Cameron’s Conservative Party secured a majority in the 2015 election, it seemed that stability had been restored. But destabilising currents were bubbling under the surface. The vote for Brexit , the May government’s interventionist programme and the rise of Corbyn’s Labour all emerged from within the post-crisis conjuncture . Public expenditure cuts, low growth, growing labour market precarity and falling living standards combined to produce a volatile and disenchanted electorate. A distinctive form of post-crisis British politics had emerged.

Brexiteers, May and Corbyn all sought to draw upon the tide of public anger which had grown since the 2008 crash. Immigration from Eastern Europe had surged since the Eurozone crisis . Brexiteers deftly combined public anxieties about rising immigration with promises to fund public services in order to secure a Leave vote in the EU referendum. The May government saw the referendum result as an opportunity to colonise Labour heartlands, pivoting towards a ‘hard Brexit ’ whilst embracing an anti-cosmopolitan brand of statist interventionism. Corbyn’s Labour pledged to reverse years of austerity . On the back of its left populist manifesto, Corbyn’s Labour Party mobilised a large surge in turnout in the 2017 election which deprived May of her majority. The Coalition had contained the fallout from the 2008 crisis , re-establishing Britain’s finance-led growth model whilst pivoting to a ‘two nations’ legitimation strategy . But this containment was only temporary. After the 2015 general, a new political terrain emerged in Britain, shaped by the distinctive post-crisis politics of Brexit , May and Corbyn .

The future trajectory of British politics is highly uncertain. The deep structural weaknesses of British capitalism have been laid bare. Policies which in recent decades would have been unthinkable—the return of public ownership, the imposition of capital controls, the de-financialisation of the British economy—have entered into mainstream debate. The volatile and unpredictable character of British politics means that the conditions for a transformation of British capitalism are in place. But profound structural barriers to reform endure. A deregulatory Brexit , favoured by some on the Conservative Right, is unlikely to command sufficient parliamentary or public support. The May government’s early radicalism has been neutered by her electoral failure. Political survival rather than transformation has become her main preoccupation. Labour’s left programme faces serious internal and external constraints, not least the likely hostility of the Treasury to its economic policies and the prospect of international capital flight. All this takes place against a background of growing global uncertainty. A prolonged phase of sustained low growth seems likely across the advanced capitalist states. The White House under Trump is disentangling the US state from its traditional commitment to liberal order. Growing trade protectionism, currency instability and geopolitical unrest will be the likely consequence. Deep phases of capitalist crisis have historically ushered in far-reaching systemic changes. The ‘transformation’ of capitalism after 2008 has not yet occurred. The form of exit from the crisis is still being shaped by volatile and unpredictable forces. Ultimately, the shape of capitalism after the crisis will not be determined by ‘structural’ forces alone. Politics will shape the transition to the new regime. Britain is one key centre in this emergent global shift. Shaping its future trajectory is a crucial task, both intellectually and politically.