Revisiting the UK Model: From Basket Case to Success Story and Back Again?

When the UK took over the presidency of the European Union in July 2005, the then Prime Minister Tony Blair presented the UK model as a potential saviour for the European social model, a model for the rest of Europe to emulate. It had succeeded, it was claimed, not only in combining growth with high employment rates, facilitated by flexible labour and product markets, but also for using economic growth and modern approaches to public service and welfare reform to renew public services and to combat child poverty. Even at the time these claims were met with scepticism; for many the UK still represented the liberal or market version of capitalism which, if followed as the model for modernization, could not only sound the death knell for distinctively European varieties of capitalism (Wickham, 2005) but also promote a dangerously fragile form of expansion, based on extended consumer credit and a seemingly never-ending rise in house prices. From the perspective of autumn 2008, the grandiose claims by Blair to have developed a blueprint for Europe have been put in perspective by the financial meltdown and the state-led rescue plan for the jewel in the UK’s crown, the City of London. This major collapse of the UK and world financial system is too new and its course as yet too unpredictable for this chapter to predict the characteristics of the next phase of model development in the UK. It is appropriate to note, however, that we are witnessing a clear demonstration of the cyclical volatility of the fortunes of national models (see Chapter 1 of this volume). The decade of New Labour could be argued to be the UK’s glory years, with high employment combined with some renewal of its social model, even if the underlying weaknesses of the model could be clearly identified. The focus of this chapter is on understanding the factors behind the New Labour boom period and the extent to which its characteristics both reinforced and redefined the UK model as an example of neoliberal capitalism and a residual welfare state.