The indications that Lloyds Bank is to complete its privatisation next spring are very welcome. The dividend should be restored by then, paving the way for a popular (in all senses) sell-off of shares. If the Royal Mail is any guide, there should be plenty of enthusiasm for an offer. Meanwhile, the Royal Bank of Scotland will still be majority taxpayer-owned, with the bank continuing to work its way through the mess left behind by the old management. Its return to the private sector will have to wait until well into the next parliament.
Still, things are going in the right direction: to appreciate what good news it is, it is only necessary to imagine for a moment what the reaction would be if the Treasury had had to announce a further weakening in Lloyds’ position and an injection of billions of pounds of taxpayers’ money to save it.
So we are moving on. With the resumption of tangible growth in the economy, falls in unemployment, and inflation subdued, Lloyds adds another line for ministers keen to stress that the British economy has come off life support and is getting ready to discharge itself from Osborne’s infirmary. With such progress made, and at such pain and sacrifice, there will be those who say, “Why let Labour ruin it?” – a venerable electoral slogan that has served the Tories well in the past.
By next spring, too, the Bank of England may well be starting to tighten its monetary policy, pushing rates a little higher and scaling back “quantitative easing”. That too will be spun as a “return to normality”. A few modest tax cuts in the Budget will make the voters feel better, and push Labour into some fresh electoral traps. Even the huge provisions that Lloyds, and the other banks, have had to make for the PPI mis-selling scandal has had its upside – a windfall injection of cash into households. The Society of Motor Manufacturers and Traders suggests that some people are using their PPI repayments as a deposit on a new car. The irony that the activities of crooked bankers, who plunged the economy into recession and sent many big car-makers close to bankruptcy, are now helping build the recovery, should be lost on no one.
But there are caveats. The strength of the labour market is largely due to the weakness in wages, which, as the statistical arguments of recent weeks have shown, have hardly grown, if at all, since the recession. Demonstrably, many families are struggling with the cost of living. The economy remains below the level of output achieved before the Great Recession. The recovery has been late and weaker than any previous comparable period. The banks remain enfeebled by any but their most recent standards. The proceeds of growth, such as they are, have been shared unfairly across regions and classes, with a housing bubble in the South adding to the imbalances.
The taxpayer may well take a real-terms loss on the “investment” made in Lloyds five years ago. And there is probably not enough competition in the retail banking or energy markets, as Labour says. But for Ed Miliband and Ed Balls, such gripes may not be enough to dispel the simple national feeling of relief that, after all we have been through, a return to economic normality, or something like it, is in the offing.Reuse content