It’s easy to see why Boris Johnson wants to be seen as the new Franklin Delano Roosevelt. Like FDR, he is in charge of an economy in deep trouble. Like FDR, his sympathies are with the capitalist not the communist. Like FDR, he accentuates the positive.
So it was perhaps inevitable that the prime minister harked back to the New Deal of the 1930s when he announced in Dudley that higher spending on infrastructure was key to the UK’s recovery from recession and to the government’s levelling up agenda.
A day when lockdown restrictions were reimposed in Leicester was not the time to echo Roosevelt’s “the only thing we have to fear but fear itself” line but in every other respect Johnson was happy to be compared to the four-time president.
FDR is, however, a tough act to follow, and it didn’t take long for the prime minister’s political enemies to point out that his 2020 UK New Deal looks rather modest when compared to the original. An extra £5bn on infrastructure is the equivalent of 0.25% of the UK’s annual output, prompting Len McCluskey, general secretary of the Unite union, to say Britain had been “promised FDR’s loose change and some second-hand spending plans. While the US got the Hoover Dam, the pandemic-hit UK gets a re-announcement of repairs to some bridges in Sandwell”.
In today’s money, Roosevelt’s spending programme amounted to $5,231 – approximately £4,300 – for every American living through the turmoil of the Great Depression, and was criticised by John Maynard Keynes for not being sufficiently bold. The £5bn pledged by the prime minister amounts to less than £100 a head – and represents an allocation of spending already agreed in Rishi Sunak’s March budget rather than new spending.
Jan Crosby, UK head of infrastructure, building and construction at KPMG, said: “The programme should be even more ambitious – much larger and focused on other areas that also need levelling up – social housing; communities and high streets, digital infrastructure, championing accelerator infrastructure for the creation of new export industries.”
Downing Street pointed out that Johnson’s infrastructure announcement was merely the start of a much bigger programme of capital spending planned for the next five years, which is true. Sunak earmarked more than £600bn in his budget – levels of inflation-adjusted infrastructure spending not seen since the mid-1950s.
What’s more, the government will have a second opportunity to flesh out its New Deal when the chancellor makes his summer statement on the economy next week. This will be followed by a budget and spending review in the autumn.
The original New Deal was not a total success. FDR cut public spending prematurely in 1936, plunging the economy back into recession the following year. Unemployment remained high even at the end of the 1930s and it took military Keynesianism – extra defence spending in preparation for US entry into the second world war – to bring about full recovery.
That said, Roosevelt started with a clean slate and his reforms fundamentally changed America. Unlike Johnson he was not in charge when the crisis began, and the US economy was slowly recovering by the time he arrived in the White House. The New Deal was not just about building dams and taking men and women out of the dole queues, it was about taming Wall Street, giving more power to trade unions, and showing that there was a different way of doing things. In his book Lessons from the Great Depression, Peter Temin noted that the “passive, deflationary” approach of FDR’s predecessor, Herbert Hoover, was replaced by an “aggressive, interventionist, expansionary” approach.
Despite insisting that the government does not intend to “cheese-pare” its way out of recession, little Johnson said in Dudley would indicate that his New Deal will be anything like as far-reaching.