Bill Jamieson: UK recovery needs feel-good factor

WE NEED the positive mood created by the Olympics to continue, to boost confidence and our economy.

For the past ten days this country has enjoyed the most sustained bout of unalloyed good news for a generation. The London Olympics and the sparkling stream of triumphs by Team GB have stirred us from our state of comatose defeatism. I cannot recall a period when the feel-good factor across the land has been so much in evidence, or pride so plentiful.

Night after night we have been cheered by unambiguously positive and inspiring news. As uplifting for the national mood has been the delicious relegation of dispiriting economic data, the relentless dentist’s drill of “eurozone crisis news” and miserable prognostications of our condition.

Andy Murray, Sir Chris Hoy, Jessica Ennis, Bradley Wiggins, Mo Farah, Greg Rutherford and a host of golden others have reduced Robert Peston to a website filler.

It has been like a psychological coup d’état where the good guys just kept winning. How can we possibly make this good mood last?

It is natural to fear a hangover, for such mood states do not last long. But there are good reasons to keep in mind some lasting benefits of this transformational fortnight.

One is the inspiration it has given to everyone engaged in sport that recognition, success and achievement are within our grasp. We will hear many calls, of course, for more money and resources for schools and communities. If only we had more money. If only we could buy more rowing boats and bicycles and javelins. But the more enduring legacy for many will be the triumph of individual effort and personal perseverance.

Time and again we were heartened as athletes – who have worked and strived for years, battled against adversity, confronted setbacks and refused to give up – won through and triumphed. Time and again it has been individual commitment, sustained effort and true grit that moved us to tears. Usain Bolt ran as he did not for “delivering sustainable communities” but for the achievement of winning and the glory of being the fastest man on Earth. His example and that of others who strived for and achieved gold will inspire thousands.

And the triumph of the Games as a whole has surprised even its organisers. Did not most of us fear an inglorious, mediocre national muddle? Did we not automatically assume that our Olympic Games Spectacle (OGS) would in fact be One Ghastly Shambles? Did not some of us even flee the country to escape it all?

From an expectation of shortcoming and failure we found ourselves capable of staging a great event. London, far from collapsing into chaos, has shown itself to be one of the most stunning, vibrant, dynamic and desirable cities in the world. Seldom has a country and its capital been shown to better effect across the globe.

None of this can be denied or uninvented. Indeed, it prompts the healthiest question: that if we can achieve such success in this area of our national life, why not in others? Such a kick in the pants administered to other areas of our realm would truly be the greatest legacy of the Olympics

But that, of course, seems ambition too far. For reasons complex and deep-rooted, and those outwith our ability to change, our national condition is not so amenable to improvement. Grim news on the economy did not conveniently go away over the past fortnight. It kept on coming. What was different was that we did not have it nightly rammed down our throats.

Politicians are naturally anxious to extend and exploit the Olympic feel-good mood. Indeed, they now see it as vital, and for this reason: it is central to a recovery in confidence – across households, business, planning and finance. For, without confidence, no amount of pump-priming, monetary easing and earnest hectoring from the top will lift us out of the trough we’re in.

Today our fate is in the hands of a fractious, fissiparous, unhappy coalition. Further division was evident this week. The government seems sustained only by a baleful combination of public deficit reduction and forlorn impotence in the face of recession.

In Scotland our politics will be dominated for the next two years by a referendum on whether to leave the UK. Every week will bring new disputation and grievance. As for recovery, Sir Mervyn King, the Bank of England governor, yesterday took an axe to the Bank’s already miserable growth forecast. Our recovery prospects are next to zilch.

And in the eurozone, the dentist’s drill is poised for another blast. Greece is set to run out of money when its debt comes up for renewal on 20 August. The German Bundestag and its central bank are in no mood to cough up.

But it is in September when the drill really hits the open nerve. Spain’s finances are set to come under renewed pressure. There is a grim apprehension in the Treasury that Greece, Cyprus and probably Portugal too will be forced out of the euro.

It is not these individual crises that cast a pall over our own recovery. It is the prospect of a systemic Europe-wide banking and financial debacle – greater than that which erupted in America five years ago this week – that makes a confidence recovery impossible. The economy has conspicuously failed to respond to all conventional attempts at stimulus. It is not the spectre of slow recovery we now face. It is the spectre of Japan and a lost decade.

Situation hopeless? Ironically, it is the gravity of the euro threat that could now re-unite and re-invigorate the faltering coalition. This autumn the Prime Minister needs to stare down adversity and display true grit. A Cabinet reshuffle that brings Liberal Democrat David Laws back into the Treasury team and into the Cabinet would both hearten his party and be well received by many Conservatives. The boldest move of all would be to swap George Osborne and William Hague, though Cameron is loath to make a move that would be widely seen as a concession to advocates of “Plan B”.

However, what is clear is that he must move to a far more active recovery programme – urgent simplification of the planning process, measures to boost business formation and expansion, and help for lower-income households to boost consumer spending.

The looming breakdown of the eurozone could provide the vital extra glue for the coalition. But it also urgently needs a clear mission and agenda. The challenge we face is of sufficient scale and magnitude to require radical action. Rhetorical summoning of the Olympic spirit is not enough. For any prospect of confidence to return, big muscle, clear focus – and a real recovery programme – are urgently required.