The Economics Behind The London Riots

The riots create a complex situation in the UK, and in London in particular. What started as anger over an unjust shooting has quickly blown up into a multi-armed creature of anger and civil unrest. There no longer seems to be a specific focus for anger, there just seems to be anger.

 

I focus on London in particular, simply because it’s the city I know best, and the one that has the most ethnically and economically diverse population in the whole of Europe. This place has been a centre of global migration for 2000 years – it was a centre of globalization centuries before the term was invented. Hundreds of ethnic communities thrive, with over 300 different languages being spoken there. Like any city it certainly has its problems with cultural and racial tensions, and while there are significant social justice issues for Blacks, Indians, Pakistanis and other minorities in London, when compared to a city like Paris, the problem is virtually non existent.

What’s especially interesting is the fact that things have blown up on such a large scale at this time. The reason behind nationwide rioting is more complex than the shooting of an innocent man; after all, Jean Charles de Menezes, a Brazilian electrician mistaken for an Islamic suicide bomber, was shot in the head seven times in a tube train by the Metropolitan Police in 2005. Admittedly, this was a time when London was still coping with the multiple Tube and Bus bombings of recent terror attacks, but it is acknowledged that the police surveillance and intelligence system had comprehensively failed and while there was outrage and distress at such an injustice, there was no rioting.

That’s because in 2005, the UK was still riding the crest of the global economic boom, and Britain itself was outperforming the world economically – it was, in many respects, the centre of global growth. What was mistakenly regarded as Chancellor Gordon Brown’s ‘economic miracle’ was little more than momentum from global economic performance. So, when things started caving in, Britain caved in more than most. Britain’s economic growth never really recovered, Brown’s reputation, now as Prime Minister, shared a similar fate, and Britain’s mood quickly dimmed.

But something is going on here. The mood in Britain is very different to the one I first encountered in 2001. Back then, there was an infectious optimism – a still new government that was making sweeping social changes. In addition, extremely low unemployment and rising property prices that gave ordinary Britons the sense that they could participate in an economy – a dream that Margaret Thatcher had claimed credit for two decades earlier, but had never ultimately delivered.

In 2008, this mood quickly evaporated. With the national unemployment rate mired for years at just under 8% and no significant direction of economic recovery in sight, there is a deep, underlying suspicion and resentment of the financial system, and a sense that some sort of ethically reprehensible financial crime has occurred. This isn’t helped by the British government still being the major shareholder of a number of financial institutions nor by the fact that university fees, as small as they may be, are on the increase.

 

In this most capitalist of cities, the sense that fiscal and ethical accountability has been avoided, no matter how misunderstood this may be, still runs deep. The last time a major street riot occurred in London was during the G20 summit in 2009. I was in the middle of this as an observer and while it was violent, it was contained within ‘The City’ – the ancient, medieval square mile that houses the nation’s banking industry. It also lasted for little more than a day.

Ultimately, I believe that while the initial anger and hunger for justice was prompted by an unjust shooting in Tottenham, the unfettered spread of civil unrest is a sign of something more – Britain is an angry, frustrated nation and nobody seems to be delivering explanations or solutions. Where long-term economic uncertainty occurs, and this uncertainty affects employment, consumer prices and housing markets with no solution in sight, this sort of rioting is the result. Even despite the recent events, Britain is simply not a fun place to be at the moment.