Disrupter, disrupted: Britain’s government

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Hello and welcome to the Intelligence on Economist Radio. I'm your host, Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. Canada's handling of the pandemic should spark a little envy in its southern neighbour. Its labour market is rebounding faster. Growth estimates are being revised upward. There is one risk though. Lots of unproductive jobs remain propped up by the government. And have a look in the back of your cupboard. Did you stockpile dry goods? In the pandemic's early days, we take a look at the world's biggest pasta purveyor, finding that even before this year, the market was growing, especially in Asia and Africa. But first, Britain's Prime Minister is beginning his working week in self isolation.

Hi, folks. The good news is that NHS test and trace is working ever more efficiently. The bad news is that they pinged me and I've got to self isolate.

Boris Johnson revealed on Twitter last night that he's working from home at number 10 Downing street, having been in contact with someone who's since tested positive for coronavirus. It was already a difficult time for Mr. Johnson last week. Britain became only the fourth country to pass 50,000 COVID 19 deaths. England is halfway through a second lockdown he had promised not to impose. Meanwhile, talks between Britain and the European Union on a Brexit deal are resuming today in a crucial week of negotiations. And on Friday, Mr. Johnson's chief advisor, a man widely considered the most controversial person in British politics, resigned. It follows on the heels of a resignation by Mr. Johnson's director of communications, Lee Kane.

That is Dominic Cummings.

He is leaving Downing street and we are told tonight that he is leaving for good.

He walked out of number 10 very.

Publicly this afternoon after clearing his desk. The political adviser who in lockdown defied his own stay at home message is tonight. Heading home out of a job.

Dominic Cummings was The main strategist behind the Leave campaign which secured Britain's departure from the EU as chief advisor to Mr. Johnson, he had a reputation for being combative, ruthless, even upsetting not only politicians in opposition, but also those in government. Mr. Cummings departure is an opportunity for Mr. Johnson to reshuffle his key staff and also the way he runs his government.

Dominic Cummings had an enormous reputation in the United Kingdom. He became known as something of a Rasputin figure in the court of Boris Johnson was quite unpopular in large sections of the Conservative Party for his very combative style.

Matthew Hull House is our British political correspondent.

It was attributed to Cummings that he had promised a hard rain to fall on the civil service. This was at a time when lots of very, very senior civil servants were being shown the door. And if you look at his blogs and his speeches, he really set out a very sort of combative and fairly radical view about how the state needed to be reshaped. Indeed, he would be absolutely scathing about how useless he thought David Cameron's administration was, how useless he thought Theresa May's administration was. So he really held much of the British state and the Conservative Party in very, very low regard.

But now it's Mr. Cummings himself who's going out the door. I mean, what is it that's precipitated this resignation?

So it doesn't appear there's been any great split over policy. This is very much a question about factions and personalities and who ran Mr. Johnson's office? And it appears to come down to between two camps. One is Mr. Cummings and Lee Kane, who was the head of press and media for Mr. Johnson. On the other side is Allegra Stratton, a new communications boss in Downing street, and Mr. Johnson's fiance, Carrie Simmons, who appears to have been quite critical of Mr. Cummings and his style.

But certainly Mr. Cummings came to the public's attention earlier this year by breaking some of the rules he helped to implement.

Yes, that's right. So this isn't really a principal factor at all in why he's gone, but it's certainly the case that this is why he's sort of very well known to the British public, that at the height of the first wave of coronavirus in the UK, when all of the UK was in a pretty straight lockdown, it emerged that Mr. Cummings and his family had made a trip from London after he himself contracted coronavirus to Durham, where Mr. Cummings is from. And this trip included a day trip to Barnard Castle, which is beauty spot. I believe that in all circumstances I behave reasonably and legally balancing the safety of my family and the extreme situation in number 10 and the public interest and effective government to which I could contribute. And so this generated a real, genuine wave of anger in much of the British public and created the impression that people in Mr. Johnson's government weren't following the same rules as everybody else. And so this created a real sort of sense of notoriety around Mr. Cummings. Boris Johnson came under a lot of pressure at that point to fire him and he didn't. And when he had no alternative, I think he followed the instincts of every father and every parent. It's now only some months later that actually Mr. Cummings has finally departed.

And now that he's gone, what happens in government?

So the big focus this week will be on reorganising the government, filling in the hole that Mr. Cummings and Mr. Kaine have left. But there are plenty of MPs and figures around the Conservative Party who hope there'll be a very different tone and style, perhaps slightly less combative, a little bit more consensual, particularly in terms of Downing Street's relationships with television broadcasters, which have been quite difficult during Mr. Kane and Mr. Cummings tenure.

But perhaps the biggest thing going on at the moment is the closing stages of Brexit negotiations. How do you think Mr. Cummings departure will affect those this week?

Yes, so the Brexit talks really are entering the final stages and they are very difficult. The two sides are still quite far apart, particularly on this issue of the so called level playing field. So that covers things like environmental standards and state aid, that is government subsidies. Now, Mr. Cummings had been a big opponent of the idea of state aid controls because he was very keen that the UK government would be able to take a much more sort of dynamic, looser approach to how it subsidised industry. However, we shouldn't expect too great a change of course, because to be quite frank, this government is staffed from top to bottom with people who take a fairly hard line position on Europe. This is a very sort of vote Leave government. And certainly David Frost, who is the Prime Minister's chief negotiator, has made clear that he takes a very sort of stiff view on anything that might, in his view, restrict Britain's sovereignty. That is, he's very averse to anything in this deal that would restrict the UK's ability to legislate as wishes. So we are entering a very difficult phase. But Cummings exit probably shouldn't move the needle that much on it.

But we've talked repeatedly about how likely a deal looks all these Same sticking points. Still sticking. What chance of a deal, then?

Well, it's very difficult to say. I mean, in many ways, it ultimately comes down to a political judgment on the Prime Minister's part about whether the political cost of doing a deal, which may involve some friction with his chief negotiator, is greater than the real political cost and the real world cost, the real economic cost of not doing a deal. And certainly the Labour Party are very keen to frame this as effectively a question of competence, not of ideology. They're saying that any government that really applied itself properly and really put some effort in will be able to do this deal. And so you can see how they're trying to shape this as a narrative, which could be quite damaging for the Prime Minister.

And now Mr. Cummings has rather unceremoniously left government. Do you think we've seen the last of him?

Probably not. Partly because Mr. Cummings loves fighting with his rivals and enemies in Westminster and he's a very, very keen blogger, so it'd be surprising if he doesn't pop up to take some shots at his enemies in the regime as he goes out. Does he have a lasting impact on British politics? Absolutely, certainly, because he was the architect of the great victory of the Brexit side in the Brexit referendum of 2016, and subsequently his priorities in many ways shaped the agenda of the government that he's just left. This idea of being on a very, very hard break with the European Union, the idea of really changing the Conservative Party's approach to public spending. Much of this, what many people think is a fairly combative tone on cultural issues, is attributed to him. So he really has contributed to the real reshaping and repositioning of the Conservative Party.

Matthew, thank you very much for joining us.

Thank you.

The coming reboot of the British government, the closing chapters at last of the Brexit negotiations story fitful attempts to suppress the coronavirus. Find deep analysis on all these and much more by subscribing to the Economist. Get a great introductory deal@Equality.com IntelligenceOffer that link is in the show notes.

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He warned that casual gatherings such as last month's Thanksgiving were fueling its spread. Reducing your contacts, reducing the gatherings are going to be most important. And what we do in the coming days and weeks will determine what we get to do at Christmas. Amidst the drama of America's election and its haphazard handling of the pandemic, Canada's performance has slipped somewhat under the radar. It's fared comparatively well in terms of coronavirus numbers, and its economy is beating gloomy predictions. But winter brings new challenges, and it's too early to claim a resounding success.

Canada's economy over the summer recovered quite quickly from the lockdown in March.

Christopher Waddell writes about Canada for the Economist and is based in Ottawa.

And we saw the economy start to open up at the end of June, and early in July, employment started to come back. And we're at a point where about almost 75 to 80% of the jobs that were lost in March have now returned.

And part of the story here is that Canada has performed relatively well in terms of COVID case numbers. Why do you suppose that is?

I think there's a series of reasons for that. It started with the fact that the two levels of government, the federal government and the provincial governments, cooperated throughout the whole pandemic right from the start. And the provinces actually deliver healthcare and deliver social services. Covid and the response to Covid never became a partisan issue. Conservative and Liberal premiers and the Liberal Prime Minister Justin Trudeau worked together. Politicians from the outset decided that public health officials should be the people in charge. It's no secret that we'll continue to have cases, given that COVID 19 is circulating worldwide. They were the spokespeople. There were daily press conferences on television, talking and updates. Our progress in getting through the initial wave of COVID 19 in Canada showed our ability to persevere and adapt with a collective goal in mind. And throughout all this, there's been a very high level of public support as well. Sort of 60, 70, 80% of Canadians think that their politicians are doing well in handling it.

And what about economic measures? What did the government, federal and provincial, do to prop things up?

Well, a variety of different things. It started early on with weekly payments of up to $500 for people who'd lost their jobs as a result of the pandemic. And that also included people who were self employed and people who you would describe as people in the gig economy, people who might be on contracts. So people could get all that through online systems, through the unemployment system. There were special wage benefits set up for them. There was also specific programs for employers to encourage them to keep their employees on staff. The federal government would subsidize wages for companies that had lost up to 30% of their revenue and more than companies. It also included charities, not for profit sector, and lots of other groups. So there was a lot of money being spent. The deficit for the current year will probably be in excess of about $350 billion as opposed to being about 28 billion last year.

And how has all that affected the sort of top line economic numbers?

Well, in fact, it's made the economy and the economic situation a little better. For instance, the bank of Canada in July was predicting that the economy would fall, would decline by a little over 7% in 2020. By the end of September and into late October, they were now predicting about a 5.5% decline. So in fact, the recovery, as people got back to work in June and into July, that started to make a significant difference, with one big exception of course, and that's the service sector, because summertime is big tourism time in Canada. Overall employment numbers, the unemployment rate has come down. It's most recently now just a little below 9% when it was up three or four points higher than that. And what's also been interesting is that across most of the sectors of the economy, employment is now back to close to pre pandemic levels.

So it sounds as if the plans have gone some way to take everyone into account. Has anyone slipped through the net?

The main groups that have slipped through the net are the main groups that have slipped through the net in other countries as well. And that involves racialized communities that involve people with lower incomes. Now in Canada, the other thing that's happened is that the initial phase of COVID and the initial series of deaths, 8 or 9,000 deaths, almost 80% of those were in long term care homes. So the whole question of seniors care and long term care has been a big issue and a big problem. And Canada's had one of the worst records of any country for that. On the other side, which is also interesting is the recovery in jobs as we move back to more and more people coming back to work has benefited primarily women in many respects because there's been actually a fair amount of spending in education to prepare for more online teaching in Canada and also spending in healthcare. So women tend to dominate those two professions. So we've seen women come back to the workforce much more quickly in Canada than we have in the United States.

And the big discussion throughout the Northern hemisphere is how the situation will change in winter when everyone has to be inside. Surely that's a more pointed question in Canada. I mean, how do you see things progressing through the winter?

Well, I could start by saying I'm in Ottawa and it's 21 degrees today in Ottawa when normally it would be about three or four. So it's quite extraordinary in the short term. But yes, winter will come. Canada's already facing the second phase of the pandemic and in fact what we're seeing is that the daily new cases are running at about twice the level were in the spring. What has happened starting in late September and has continued is support programs that existed during the summer that allowed for the quick bounce back have generally been extended at least until June next year. So there's a fair degree of predictability that support will be available both for businesses and also for people who are still waiting for jobs to come back. Now, the challenge in all this, of course, is that some jobs won't come back. That's not clear yet what those jobs will be. And I think part of it may depend on how long the varying restraint conditions continue. And at the same time, there's clearly some businesses are being kept alive that when the pandemic ends they may not be in good enough shape to be able to continue. There's a lot that's unknown. I think most people would like to be able to return to pre pandemic life as quickly as possible, but that's not going to be easy until there's a vaccine.

Christopher, thank you very much for your time.

Thanks very much.

For many people, the first real experience of the pandemic was supermarket panic buying shoppers were all elbows stockpiling fusilli amounts of everything from A to ziti given chance to load up on non perishable foods. It was hard to say gnocchi, but holy macaroni, put your penne down and wrap your oreki around this.

There's a survey by Doxa, a Milan consultancy that found that the French, the British, the Germans and the Americans ate as much as 25% more pasta during the lockdown.

Wendelin von Bredo is our European business and finance correspondent and a practiced pasta preparer.

The pasta boom is very good for makers of pasta, and the leader is Barilla, an Italian company based in Parma. They are by far the biggest. And the exports of Italian pasta increased by 30% in the first six months of the year, which is the most significant jump of pasta exports in recent memory.

And so the numbers have been particularly good then for Barilla.

The numbers have been especially good for barilla. It's a 143-year-old family company and its headquarters in Parma were close to 100% capacity throughout the very harsh lockdown in Italy in spring, as well as its other 14 factories in Italy, it continued to make all 120 varieties of pasta. And the challenge was that they were worried about supply bottlenecks. But they found a very clever method in the sense that they started to send trains from Palma to Ulm in Germany, just to ensure supply. And These trains transported 490 tons of pasta, 60 tons of sauces and 50 tons of pesto. In June, they started to send three trains a week, and they said they might send another. So four times a week.

And so is this a real turnaround for Barilla or were they doing well even before the pandemic?

Barilla was doing quite well in the last few years, but in the last 20 years it had a couple of missteps. The biggest misstep financially was probably in. In 2002, Badilla made a big mistake. It spent 1.8 billion euros in a hostile takeover for controlling stake of Kamps, a German baker. And it quickly turned out to be a costly mistake. They never really made money with Kamps. And so in 2010, Barilla sold Kamps to a private equity company. And then in 2013, Guido Barilla, the company's chairman, said in an interview on Italian radio that he would not do a commercial with a homosexual family because of the values of Barilla. And these comments went viral pretty much immediately with the hashtag BoycottBarilla and provoked an outcry in particular in America. And Mr. Barilla apologized and they really tried to mend fences with the gay community. They created an inclusion board and they launched a limited edition pasta box that showed two women sharing a kiss of spaghetti. They basically acknowledged that that was a big mistake.

And now undisputed giant global brand who just can't sell the stuff fast enough. I mean, do you think that rise in consumption will outlast the pandemic? Itself?

Well, in fact, pasta consumption worldwide increased in the last 20 years from 7 million tons in 1999 to 16 million tons last year. Italians eat about 23 kilos per head a year, so that's more than anywhere else. I think the second biggest consumers of pasta are the Tunisians. So in Italy, pasta consumption actually has gone down over the last few years. But in Asia and Africa, there's enormous potential for growth because at the moment, they actually eat relatively little. I talked to Luigi Cristiano Laurenza of the International Pasta Organization, and he's very confident that even after the pandemic, there will be more pasta munching all over the world.

Wendelin, thanks very much. And buon appetito.

Grazia Milne.

That's all for this episode of the Intelligence. If you like us, give us a rating on Apple Podcasts and see you back here tomorrow.