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Nine Crises: Fifty Years of Covering the British Economy from Devaluation to Brexit by William Keegan

Bill Keegan thinks that of all the crises, dating back to devaluation in 1967, which he has covered as a journalist, “the prospect of Brexit is by far the greatest and most worrying”.

We shall see. I take a more complacent view. And some of the previous crises seemed pretty alarming at the time. Inflation peaked in August 1975 at 26.9 per cent.

But good journalists are not complacent. They communicate the drama of events. Keegan is very good at this. He shares his enjoyment and his insights, without pretending to omniscience.

He reminds us of the Queen’s great question about the crash of 2007-08, which had taken pretty much everyone by surprise: “Why did nobody notice it?”

Shortly afterwards, while presenting Keegan with the CBE, she asks him, “And what do you do?”

“‘I write about the economy for The Observer newspaper,’ I replied. There was a brief silence. Then I added, ‘I was one of the people who didn’t warn you.'”

In the hands of this ebullient and often self-mocking author, the dismal science ceases to be dismal. Here is an economist who does not suppose economics explains everything. His favourite subject is history, and in 1960 he went up to Trinity College, Cambridge, to read classics.

Keegan expresses his gratitude to the Jesuits at Wimbledon College who taught him Latin and Greek, but he opts to read economics instead, because he wants to understand more about what is going on, and reckons “I could study history for the rest of my life, whereas, if I did not have a go at economics, I probably never would”.

He discovers he prefers words to charts and diagrams:

“most economists…just loved charts. And economics was becoming increasingly mathematical. I was greatly relieved by the story told by a friend of mine, the late Sir Dennis Proctor, who had been a friend of Keynes. Proctor, a classicist, had asked Keynes, a mathematician, ‘Maynard, does one have to be a mathematician to understand economics?’

“‘No, Dennis,’ came the reply, ‘but one does need a sense of proportion.'”

What really interests Keegan is “political economy”, which he defines as “the relationship between economics and politics, and the discussions and battles that go on in public and private between economists and policymakers”.

On joining The Financial Times straight from Cambridge, he is initiated into an indispensable way of finding out about that world:

“It was drummed into me that lunch with politicians, officials, businessmen and City figures was an important part of the job. In effect, I was told to go out and spend the company’s money cultivating contacts.”

There are always people who are prepared to talk, if only they can find someone sympathetic to talk to. Enjoyment and the exchange of information go hand in hand, and the whole thing can when necessary be done discreetly.

After 1979, Keegan struck up a friendship with Ian Gilmour, one of the Tory wets who viewed with horror the economic policies pursued by Margaret Thatcher and Geoffrey Howe. He also plugged himself into the opposition within Whitehall:

“some of the officials who were having to carry out policies they did not believe in were happy to meet me, but only in secret. It was more than their professional lives were worth to be seen with ‘the enemy’ in public. There was one very important source for me who insisted on meeting in a curry house near Leicester Square where we were both quite certain that we would meet no one we knew.”

From 1964-67, the Labour Government of Harold Wilson made a “forlorn attempt to wish the obvious necessity of devaluation away”. Meanwhile the civil service secretly drew up a “devaluation war book”, detailing how the necessary currency adjustments were going to be made and the announcement handled.

This was stored in a safe with a combination lock. In November 1967, when devaluation took place, it turned out that nobody knew the code for the lock:

“The Treasury frantically telephoned Peter Jay, who had been private secretary to its top official at the time, and was now economics editor of The Times. Luckily for them, Jay remembered the code, which was the date of the 1949 devaluation, with the digits reversed.

“Jay did the honourable thing: he told the Treasury the code, but did not embarrass the government and his former colleagues by revealing what had happened, or taking journalistic advantage of it.”

There is a sort of generosity in Keegan’s account. Many of the people he meets are highly intelligent, and are trying to do the right thing, and even when, as often happens, they fail, he is disinclined to write them off as evil or malicious.

Episodes such at the three-day week of 1973 and the IMF crisis of 1976 are described without the sense of pessimism and almost unbearable national decline which they induced in some of us.

Keegan had a brief spell at the Bank of England, but the greater part of his career has been spent at The Observer, where Alan Watkins, whose greatness he recognises, was the political columnist.

There were some wonderful journalists at work in this period, a number of them (though none on the economic side of things) portrayed in Watkins’ book Brief Lives, published in 1982In the introduction he wrote for the new edition of that work in 2004, Watkins remarks:

“The representative figures of the age of Wilson and of Macmillan’s England who are depicted here possessed, with some exceptions, a rationality, an optimism and a capacity for the enjoyment of life which their successors do not always, or even usually, exhibit today.”

With rare exceptions, Keegan is generous about the politicians and officials he get to know during this half century. They include Nigel Lawson, a distinguished journalist before becoming Chancellor of the Exchequer.

Keegan is highly critical of Lawson as Chancellor. “Still writing the same old rubbish,” Lawson delights in saying whenever they meet, to which Keegan replies, “Still pursuing the same old policies.”

But when the owners of The Observer want to sack Keegan for being so hostile to the Thatcher government, Lawson, as Chancellor, confounds them by saying, when lunching at the paper: “I read William’s column. I don’t always agree with it. But I wouldn’t be without it.”

The only Chancellor Keegan cannot stand is George Osborne:

“there was something about the cynical way that Osborne introduced his austerity programme which, frankly, got beneath my skin…It mattered not that in opposition Cameron and Osborne had supported Labour’s public spending programme. With blatant disingenuousness, the new Chancellor and his colleagues now blamed the crisis on Labour’s ‘excessive’ public spending.”

In Keegan’s view, Osborne’s misplaced policy of austerity was not just the wrong way to promote economic recovery, flying as it did in the face of Keynes’s insight that the only way to emerge from recession is to spend your way out.

The policy of austerity also helped cause the No vote in the EU Referendum: a disaster in Keegan’s opinion, though he still hopes “this movement to what I regard as a cliff-edge can be stopped”.

Yet the overall effect of his book is cheering. The British economy has survived and prospered after so many crises it can surely survive Brexit.

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