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Posts Tagged ‘economy’

Labour has big ambitions for a crisis-ridden economy

13/09/2023, 10:57:11 PM

by Jonathan Todd

The British economy, which Labour intends to make the fastest growing in the G7, confronts major and interlinked crises.

The immediate crises of our crumbling public realm. Schools that do not open. Prisons that do not contain terror suspects. Councils that do not balance their books.

“Spent 5 hours at Homerton hospital A&E,” a friend messages. “The state of the NHS is just terrifying. Many people were there not because of accidents, but rather long-term health conditions. They turn up at A&E because other parts of NHS and social services (e.g., mental health) are so diminished.”

Our workforce is reduced in size by a health and social care system that fails to keep us fit and firing and in efficiency by other features of our dysfunctional public realm, such as closed schools, late trains, and unsafe streets.

Emma Duncan also linked the public realm and economic performance in the Times this week.

The squeeze on local government services is making Britain look and feel poorer and uglier. Councils have a more immediate and visible effect on people’s lives than anything national government does, and because care swallows up most of councils’ spending, the funding for mending potholes, cleaning off graffiti and clearing up rubbish has been slashed. A grimy, depressing environment is not just bad for morale: it’s also bad for our economy if Britain looks like a developing-world country that’s not worth investing in.

We also act, beyond our vapid bluster of “Global Britain”, like a developing-world country in being unsure of our international position. Britain, to paraphrase Dean Acheson, has lost a tailored and privileged membership of the EU and not yet found a role.

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Power cuts, military superpowers in conflict, and Labour taking office in the midst of economic meltdown – could it be 1964 all over again?

13/10/2022, 10:41:59 PM

by Declan McHugh

The incredible divergence of political fortunes that has seen Labour open up 30-point poll leads has given rise to a growing belief that the Conservatives are heading out of government. That view isn’t confined to those on the Labour side. It is now widely held in the business community, the media and indeed in the Conservative Party itself. Tory MPs openly lament that their party is careering, inexorably, to a catastrophic defeat at the next general election. The parallel that many draw is with 1997, when Tony Blair led Labour to an historic landslide. But is 1997 the right point of historical reference? Or do we need to look back several decades earlier for a more apt comparator – all the way to 1964?

That year saw the threat of blackouts at home and the eruption of superpowers in armed conflict abroad. It also saw Labour end 13 years in opposition; a narrow election victory enabling Harold Wilson to become PM. With a majority of just four, his new administration faced major political challenges from the outset. But the bigger problem facing the Wilson government was the economic inheritance left by the departing Conservatives.

An ill-fated ‘dash for growth’ had left the UK economy in a nose-dive. So much so that when the outgoing Chancellor, Reggie Maudling, handed Number 11 over to James Callaghan, he cheerily told him: “Sorry old cock to leave it in this shape. I suggested to Alec [Douglas Home] this morning that perhaps we should put up the Bank Rate but he thought he ought to leave it all to you.”

The incoming Labour government was saddled with an £800m deficit that immediately triggered a series of Sterling crises. One of Callaghan’s first acts was to raise interest rates to 7%, leading the Building Societies Association to hike rates for new mortgages to 6.75%. Although the party won a bigger majority in the 1966 election, it was never in control of the economic situation. By 1967 the Wilson Government was forced into a devaluation that saw the pound reduced from $2.80 to $2.40. Hopes of investment in the ‘white heat of technology’ were crushed as the administration was pushed into a programme of austerity that brought it into conflict with unions and, ultimately, contributed to electoral defeat in 1970.

By contrast, the political and economic conditions in 1997 were far more favourable. Labour went into that election facing nothing like the electoral mountain that stands before it today. Although the Conservatives had won a shock victory in 1992, they had done so with a majority of just 21. The electoral arithmetic today is starkly different. Assuming Labour don’t make spectacular gains against the SNP, the party requires a swing from the Tories of more than 13% just to get a bare majority. To put that into perspective, Blair won a landslide with a swing of 10%; Attlee won a post-war landslide with a swing of just over 12%. So for Labour to win a majority of any kind it must surpass those two landmark victories.

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Labour needs a clear, distinctive, and credible economic message

23/07/2020, 08:00:31 AM

by Jonathan Todd

More people than not think that Keir Starmer looks like a prime minister in waiting (38% versus 34% in a YouGov poll conducted in early July), while more than twice as many think Labour is not ready for government than think Labour is (54% versus 23% in the same poll).

Other polling reveals that voters now think that Starmer would make a better prime minister than Boris Johnson.

Yet Labour trail the Tories by somewhere between 6 and 10 points on voting intention – with Survation putting it at the lower end of that range, Kantar being at the higher end, and Opinium in-between.

These deficits cannot be explained in terms of Starmer. It is the rest of the party that holds us back.

“Labour is under new management,” said Starmer at PMQs. Where Labour previously made commitments that voters struggled to believe, Labour now needs credible answers. Yet big enough to meet the UK’s challenges.

These do not come any bigger than the economy. The number of people aged 18-24 claiming Universal Credit or Jobseeker’s Allowance doubled in the last three months. Unfortunately, with furlough ending, demand not recovered to pre-Covid levels, and the risk of a second wave, our economic struggles are likely to persist.

With respondents being allowed to tick up three options, YouGov asked: Which of the following do you think are the most important issues facing the country at this time?

Health and the economy came joint top on 57%. Far ahead of the next most important issues: Britain leaving the EU (43%); the environment (24%).

It is noteworthy that over four-in-ten of the public do not see Brexit as “oven ready” and unsurprising that health is a concern amid a global pandemic – which will further rise if there is a second wave. But, as we learn more about Covid-19, improve our systems for containing it, and advance towards a vaccine, the economy will likely usurp health as the public’s biggest worry.

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A Labour shadow chancellor: the impossible job?

14/04/2020, 10:15:36 PM

by Callum Anderson

Earlier this month, Labour decisively turned the page from the Corbyn era.

An eagerness to look to the future was the prevailing emotion for the many Labour activists and supporters, who had watched with varying degrees of resignation and despair as Labour crashed to its worst general election defeat since before the Second World War.

Yet we must not forget that Keir Starmer’s election as Labour leader can not be an end in itself. Rather, it must provide the Labour movement with a critical lifeline to change where change is needed, and rethink where rethinking is needed. We must all rally behind the new leadership to support this essential work.

As the new shadow chancellor, Anneliese Dodds will play a particularly key role in helping Labour earn back both the trust and the economic credibility that it so desperately lacked during the last decade.

Dodds is extremely well qualified. Despite an absence of executive experience, she served as a shadow treasury minister for the last two and half years. As an MEP, she sat on the European Parliament’s Committee on Economic and Monetary Affairs.

Nonetheless, her task is no small one.

Long regarded as one of the most difficult job in politics: a prospective chancellor must be able to understand and absorb economics, and articulate the Party position in a way which can command respect in Parliament, and is comprehensible to the person on the street, the small business owner and financial markets.

For the last decade, Labour’s achilles heal could be simply posed as a question: can it be trusted to prudently manage the public finances, while still delivering economic and social justice?

As we all remember, Messrs Miliband and Balls were never able to shrug off the (false) Conservative frequently claims that Labour profligacy had caused the 2007-8 financial crisis and had necessitated austerity.

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Labour, co-owner of #brexitshambles

03/02/2020, 10:30:38 PM

by Rob Marchant

We are out. That’s it, the fat lady has sung.

But of course we are not out at all, not in any meaningful sense. This is just the start of a tortuous, eleven-month scramble to try and get some kind of a sensible result in place by the end of the year.

Remainers have to admit that they – we – lost the argument, at least for now. Leavers have got what they wanted and, ultimately, that’s democracy.

But, Leaver or Remainer, we have had in many ways the worst of all possible worlds. Leavers have not really got what many wanted, at least, not yet. If we leave aside the semi-suicidal, macho contingent who are happy to have the hardest of hard Brexits, moderate Leavers will now see that we now have eleven months to get somewhere on the sliding scale between what one former PM has rightly called the “pointless Brexit” and the “painful Brexit”.

If we end at the “pointless Brexit”, people on both sides will rightly say, we might as well have stayed in. Most of the benefits but without a seat at the table.

If we end at the “painful Brexit”, for example, with few and/or poor-outcome trade deals in place, the economic jolt to come will be memorable. And, it must be said, we have both precious little time to get those deals in place and the poor bargaining power of the supplicant. But we are where we are.

And somewhere in the middle? A bit of both of the above or, perhaps, not even really possible. Perhaps it will quickly converge down to just that binary choice of one or the other: who knows.

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The UK will vote to be inside the EU – eventually

05/06/2018, 08:31:35 AM

by Jonathan Todd

The UK will have another referendum on our membership of the EU. Rather than if this will happen, it is more a matter of when, on what terms, and in what circumstances.

This is because:

The referendums of 1975 and 2016 have established a de facto constitutional principle that the UK cannot move in or out of the EU without a referendum.
If this referendum does not come before March 2019, and the UK exits the EU at the closing of the Article 50 window, the UK will make right-wing and/or left-wing attempts to find a new place in the world, but neither will be able to turnaround the ongoing diminishment of UK living standards associated with Brexit, building pressure for a revision to the status quo ante.

There’s much to be said for the Ken Clarke view that referendums are defective instruments. It is difficult, however, to imagine circumstances in which it would be politically possible to reverse the verdict of 23 June 2016 without another referendum.

While Best for Britain is expected to publish its campaign manifesto on 8 June, calling for such, given the intransigence of Labour and the Tories towards a referendum, the likelihood remains that the UK will leave the EU in March next year.

45% of the public now expect that this will have a negative impact on the economy. Versus, according to the latest polling, 30% who think it will have a positive impact. Only 13% think it will make no difference to the economy. In contrast, 40% think it will have no impact on their personal finances.

“A recession,” Ronald Reagan said, “is when your neighbour loses his job. A depression is when you lose yours.”

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May and Trump are in charge – but voters’ wallets still rule

23/01/2017, 07:15:13 PM

by Jonathan Todd

Trump’s inauguration. May’s speech. We are told that Trump is a protectionist and May is for free trade. But they both reject the social market that characterises the EU, making it a golden shower of a week for internationalist social democrats.

The market comes via trade within the EU, while the social is injected by having this occur above a floor on workers’ and consumers’ rights, as well as protections for the environment and other public goods. “We would be free,” threatened the prime minister, “to change the basis of Britain’s economic model.” The social dimension of the EU model would not endure any transformation into Dubai-on-Thames. Nor, according to a former head official at the Treasury, would the NHS.

It is also the market, not the social, that attracts Trump – perhaps better described as a mercantilist than a protectionist – to a trade deal with the UK. He wants a wall on the Mexican border but he doesn’t want, in contrast to a pure protectionist, to wholly encase America behind trade walls. He does, though, seem to view trade as a zero-sum game, not a win-win exchange. And he eyes a win for America in a negotiation with a UK to be stripped of EU social regulations and looking for friends after politically detaching ourselves from our European partners.

Trump perpetuates the myth that America has ever put itself anywhere other than first. Pumping, in today’s money, around $120bn into Europe via the Marshall Plan, for example, wasn’t just about compassion for a continent on its knees after World War II. It was about minimising the risk of American blood being spilt on European soil, opening up European markets for American goods, and creating a European bulwark between the Soviet Union and the Atlantic.

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How to fight hard Brexit: Step 1 – Understand why Remain lost. Spoiler: It’s not what Westminster thinks

28/12/2016, 11:04:18 AM

In a series of three pieces, Atul Hatwal sets out how hard Brexit can be fought in the coming years. Today he looks at why Remain lost and the implications for the battle to shape Brexit

Why did Remain lose? Since the referendum Brexiteers have been assiduous in asserting their narrative: immigration trumped the economy, emotion won over facts and these are the new rules of the political game.

The Brexiteer version of history is now the accepted consensus at Westminster, virtually unchallenged by pro-Europeans, often meekly accepted.

The state of the pro-EU camp feels very familiar, certainly to a Labour member. All very mid-1992 when following a fourth electoral defeat, the best that many senior leaders of the party had to offer by way of strategy was “one more heave.”

It wasn’t good enough then, it isn’t now.

The starting point for pro-Europeans is to ask the right question.

Not just why Leave won but why a Remain campaign built around familiar economic beats failed when the same backing track had proved so persuasive at the general election and the 2014 Scottish independence referendum.

At the election and referendum, campaigns targeting concerns about the economy had convincingly defeated Scottish nationalism in 2014 and crushed Ukip’s English anti-migrant nationalism in 2015.

The conventional wisdom is that immigration was more potent as an issue in 2016.

Fortunately for those who want to prevent a hard Brexit, this is wrong.

The British Election Study (BES), which surveyed a huge panel of 30,000 voters before and after the referendum, sheds some light on what actually happened.

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It’s always the economy stupid. Time for Project Fear to turn up the volume

15/06/2016, 12:42:39 PM

by Samuel Dale

What has Remain been doing? The campaign to keep Britain in the EU has been spinning around like a Catherine Wheel in the last few days.

Some of this is down to effective campaigning from Vote Leave. After months of focusing on nonsense like sovereignty and weak economic arguments, they have started to focus on the only topic they can: immigration.

They are running advert after advert on Turkey becoming a member of the EU by 2020 and millions of Turks (or, nudge, nudge, hint, hint: Muslims) coming to the UK. Total lies and nasty smears but effective campaigning and the only message that resonates for them.

But Remain’s initial response to this aggressive shift and a few worrying polls has been bonkers.

Instead of ramming home it’s winning economic arguments it left the floor to Gordon Brown to waffle on about global peace and influence.

And instead of simply ignoring immigration – which it absolutely must at this late stage – it has left Labour to talk about a future deal or renegotiation. Or even a Scotland-style Vow on controls.

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