{"id":344422,"date":"2025-08-14T17:38:13","date_gmt":"2025-08-14T17:38:13","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/344422\/"},"modified":"2025-08-14T17:38:13","modified_gmt":"2025-08-14T17:38:13","slug":"is-britains-sluggish-economy-the-fault-of-the-labour-government","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/344422\/","title":{"rendered":"Is Britain\u2019s sluggish economy the fault of the Labour government?"},"content":{"rendered":"

The latest economic growth numbers may have been fairly unimpressive<\/a> by most historical standards, but they were rather better than recent readings and surpassed market expectations. The first estimate of the size of the UK economy showed it had expanded by 0.3 per cent<\/a> in the second quarter of this year, against a rise of 0.7 per cent in the first three months. Investors had \u201cpriced in\u201d a minimal 0.1 per cent rise. The annual increase, ie on the same period last year, is 1.2 per cent. Is this good news or bad news?<\/p>\n

What\u2019s happening?<\/p>\n

The pattern of sluggish economic growth<\/a> that has prevailed in Britain, and most of the West, since the global financial crisis of 2008, is proving to be the new normal. It\u2019s not what we had come to expect. For most of the postwar period, punctuated by stop-go cycles, average economic growth was running at 2 to 2.5 per cent a year, with some endemic inflation and structural unemployment. By the 1990s this had accelerated to something like 2.7 per cent, combined with lower inflation and unemployment. <\/p>\n

In recent years, excepting the pandemic, growth has been more like 1 to 2 per cent. This is driven by low investment and a poor productivity record, exacerbated by market loss post-Brexit. <\/p>\n

Is this what Labour promised?<\/p>\n

No. It gave the impression that the very act of electing a Labour government to replace the incompetent Conservatives would lift confidence and \u201ckickstart\u201d the economy, but no firm evidence of that has emerged. Expectations have not been fulfilled. <\/p>\n

For example, the Labour manifesto stated: \u201cSustained economic growth is the only route to improving the prosperity of our country and the living standards of working people. That is why it is Labour\u2019s first mission for government. It means being pro-business and pro-worker. We are the party of wealth creation.\u201d <\/p>\n

Rachel Reeves, when she was shadow chancellor, promised \u201csecuronomics\u201d, but little has since been heard about that either; tax rises and welfare cuts have been the main talking points.<\/p>\n

Will Labour\u2019s policies work?<\/p>\n

They may well do, but not necessarily fast enough to produce tangible results by the time of the next general election, and to rescue Labour\u2019s second term. <\/p>\n

There are many measures that should edge up growth, even if each is comparatively modest: the Brexit reset; trade deals with the US and India; making the public finances stable; reforming planning rules; expanding airports; building 1.5 million homes; green energy including nuclear power; loosening financial regulation; making room for cuts in interest rates; and some strategic investments in new sectors. Headwinds for the UK include the continuing world trade war, cuts in migration, a trend to higher debt-financing costs globally, and the prospect of more wars.<\/p>\n

The problem is that any major investment drive takes years, which means that much of the benefit in lifting the trend rate of economic growth won\u2019t be felt until the early to mid-2030s \u2013 by which time some other political party may be in power and claiming the credit. <\/p>\n

What can Labour do?<\/p>\n

Up its presentation. As with the NHS, voters need hard evidence that things are indeed improving, even if slowly, and that they are on the path to better times. That means explaining why present sacrifices have to be made, but also some vision of the rewards that will follow as a result. The party needs to boast and showcase its successes. <\/p>\n

Does it matter?<\/p>\n

The economy will always be central, which in a way is a strength for Labour given that it can\u2019t win on the \u201cculture war\u201d issues. A display of determination and competence in running the public finances and the wider economy can win the confidence of the voters. Unfortunately, Reeves has made too many errors of political judgement to be confident that the public will be receptive to anything she says. But give it time, and some evidence of higher living standards and improved public services, and that can be turned around. <\/p>\n

Is the opposition capitalising on Labour\u2019s misfortunes?<\/p>\n

Not that much. The words \u201cLiz Truss\u201d and \u201cmini-Budget\u201d still make people \u2013 including the current shadow chancellor \u2013 wince. The memories of the Tory years in power aren\u2019t that rosy: a long spell of austerity, followed by Brexit, Partygate, splits, crises, and general \u201cchaos and confusion\u201d. Labour can still rightly pin some of the blame for \u201cbroken Britain\u201d on 14 years of Tory rule.<\/p>\n

The electorate simply isn\u2019t yet ready to give the Tories a hearing; they\u2019ve apologised for Truss, but it\u2019s not enough. <\/p>\n

Meanwhile, perhaps from frustration with the two main parties, voters are curiously susceptible to the lavish and unrealistic promises made by Nigel Farage and Reform UK. Again, this could actually turn to Labour\u2019s advantage if it concentrates on the not-too-difficult task of proving that Farage\u2019s fantastical figures don\u2019t add up. Not much sign of that yet, though. <\/p>\n

Labour\u2019s biggest problem isn\u2019t so much the economy as complacency. <\/p>\n","protected":false},"excerpt":{"rendered":"The latest economic growth numbers may have been fairly unimpressive by most historical standards, but they were rather…\n","protected":false},"author":2,"featured_media":344423,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5018,3,4],"tags":[748,393,4884,1144,712,16,15,1764],"class_list":{"0":"post-344422","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-britain","8":"category-uk","9":"category-united-kingdom","10":"tag-britain","11":"tag-england","12":"tag-great-britain","13":"tag-northern-ireland","14":"tag-scotland","15":"tag-uk","16":"tag-united-kingdom","17":"tag-wales"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115028341846605267","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/344422","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=344422"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/344422\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/344423"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=344422"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=344422"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=344422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}