Rachel Reeves needs a scapegoat before her budget next month. With tax rises and spending cuts looming \u2013 perhaps even a few manifesto-breakers \u2013 the Chancellor is desperate to find someone, or something, to blame for the mess, rather than admit to Labour\u2019s own missteps.<\/p>\n
They have already tried over-egging a \u00a322bn black hole and laying it at the Tories\u2019 door. So what is Reeves casting back to now? The B-word. There is no clearer signal of a Government with no economic story than one trying to come up with an excuse that voters will see straight through.<\/p>\n
Addressing business leaders in Saudi Arabia yesterday, Reeves conceded<\/a> that the Office for Budgetary Responsibility (OBR) was \u201clikely to downgrade productivity\u201d which has been \u201cvery poor since the financial crisis and Brexit\u201d. Any OBR downgraded forecasts, Reeves claimed last week, should be blamed on Brexit: \u201cThat is why we are unashamedly rebuilding our relations with the EU to reduce some of those costs.\u201d Our exit deal, she has said, \u201ccompounded\u201d productivity problems.<\/p>\n The OBR\u2019s most recent estimate \u2013 one Reeves was quick to cite \u2013 suggests the 2020 Brexit trade deal will \u201creduce long-run productivity\u201d by four per cent compared with staying in the EU. It\u2019s not up to date as it is based on academic studies conducted between 2016 and 2019. The problem that is up to date \u2013 one that is at the heart of Reeves\u2019 fiscal challenge \u2013 is that reports are now coming out that the OBR is understood to have downgraded the UK\u2019s productivity level ahead of her budget, adding \u00a320bn to the hole in public finances.<\/p>\n It is worth remembering that at Reeves\u2019 last budget, where she delivered a record \u00a340bn of tax rises, the Chancellor pledged not to come back for more. To do exactly that \u2013 and then blame an event nearly a decade old \u2013 is to take voters for fools. It will not wash to say Brexit has caused the downgrade. It is not a newly discovered factor, its effects are not revelatory to this budget. If the Chancellor wants to raid taxpayers again, the least she could offer is a little candour.<\/p>\n Economists, even Remain-supporting ones<\/a>, warn blaming Brexit for today\u2019s economic woes is misleading. Strong analysis from The Times<\/a> summed it up rather nicely: \u201cMinisters may be tempted to cast Brexit as a fresh excuse for tax rises. In reality, as the economy adjusts, the Brexit effect is fading, not deepening.\u201d<\/p>\n If Labour would like to argue so vociferously about the great harm Brexit has done to the economy, might they look to do anything about it? Of course not. According to their thinking, the problem is Brexit \u2013 but they\u2019re not going to reverse it. Unable to move on, and unwilling to look back.<\/p>\n It will take a forward looking, intellectually sufficient narrative and diagnosis to win these arguments and make tough political decisions for a good economic future. Labour seem unable to provide one; the Tories are trying. Sir Keir Starmer at PMQs last week gave free publicity to the Party\u2019s \u2018golden economic rule\u2019 where half of each pound saved would be spent bringing down the deficit, with the other half going on growth-boosting measures such as tax cuts \u2013 and the Tories have already identified \u00a347bn in spending cuts. There is a vision to secure the future rather than load the weight onto different sectors in some horrid \u2018Buckaroo<\/a>\u2019 game where the donkeys are left overworked, undersupplied and kicking-out.<\/p>\n Away from its inherent flaws, Labour\u2019s new approach just feels so dreary. I thought we had all agreed that our political arguments had moved beyond that fateful day on 23rd June 2016. When I was just a budding hack, I wrote<\/a> about how we needed to have new political arguments \u2013 even that was five years ago. But we are moving backwards because of a backwards looking Labour government; one that is taking a cowardly, negative strategy that does not stand up to scrutiny.\u00a0<\/p>\n