Labour’s growth agenda? Necessary but not sufficient.
Ministers will be deeply frustrated at the lack of economic growth, though they ought not to be surprised. Their own missteps have been well covered in this newspaper, and week after week new survey data reveals the extent to which government policies have dampened spirits, reduced hiring and spooked confidence.
However, while their opening salvo of policy choices hasn’t helped matters, the blame for the UK’s generally poor rate of growth does not sit solely with the government of the present day. Ignoring the post-lockdown corrections of 2021 and 2022, the last time we enjoyed an annual rate of GDP growth higher than 2 per cent was a decade ago, in 2015.
We had a decent year in 2014, at 3.1 per cent, prior to which we struggled through a post-2008 lull of between 1.9 and 2.1 per cent; figures that would have ministers reaching for the champagne today. As things stand, the Bank of England expects the UK economy to grow by just 0.75 per cent in 2025.
Much of the current debate relates to what this means for Rachel Reeves when she delivers her Spring Statement in a couple of weeks’ time, and of course this matters hugely for public spending, tax revenue and our near-term economic health, but as a country we have to think beyond these political and fiscal events.
To its credit, the Labour government is saying – and occasionally doing – the right things when it comes to laying the groundwork for future growth and these efforts are even more admirable given that the party almost certainly won’t be in office by the time any of these soon-to-be-planted trees bear fruit.
Their plan is transformative on paper, but comes wrapped in a typically British form of caution. Keir Starmer is no Javier Milei, Argentina’s chainsaw-wielding radical, and whatever the rhetoric we can still expect any pro-growth revolution here to come up against its fair share of bureaucratic hurdles, judicial reviews, organised opposition and momentum-sapping consultations.
Labour’s approach might therefore be summed up as necessary but not sufficient; the reforms aim to correct some shocking deficiencies, but alongside them taxes will almost certainly continue to increase and the state will still expand. Can we borrow Milei’s chainsaw?
Where might the missing elements of a truly radical growth plan come from? Which party could possibly assemble a coalition of voters in support of such an agenda? Are we, as a country, even ready for the kind of debate necessary to do justice to the urgency of this mission?