ALL the indicators point to a very substantial victory for Keir Starmer’s Labour Party in the UK General Election whenever it takes place.
Last week Labour won by-elections in Wellingborough, Northamptonshire, overturning a Conservative majority of more than 18,000, and in Kingswood, South Gloucestershire, where the party flipped a seat with a 11,220 Conservative majority.
In Wellingborough, the swing to Labour was the second-biggest in any post-war election. With results like this, you would think Labour strategists would be busy setting out a series of dramatic policy shifts to further encourage its supporters and energise them in advance of the General Election, painting a picture of how Labour will begin to reconstruct and rejuvenate Britain and its threadbare institutions.
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But no. We see the reverse. Keir Starmer is running away from his own policy proposals. Most strikingly, gone is the potentially transformative commitment to a £28 billion per year UK green re-industrialisation, considered too expensive, too radical, by the shadow Treasury team. This is a major loss for the UK economy.
Such misplaced political timidity fails to learn the lessons from president Joe Biden’s success in the US. As a candidate in 2019, Biden made big promises on industrial policy, infrastructure, and climate change, even in a tight election contest.
Biden offered a strikingly different vision of the US from his opponent Donald Trump, who did nothing on infrastructure and denied climate change and its dangers.
Once elected Biden passed a $1.2 trillion infrastructure act to repair America’s roads, schools, utilities, and much else besides. Biden then passed the landmark Inflation Reduction Act’s containing $370bn in green policies, which have electrified EV production, driven battery investment, and jumpstarted a raft of other early-stage green industries.
What this shows is the positive impact of ambition and vision. People want their leaders to a picture of the future that is better than the present, one that is positive and dynamic, hopeful.
Candidate Biden offered this as he simultaneously re-assured voters of a return to political normalcy post-Trump. Biden was radical and calming at the same time. He then delivered dramatically. Despite pushback from his own party.
In 2020/21 Larry Summers, a former chair of the National Economic Council under Barack Obama, excoriated Biden’s spending plans and industrial policies, forecasting a long multi-year period of inflation, with the need for higher unemployment, and a recession.
Most US business economists expected the US to be in a recession in 2023. But they were wrong.
Crucially the economic results have been positive. US inflation fell to 3.1% as central bank rates rose to 5.5% and pandemic supply chain issues moderated. Wages, especially for non-supervisory workers, grew faster than inflation.
The construction and manufacturing sectors boomed as thousands of infrastructure projects got going. Unemployment fell to 3.7% – near a 50-year low. Productivity jumped – growing at 3.2% at the end of 2023. The result: in 2023 the American economy grew at 2.5%, faster than any other major economy.
Low and behold. It turns out that pursuing expansionary industrial and climate change policies drives growth, jobs and the economy.
Meanwhile, the UK, Germany, and Japan have slipped into recession and China’s economy is stuttering, slowing, deflating.
It is disappointing that Starmer fails to look across the Atlantic and learn the right lessons: Promise real change. Sketch out a brighter, better future for all. Signal you will take bold steps once in office.
Be clear and consistent. Signal a political step change for the UK and Scotland.
Instead, Starmer is wringing his hands in worry, scared of his own shadow, offering austerity lite and too few innovative solutions for an economy and country strained and stressed by years of neglect of public services, and the social contract.
The US example shows the economic growth of today and tomorrow requires investment in a green more sustainable future. That investment is not only essential for the planet but also will drive our economies for decades to come.
Biden today faces a frustrating challenge – making more voters see and value the real economic changes he has wrought, having delivered more than most thought possible. Indeed, candidate Biden may lose in November if voters fail to credit him with his real economic victories.
The contrast in London is stark. Each day, as local electoral wins mount, Starmer offers less, jettisoning policies. Perhaps a Labour government will be more ambitious in office. But I worry that a shrunken policy platform will make it unlikely meaningful economic changes will be planned or be possible.
Stuart PM Mackintosh is executive director of the Group of Thirty (G30), an international body of financiers and academics based in Washington DC which aims to deepen understanding of economic and financial issues and to examine consequences of decisions made in the public and private sectors.
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