Grow, baby, grow… but will Labour’s growth agenda be enough?
City PM’s politics reporter, Jessica Frank-Keyes, unpacks the week in Westminster. Today, she tackles Labour’s growing promises.
Picture a graph with the x axis stretching from 1800 to the present day. The data is represented as a fairly flat line along the bottom, up to about 1960.
Then it bumps around at about a quarter of the graph’s height, before – in around 2011 – shooting upwards. The data drops again in 2020 (no prizes for guessing why), and then heads skyward again in 2022 and onwards.
That’s the graph for the number of times the word growth is listed as being mentioned in both Houses of Parliament since Hansard – the official record – was founded in 1803.
Nowadays, everyone seems to agree that Britain’s economy needs to grow. From the ill-fated Liz Truss denouncing “the anti-growth coalition”, to the Labour government winning the election and pledging to get the economy back on track, it’s a broad political consensus.
As Karl Williams from the Centre for Policy Studies (CPS) puts it: “Real wages have stagnated for the past 15 to 20 years, since 2008. We’re a lot poorer than we should be.”
Ahead of the election, Labour promised in their manifesto that they would work to secure the highest sustained growth among the G7 nations.
After taking office, Keir Starmer and Chancellor Rachel Reeves were eager to highlight their poor economic inheritance, following the impact of Brexit, the Covid pandemic, the energy crisis sparked by Russia and what they termed ‘Tory economic mismanagement’.
They cited a £22bn “black hole” in the public finances, and Reeves’ Budget hiked taxes by £40bn, creating backlash from businesses and lobby groups such as the Confederation for British Industry (CBI), who said her fiscal plans knocked confidence in the economy.
Since then, she’s faced a lot of criticism – including speculation about her future at the Treasury, and defended herself over a trip to China during a week when state borrowing costs soared to their highest levels since the 1990s – prompting fears of fiscal meltdown.
The markets have since stabilised, although the overall economic outlook remains bleak. But Reeves appears safe in her role, for now – with reports she is fully backed by the PM and her cabinet colleagues in her and Starmer’s new drive for “growth, growth, growth”.
This renewed focus on kickstarting UK growth – from announcing planning reform, cracking down on court delays to major infrastructure schemes, and meeting with big businesses such as Tesco, BAE Systems and Nationwide – reflects a sense that the government recognises it hasn’t exactly been smooth sailing since the election.
“They’ve seen the message they introduced in the last Budget had a depressing effect, and they’ve realised they’ve got to do something to at least offset that,” Williams observed.
Economic growth stagnated in the second half of 2024 – and inflation is now back above the Bank of England’s two per cent target. While ‘the economy’ remains top of YouGov’s tracker of Brits’ political priorities. It’s clear that if ministers can succeed, there are votes to be won.
The Chancellor insisted to MPs this week that the government “must go further and faster”, while Starmer used a visit to Bloomberg HQ to reiterate “growth is the number one priority”.
Reeves’ big economic speech on Wednesday is widely expected to see her confirm government support for the expansion of Heathrow Airport – potentially putting her on a collision course with opponents such as the energy secretary and London mayor.
And Labour MPs with west London constituencies weren’t shy in lining up to express their outrage in the House of Commons on Tuesday afternoon, when a transport minister had to answer questions about the rampant speculation.
Chatting to some in Parliament, it’s clear the government is doing more than perhaps was expected – after all, they’ve got to put that mega majority to good use.
Praful Nargund, of the Good Growth Foundation, also praised the Chancellor’s “big focus on cost of living”. He reckons living standards – and the pounds in people’s pockets – are “really the marker by which people will judge whether or not growth has been successful”.
Milton Keynes MP Chris Curtis, co-chair of the Labour Growth Group, told me Reeves’ address is being seen as “an inflection point” and insisted: “We stand ready to back her every step of the way.”
Consensus around the need for growth is clear, but it’s far from certain whether the measures the government commits itself to will actually deliver it – and how long it will take.
While it remains to be seen exactly what the Chancellor has in her locker, just don’t expect that chart to flatten out any time soon.