The UK’s chancellor of the exchequer, Rachel Reeves, delivered her first budget last October with a promise to end “short termism”. No more economic gimmicks – from now on Britain’s government would plan for the long term, she suggested.
Meanwhile, Labour will have to ride out politically choppy waters as the British economy continues to stutter along with negligible growth. Thinking long term is all well and good, but governments must survive in the short term if they are to see through their plans.
Right now, there seems to be little sign of good news on Britain’s economic horizon.
Most economic analysts in the Westminster bubble agree something had to give. Economic chopping and changing had become a British national sport.
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The previous Tory government went from George Osborne’s “Plan for Growth” in 2011 to Jeremy Hunt’s “Growth Plan” in 2023, clocking up a bewildering 11 economic strategies in that time. The Tories went through almost as many business secretaries – 10 in total – and seven chancellors.
By the end, investors had lost faith in the government’s ability or willingness to see any economic strategy through.
[ Rachel Reeves: Labour will go ‘further and faster’ in search for growthOpens in new window ]
Reeves, to her credit, has followed her long-term thinking with requisite action. The National Wealth Fund she set up in October has been welcomed, but it will take years to bear fruit. So will the relaxation of planning laws designed to spur building, and the borrowing-led infrastructure plans such as greater rail connections in the north of England.
On Wednesday, Reeves again looked to the future with a plan for a third runway at London’s Heathrow, which she said would add half a percentage point to GDP. Yet Ryanair’s Michael O’Leary claimed it wouldn’t be built until the 2040s. It certainly won’t be built by the next election.
In the meantime, Labour has hiked taxes, which will be a drag on growth in the immediate future. It seems to be governing through the cliched maxim of there being no long-term gain without short-term pain. But with an emphasis on the hurt.
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