Blog 2023 Malcolm Blair-Robinson

Labour and the Economy

If David Milliband had been elected Labour leader, thus keeping alive the concept of New Labour, the current economic posture of the Opposition would serve. The prospects of a return to power would be negligible.

But it was not David, but Ed, who was elected, signalling the end of New Labour, with all its skeletons, arrogance, inertia and spinning. The prospects for Labour are therefore much brighter, not because it will justify its past and offer more of the same, but because it will break with the past and offer something different. This is not happening with the economy.  Alan Johnson is good on communication and voter empathy. He talks of worried families up and down the land and people nod. But there is no big idea. When he talks, we hear a man who has mugged up, not an innovator who has thought through. That big idea is out there. Alan Johnson needs to grasp it and make it his own.

Growth Figures

These have turned out better than expected for the third quarter at 0.8%. Annualised that would come to 3.2%. Actual growth over the past twelve months is 2.8%. All this is very respectable, but the effect of the cuts is yet to feed into the economy, although those of the past year by Labour and the Coalition combined are as fierce in effect as those yet to impact. Cause for optimism certainly and favouring deficit hawks, but not so decisively as to give them the field. Yet.

It is interesting to compare what is happening here, with the U.S.. There the economy received such a record stimulus and government spending by the Federal authorities has reached such proportions, as to energise the battered Republican Party, give birth to the Tea Party and hazard the prospects for the Obama Administration in the mid- term elections. There is evidence of the economy failing to generate any momentum of its own and growth slowing, not because of cuts, but because the impact of spending measures is wearing off. Moreover the structural imbalances and fault lines remain much as they did at the beginning. Jobless totals are frightening and property prices continue to fall.

This suggests that without fundamental re-modellling, the old economic model is clapped out and no amount of spending will fire it up or keep it going, a view held by this Blog. By contrast the faults in the structure of the similar economic model employed in the U.K., in the lead up to the crash, are now correcting themselves. This is because the private sector and the ordinary working people have known for long what was wrong, but weighed down by the ever growing State, have been held back. The attack on big government and profligate spending by Whitehall, has energised everyone not engaged in it and the British economy, so long skewed from its potential by over-borrowing, quangos and co-ordinators, has started to break free.

It therefore looks as if we are doing better than the high spending America. It is no time, however, to be cocky. Without an American recovery at some point, our own will not sustain.