All the announcements only revealed Labour’s curious blind spot about how most people have to live their lives. Chancellor Rachel Reeves continues to make this clear. Her own checklist of achievements indicate just how distant Starmer’s strange, technocratic government is from New Labour. Where Blair and Gordon Brown sang the praises of unfettered globalization, Reeves puffs up her interventions against the market, from British Steel to loans for Jaguar Land Rover. And though Reeves and others will praise New Labour, with creatures like Peter Mandelson and Blair circling the Government, Starmer’s party is far more prepared to intervene on the economy than its most recent predecessor.

But intervene for whom? Big numbers, big companies, big talk of economic growth: this is the tone Labour wants to set when doing economics, to the point of absurdity. A claimed £110 billion investment by mostly US “financial firms”, the centerpiece of last week’s Trump bootlicking, was to produce just 1,800 jobs — perhaps every lucky new employee will simply be given £61 million each? And so it goes for data centers, the shiny new toy for all parts of the party, including new Business Secretary Peter Kyle and even the leader-in-waiting Andy Burnham, with seemingly little thought as to what tangible economic benefits these resource-guzzling monsters actually produce. It’s all radically disconnected from the daily experience of life in Britain, which remains much as it did pre-Labour: a sense of everything being too expensive, and nothing really working properly.

It’s not too hard to guess where the real impetus for data center enthusiasm has come from. Keir Starmer has been happy to pose with Palantir’s CEO, Alex Karp, a man otherwise given to pontificating about “the superiority of the West” and “scaring our enemies”. Perhaps Starmer was hoping some of Karp’s mildly unhinged confidence would rub off on him; sadly, the PM’s own enemies do not appear to be the remotest bit scared. Nigel Farage certainly isn’t.

Starmer’s government is shaped by one, overwhelming factor, something Burnham had the temerity to point at in an extensive pre-conference interview: “fear” of the bond markets. He wasn’t wrong: the Government has an increasingly fraught relationship to financial markets, as repeated mini-crises and the steady creep upwards of government borrowing costs suggest. The result has been a kind of economic paralysis in which the Treasury tiptoes as close as possible to the spending limits allowed by its own fiscal rules, in the hope of not frightening the bond markets, but never does enough to break out of the doom-loop. Attacks from the Left are starting to have some bite. Starmer has been unable to persuade his own backbenchers of further austerity, with messy reversals to at least some planned cuts (and rising interest rate charges) adding another £10 billion to expected borrowing, but his government is also tied, painfully, to pre-election promises to keep the main taxes untouched.

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Add to that weak economic growth and rising demands from health and social care and you have a hole in the government’s plans that is likely to be somewhere between £30 to £50 billion. Reeves will find out the exact number at the end of this week, when the Office for Budget Responsibility presents its latest forecasts; leaks beforehand suggest a further reduction in Britain’s productivity growth is on the cards. We are rapidly approaching two lost decades for the British economy. And there doesn’t seem to be a way to square the circle of low growth and politically impossible tax rises and spending cuts that is generating this economic instability. There is no particular reason for anyone trading government debt to believe that this messy government will be able to either magic up chunky tax rises (which Chief Secretary to the Treasury Darren Jones hinted at over conference) or persuade its increasingly restless backbenchers of the need for more cuts.

This fundamental lack of confidence is causing a steady increase of borrowing costs. In a world already beset by multiple shocks, from the big and obvious like the Trump tariffs to the more subtle like the impact of extreme weather on harvests, Britain is particularly badly exposed. Not only because government debt hovers at around 100% of GDP, but because the economy is fundamentally, materially weak: importing about half the natural gas it burns for electricity and heating, and about half the food it eats. It’s an economy that now has no remaining fertilizer factories, relying solely on imports from an increasingly turbulent world. The obvious, immediate things to do — a wealth tax, and an end to the absurd Quantitative Easing-related payments to the Bank of England — have been proposed only by the Government’s opponents to its Left and Right respectively.

Starmer can and should call Reform’s plans to mass deport Indefinite Leave to Remain holders “racist”. Relative to the complete spinelessness Labour has previously displayed towards Farage, this is a step forward. It is useful when confronting a political enemy to be able to actually attack them for something. But it will prove no more successful a strategy, by itself, than the same trick did for Joe Biden. For sure, he could be rude about the unique threat Trump presented to US democracy — and his points, broadly, would be correct. Biden and his supporters could talk up the huge investments made through the Inflation Reduction Act, or the CHIPS Act. They were real cash and major interventions, far bigger than anything Labour has contemplated, that would, over time, deliver some manufacturing jobs. But if all Trump had to do was ask, repeatedly, at every rally, whether ordinary Americans felt better off now than they did four years before, it amounted to nothing. Worse, when the hapless Kamala Harris attempted to float a few mild proposals to restrain grocery prices, the hue and cry from the liberal economics establishment about the evils of “price controls” meant her campaign never touched the core issue of overpriced essentials, and corporate profiteering, again. Lacking any real ideological scruples on economic issues, Trump’s administration has proceeded to rip up much of the free-market rule book — imposing dramatic, politically motivated tariffs, and taking part of chip manufacturer Intel into public ownership, for example. Reform in the UK has shown a similar flexibility — Nigel Farage has pledged to nationalize British steel while Richard Tice has taken on the Governor of the Bank of England over the costs of Quantitative Easing.

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Britain’s wage slaves are revolting

By Jonny Ball

Biden, Harris and the Democrats could go round and round the core economic issues. They could point to all their marvelous interventions. They could highlight the real dangers of their opponents’ plans. But if they did not address the central economic issue for millions — the cost-of-living crisis — it would all amount to nothing. And so they lost.

This should be taken as a warning for Labour. UK inflation remains above the Bank of England’s 2% target and, crucially, it is food prices that are helping to keep it there. Britain imports so much food that disruptions in the rest of the world (crucially now including extreme weather disrupting harvests) turn quickly into higher prices in the supermarkets here. Living standards have barely moved since 2019, creating fertile ground for the kind of resentments against migrants that Reform, and those further to the Right, to flourish.

Labour has dragooned more establishment economists into advising them, now including former Bank of England deputy governor, and former Columbia University President, Minouche Shafik. But their attachment to establishment economics is part of their problem: it means they will run scared of intervening on prices in the name of free-market economics, and it means they will duck out of taxing wealth — instead leaning still harder with Budget tax rises on the “working people” they once pledge to protect. Charges of “racism” against Reform will count for little if all Farage has to do at the next election is ask, like his mentor Trump, if people feel any better off.

Meanwhile, Labour’s National Executive Committee, firmly now in the hands of the Starmerites, has jammed through an extraordinarily condensed timetable for the election of Rayner’s replacement as deputy leader. The battle is a potential flashpoint for discontent with Starmer’s leadership, but the hasty timetable and high entry requirements will severely limit the contest. Former Cabinet minister Lucy Powell, a close ally of Manchester Mayor Andy Burnham, is the most likely oppositionist to make the cut against presumed leadership loyalist, Education Secretary Bridget Phillipson. For the Labour Right, a smooth coronation of Phillipson would be the preferred outcome, cementing their hold over the party — both symbolically and in reality.

The new line on the economy at least has the benefit of clarity. With anemic growth and global economic headwinds hindering job creation, the leadership is now emphasizing its pro-business credentials. What better way to do this than ditch the “political indulgence” of its program for workers’ rights? As Keir Starmer shreds more and more of his original pledges, Labour-backing trade unions may find themselves forced into confrontation. The question is whether, after years of looking the other way, they’re still capable of mounting a fight.

Labour’s original “Employment Rights’ Green Paper”, published in September 2021, represented one of the most comprehensive pro-worker platforms in decades. Overseen by Corbyn-era Shadow Cabinet survivor Andy McDonald and drafted in close consultation with the unions, it put forward a minimum wage of £10 an hour, a ban on zero-hours contracts, and perhaps most radically the introduction of sectoral bargaining across the economy.

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McDonald resigned shortly after its publication, citing the leadership’s lack of ambition in delivering its promises. Responsibility fell to Rayner, in what was then her expansive portfolio as deputy leader. Under her stewardship, the original pledges were watered down (sectoral bargaining was removed) into a much-reduced manifesto commitment before being introduced to Parliament last October as the Employment Rights Bill. Despite its limited scope, McDonald himself welcomed it as “a historic Bill”. Critically for Starmer during “Phase One”, it had been enough to buy industrial peace and limit noises off from the union movement, even if it fell short of their initial hopes.

“Phase Two”, as Stamer wants to call it, has a different coloration. With a grim Budget settlement on the horizon, including more than likely further tax rises, the Employment Rights Bill is an easy target for business lobbying. The argument is familiar: if the government wants more jobs, it must make hiring cheaper by cutting back on all those costly workplace protections. Already the lobbying has begun. The Financial Times quotes anonymous chief executives welcoming Rayner’s departure as “good news” and suggesting that “sensible amendments” to the Bill would be forthcoming. Some in Number 10 are reportedly seeking to “kill” key parts of the Bill.

The stage is being set for a confrontation with the unions, although whether they rise to the occasion is a different question. Some of the battle lines were being drawn up earlier this week at the Trade Union Congress’ annual shindig, its Brighton Conference. General Secretary of Unite, Britain’s second-largest union, Sharon Graham made her traditional threat of withholding affiliation fees from Labour over some or other infraction. This year, it was in support of Birmingham’s bin workers: some are set to lose £8,000 a year in pay as a result of the Labour-run council’s bungled reorganization of the city’s refuse collection. This is a classic old-school labor dispute of the kind the whole trade union movement could rally round, and so they did at the TUC. But as the strike threatens to stretch into its second year, it is also exposing the severe weaknesses of the movement.

Graham was elected in 2021, promising to focus on the “workplace not Westminster”, a break from her predecessor Len McCluskey’s overtly political strategy. In office she has failed to ignite any syndicalist fervor. Unite’s membership figures have been fudged, falling from 1.08 million in 2020 to 870,000 in 2023. Even if the union disputes this, refusing to release official figures, it is in line with declining numbers of trade union membership overall. Despite the 2022 wave of strikes, and hopes amongst some on the Left that this might revive union activity, union membership is down to just 22% of the workforce at 6.4 million, is overwhelmingly concentrated in the public sector, and is increasingly aging.

The result in Unite is that while Graham has a certain verbal radicalism — talking up to the skies her contempt for the Westminster machine — the union has not delivered much for its members nor challenged Labour’s Rightward shift. Where McCluskey and those around him sought to actively apply pressure onto the Labour Party via candidate selections, active sponsorship and support for MPs, and eventually supporting the robustly pro-union Corbyn, Graham has diverted political pressure by abdicating from “Westminster”.

Unite has become not just depoliticized, but in practice frequently an active prop for the government. Graham’s support for increased defense spending and Heathrow expansion echoes longstanding trade union positions. But, unlike McCluskey who actively sought to shape Labour policy, Graham has backed off. In doing so she has handed the government a free pass. Her set-piece interview with The Guardian at TUC Conference threatened that Labour has just “one year” to get this right; deferring, once again, the moment of reckoning with Starmer’s Labour government and handing the initiative straight back over to the party leadership.

Meanwhile, in the country’s other dominant union, Unison, there is a faint glimmer of political hope with the General Secretary election due for the end of November. Traditionally, at least over the last two decades, the Left vote has been split between “grassroots” candidates, allowing the well-entrenched union Right to come up top. Unison has been a reliable ally of Starmer’s leadership, crucially helping swing Labour’s internal National Executive Committee towards him. This year, current General Secretary and reliable Starmer ally Christina McAnea faces a single Left candidate, social worker Andrea Egan. Egan pledges a thorough “review” of Unison’s relationship with Labour, has attacked McAnea’s “cosy” relationship with the government, and was herself expelled from Labour in 2022 as part of the Starmer faction’s ongoing purge of the Left. In theory, the significant prize of Unison’s General Secretaryship is now open to the Left; in practice, the route there is likely to be somewhat rockier, with Unison’s own National Executive Committee elections in June seeing the Right win back control after a number of years in the minority. In the absence of industrial struggles, and with a leadership keen to point to the benefits of proximity to government whilst carefully pitching Leftwards — McAnea has recently criticized Starmer’s overtures on migration — a victory is by no means assured.

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But the question of who the unions represent today is becoming increasingly complex. The Labour Party and trade unions both now draw primarily from the same group of employees. Public sector employees have long been more likely to vote Labour but in the last few decades union membership has also swung decisively towards them. Today, almost half (49.9%) of public sector employees are in a union, compared to only 12% of the private sector. University graduates are more likely to be in a union than those without a degree, and likewise more likely to vote Labour.

Where a sharp differentiation emerges is in age. While the over 50s are today the most likely to be in a union, it is the under 40s who are most likely to vote Labour. The difference, most likely, comes out of the experience of those entering work before or after the 2008 financial crisis. Those starting work before could find themselves with a few years in employment, and relatively secure, potentially owning a house before the calamity; those entering afterwards are more likely to be in poorly-paid, insecure work, and still renting. Unions can speak to the securely employed; political parties of the Left to the insecure.

The outcome on the union side is likely to reinforce institutional conservatism: a slowly declining and aging membership catered to by entrenched bureaucracies that make some noise to win political favors from a Labour government, but which have few interests in the harder tasks of workplace representation, let alone militancy.

Starmer in Phase Two — anti-migrant, anti-union Starmer — may yet win a victory over a listless trade union movement, gutting his government’s own Employment Rights Bill. At least some of those around him would welcome a confrontation, simultaneously allowing them to appease the business lobby and posture as tough to the Reform-inclined. In reality, it is unlikely to do his government, nor him personally, any political good. Reform will continue to harry on migration and now both the eco-populist Greens and, if it emerges, Corbyn’s new party will harry him on workers’ rights. But worst of all will be the treatment of the hundreds of thousands of insecure, poorly paid workers in this country, promised a modicum of protection. It is this sizable constituency that neither the Labour Party nor its affiliated trade unions appear interested in representing. The stage is set for new political forces — of the radical Right, or the Left — who can speak to their interests.

Tony Blair rarely felt the need to apply such discipline. He tolerated numerous revolts, most spectacularly on the Iraq War vote in early 2003, and even serial rebels like Jeremy Corbyn or John McDonnell were allowed to keep the whip. The clique around Starmer today believe that the “sealed tomb” in which the Left had been placed during the Blair era wasn’t secure enough to prevent its re-emergence in 2015. The lesson learned by Starmer’s closest aide, Morgan McSweeney, and those around him was that the Left must never, ever be allowed anywhere close to power again. The munificence of the Blair years was, on this reading, a terrible mistake for which the price is eternal factional vigilance.

Such single-minded dedication is, as some on the Left suggested a while ago, a cause for concern. People who know little other than how to fight and win an internal Labour Party battle were, of course, going to try to apply the same techniques to their opponents, only now with the full force of the American state. The Government’s approach to Palestine protestors in recent months, even as ministers have been dragged into making some mealy-mouthed complaints about Israel’s behavior, suggests the Left’s fears were well founded. At least one retired vicar could be found among the more than 100 peaceful protestors arrested earlier this month for the crime of supporting Palestine Action, and smeared as terrorists using legislation originally intended to target Al Qaeda. This never happened under Blair: at the peak of the anti-Iraq War protests, when demonstrators broke into RAF Fairford and vandalized planes intended for bombing runs in the Middle East, they were charged only with criminal damage (and defended by one Keir Starmer QC).

Even so, the problem for Starmer is more severe than the party’s perennial factionalism. His authoritarianism speaks to a fundamental lack of confidence in his leadership, its goals and perhaps also himself. The contrast with Starmer’s presumed role model is, again, stark. New Labour involved a serious attempt to think through how the world was changing. It had an intellectual core: thinkers such as the LSE sociologist Anthony Giddens, doyen of the “Third Way”, or those on the policy side such as Geoff Mulgan, founder of the Blairite thinktank Demos, weren’t only ornamentation. Moreover, Gordon Brown was a serious political thinker, editing at the age of 24 the now-legendary volume of essays, The Red Paper on Scotland, which proudly bore the influence of Marxist thinker, Antonio Gramsci, and later producing a well-received biography of the Scottish radical socialist James Maxton. He had grappled with the dilemmas of what Marxism Today called the “New Times”: the decline of the traditional working class, the triumph of Thatcher and her co-thinkers, and the early years of globalization. If Brown reached conclusions about the global economy that the traditional Left did not agree with, they were at least substantive arguments, reinforced by a crop of new think tanks, including the Institute for Public Policy Research and Demos, to match the more established ones on the Right.

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Reform won’t save Britain

By Dan Evans

I say this with some jealousy: Corbynism had no want of academics, but landing, as it did, from a clear blue sky in the summer of 2015, the movement had to be assembled on the fly from the equivalent of bits of string and Fairy Liquid bottles. The one think tank whose radical history left it perfectly positioned to provide some intellectual heft and direction, the New Economics Foundation, where I used to work, chose instead a path of obscurity under Blue Labour veteran Marc Stears. The result was that where we might have had an intellectual anchor, we instead had an empty space. Corbynism lacked a deeper, shared understanding of the society in which we lived and a longer-term strategy for a future government.

This absence was felt keenly. Serious time and resources were put into developing economic policy, with detailed proposals on banking, finance and novel ideas such as a Universal Basic Income. If there’s an unexpected legacy for Corbynism, it is the step-change in the intellectual quality and focus of the British Left’s policy work. A new Left party, a rejuvenated Greens under Zack Polanski, or both together, are in a far stronger position today as a result. On this intellectual confidence and purpose, as on much else — promises of greater public spending, surges in party members, and general election votes — Corbynism and New Labour were far closer to each other than either is to Starmerism.

By contrast, Starmer has next to nothing. The closest thing to an authentically Starmer-aligned think tank, Labour Together, has seen funding cuts and redundancies since the election. Insiders have reported that it has become “listless”, without “purpose or sense of direction”, and has lost around one in six of its staff since the summer. The rest of the centre-left policy shops have either all kept some distance from the Government, or been kept at some distance. The tendency that has had the most obvious impact on Starmerism is from well outside the Left, in the form of the Yimbys whose demands for planning deregulation have been widely repeated by the Government. The odd senior think tanker has moved over to Downing Street or some ministerial advisory role, but there’s no systematic attempt at forging a Starmerite consensus equivalent to Blair’s promotion of the “Third Way”. The Prime Minister’s defenders claim this is a pragmatic government — choosing whatever works — but the reality is that in the absence of a clear orientation, Labour has ended up permanently on the back foot.

“Starmerism”, such as it is, represents a return to Labour’s lowest common denominator: what Perry Anderson in the Sixties called a “complacent confusion of influence with power, bovine admiration for bureaucracy, ill-concealed contempt for equality, bottomless philistinism”. Labour’s principled, socialist past is still mythologised today, but at its birth, as the “Labour Representation Committee”, conservative trade union leaders squeezed out the radicals. Founded in reality on the principles of compromise and subordination, Labour’s first Parliamentary breakthrough in 1906 was the result of a secret deal struck between its leaders, Ramsay MacDonald and Keir Hardie, with the Liberal Party. The party’s first government was a confused mess; its next ended in a catastrophic split that saw MacDonald leading a majority-Conservative National Government. It took further Left-wing splits and a world war to knock Labour into shape. But it has never lost its roots: a party born, as postwar Foreign Secretary Ernest Bevin put it, “from the bowels of the TUC” has always had an ingrained suspicion of not only socialism, but abstract ideas and big picture thinking in general. If it had tolerated a Left wing, it was because, in a stable two-party system, elections could not usually be won without it.

The wrinkle is that Starmer was himself once keenly interested in ideas and in the Left. In the Eighties, he sat on the editorial board of a well-produced green-tinged Left magazine, Socialist Alternatives, which was closely aligned with the iconoclastic post-Trotskyist International Revolutionary Marxist Tendency. Later, he was better known as a prominent Left-wing barrister. When it came to his 2020 leadership bid, he could successfully leverage this illustrious past, promising Corbynism without Corbyn to a still-raw Labour membership. He has since done everything possible to distance himself from his own history.

He got lucky. After two years of drift, Liz Truss’ implosion at the hands of the Bank of England gifted Labour a majority. But without any serious work — an attempt to build deep roots, to win over broad swathes of the population, and to develop a coherent program for government — they would win a “sandcastle majority”, easily swept away with the turning of the tide. On some level, it seems clear now that Starmer and those around him really did believe they could rock up in Downing Street, declare the grown-ups to be back in charge, and wait for economic growth to return. This suggests an extraordinary level of naiveté about the British state and economy — as if all we needed to do was apply a new lick of paint, rather than rip out the rotten wood and rewire the entire house. It has left this government, more than any in recent memory, totally at the mercy of dysfunctional core state institutions like the Treasury and the Bank of England.

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Labour’s soft-Left insurgency

By James Meadway

The damage has already been immense, as Reform surges in the polls and turns over councils that had been in Labour hands for generations. It is not certain the party will last much beyond this Parliament, at least in its current form. This could be considered a tragedy. Hundreds of thousands of selfless and public-spirited people have given their time to the party, and many still continue to do so. Millions of voters in Britain, over decades, have trusted it with their support. In office, the party has delivered meaningful, even transformational, change for the good of the country, whether in establishing the NHS, the Equal Pay Act, or — and we should acknowledge this — in the socially liberal reforms of New Labour. Even its shorter-term reforms — the Sure Start centers or the significant boost to schools funding under Blair — had a positive impact while they lasted.

But the worst of Labour has been grim, and often arrived with the best. Blair had Iraq and the war on terror. Attlee had Malaya and Partition. Starmer has Gaza, and — he is unique in this respect, a Labour leader like no other, not even Blair — no contrasting upside. And if the economic projections of the Office for Budget Responsibility are to be believed, nor will he find one. The “achievements” the party leadership points to, primarily the addition of four million extra NHS appointments, are threadbare. Rishi Sunak saw an even bigger improvement in numbers during his last year in office.

Starmer will likely get votes at 16 through. This is not nothing, but not remotely approaching the scale of constitutional reform managed by New Labour, or even that proposed by Gordon Brown’s Commission in 2023 which was studiously ignored by Starmer in government. The Assisted Dying Bill has become a poorly managed farce — troubling for an issue so manifestly serious. Rhetorical flourishes about Starmer taking on the “bulging benefits bill” that is apparently “blighting society” end up as just that. Markets correctly smell frailty.

All the while, whispers of a leadership challenge grow louder. Labour MPs nervously look at their thin majorities — more than ever before have less than 5% as a buffer — and ponder their future. The much-admired Andy Burnham has been speaking far beyond his brief as Mayor of Manchester, and reportedly has a quick route back to Parliament, should the need arise. Angela Rayner’s leaked memo, setting out tax-raising alternatives to Rachel Reeves’ spending cuts, will not have hurt her leadership ambitions. But any leadership contender now requires the signatures of 80 MPs to stand, after changes brought in under Starmer: in a deeply factionalized Parliamentary Party this excludes anyone but the more milquetoast or leadership-approved from the ballot. The talk, over the past few weeks, was that Starmer loyalist Shabana Mahmood had been recruited as campaign chair for Wes Streeting.

The Blairite Health Secretary is unusual amongst Labour MPs in being a genuine ideologue. Streeting has ideas about the world, and some desire to put them into practice. He would present Labour with the sharp break with its own past that New Labour never managed — he could finally complete the Blair Revolution. There are examples of this transformation elsewhere: Italy’s pure centrist Democratic Party were once the Democrats of the Left, and before that the million-strong Italian Communist Party. There is maybe 20% of the electorate who, as in Italy, could be persuaded to vote reliably along these lines: typically better off, more often employed in the public sector, moderate on foreign policy, and given something of a Blue Labour gloss to (it would hope) ward off Reform. This version of Labour could, in principle, leverage that support to claw its way out of the current political chaos as the dominant partner in future coalition governments. With a new Corbyn/Sultana party and the Greens to its Left, the political logic for a British “Democratic Party” is clear. There is a route out of Starmer’s quagmire, but it will require a conclusive break. A break to the Left inside the party has been made impossible; a break to the Right is all that remains.

Starmer is unlikely to be deposed just yet. His team is clinging to the Hamilton by-election result, where surging Reform gobbled up SNP support to allow Labour to clinch an unexpected win. This may steady the nerves of his supporters for now. But their relief will be short-lived. The much-delayed spending review is finally due tomorrow, when hapless Chancellor Rachel Reeves, who promised “no return to austerity”, will detail her return to austerity. Cuts to “unprotected” departments, outside of health, education and defense, will be harsh. And only defense is expected to see meaningful increases. A few cabinet ministers, such as Home Secretary Yvette Cooper, have gamed the Treasury’s system, holding out for better deals right up until the last minute. Some tweaks to the Treasury’s investment rules have freed up funds for infrastructure projects outside of the south-east, but these will do little to address day-to-day needs. And for many, like those who lost their winter fuel payment or face the two-child benefit cap, daily life is substantially worse. That basic and correct perception is the most corrosive force eroding Labour’s public support.

Starmer has had little choice but to respond: facing plummeting popularity, backbench revolt, disquiet in the unions, and, finally, the growling of Gordon Brown. The Prime Minister’s half-promise to partially reintroduce the winter fuel payments came unprompted at PMQs, leaving the Treasury scrambling for cash. The apparent fudge appears to involve clawbacks from wealthier pensioners via tax reforms in the next fiscal year — leaving this year’s payments unfunded, details only to be revealed at the Autumn Budget. Had Reeves not spent her first six months in office berating the Tories’ for their “unfunded” spending commitments, this might be less embarrassing.

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By Despotic Inroad

Inside Government, there is a very real sense that No. 10 is becoming directionless on the economy. Ravinder Athwal, head of economic policy, is set to leave in July. And a search for an additional “senior advisor” has so far come to naught. A vacuum is opening — and others are jostling to fill it.

One possible contender is Angela Rayner. A leak from her office, listing alternative tax rises targeting the wealthy, made its way to the front page of The Telegraph. It was possibly the result of Treasury Spads wanting to flush out the opposition, but front pages in the Tory press bewailing her “TAX RAIDS” and “PUSHBACK ON CUTS” do not exactly hurt Rayner with Labour members. Polling by LabourList of those members suggests a surge in her popularity, second only to Ed Miliband. A Cabinet hold-out, and a former trade union negotiator herself, Rayner was one of the last ministers to strike a spending deal with the Treasury, claiming more funding was needed to meet the Government’s own ambitious housing targets. The chief executive of Britain’s largest housing association has been warning of a “cliff edge” in their funding, but it is hard to see what new money could be found at this late stage — although, again, her name in the headlines doesn’t hurt.

Meanwhile, perennial king-over-the-water, Andy Burnham, has set out his stall. At a conference organised by the soft-Left faction Compass, the Manchester Mayor delivered, in his well-practised everyman style, a wish list for the Party faithful: tax hikes for the wealthy, reversal of disability benefit cuts, more funding for local authorities, a social housing programme and the introduction of proportional representation. But it’s a long road to Downing Street. Lacking a parliamentary seat, Burnham would need a speedy reshuffle.

Their roads ahead might look different, but Rayner and Burnham are converging politically. With the Corbyn insurgency dealt with — “shaking off the fleas” — and its few remaining MPs isolated and demoralized, the Party’s perma-war has shifted. The new battleground is well to Corbyn’s Right. Currently grouped uneasily around Starmer, the weary foot-soldiers of the Party’s soft-Left are keeping a beady eye on his eventual exit. Former ministers Anneliese Dodds and Louise Haigh have headed for the backbenches, while Rachael Maskell, already on the backbench, has been notably more vocal in her recent criticism of the Government.

“Soft-Left” is the Party’s default option, a broad center-left space where most of the Party’s 300,000 remaining members feel most comfortable. But ideologically it is hard to define: a slightly fuzzy blur of good intentions on public spending and foreign policy. By contrast, New Labour was an intensely intellectual and strategic project, and the hard-Left of Tony Benn, Jeremy Corbyn and John McDonnell certainly had its intellectuals, if without the same ruthless grasp of strategy. Even the Party’s Old Right at least has a clear set of principles: America First, Britain Second. Blue Labour has “faith, flag, family” and the Trump-supporting antics of academic provocateur Lord Glasman. And the soft-Left? It has some niche nostalgia — an enthusiasm for Eighties Eurocommunist journal, Marxism Today — but not always much clarity.

This vagueness has made its existence frustrating. After splitting with the Bennite hard-Left in the mid-Eighties to support Neil Kinnock, much of the movement then hitched itself onto New Labour, which was in the ascendant from the mid-Nineties. But whatever successes early New Labour delivered, from constitutional reform to a turnaround in the NHS and schools, were overshadowed by Iraq. The soft-Left hero Robin Cook resigned as foreign secretary over it. The 2008 financial crisis shattered the remaining economic case for Blairism.

Dealing with the legacy of New Labour has become a generation-defining problem for the Party, and for its soft-Left faction in particular. Mostly rejecting Corbynism, it rallied behind Starmer’s 2020 leadership bid, seduced by his Corbyn-lite promises. But by the time he arrived in No. 10, Starmer had discarded every plank of that platform, leaving only Reevesian penny-pinching and his own authoritarian tendencies. Labour’s most optimistic vision offers little more than the right to die more quickly, either at your own hand or in a future war with Russia. It’s a long way from Things Can Only Get Better.

The soft-Left senses that this could be its moment. At the Compass conference, there was a certain spring in the attendees’ step. And a few days later, the journal Renewal, which has long attempted to give some intellectual heft to the soft-Left project, relaunched in the sweaty backroom of a Clerkenwell pub. Labour MPs including Anneliese Dodds, Left-leaning journalists, and wonks were in attendance. After 40 years of disappointment, tagging along with leaders who promised much and delivered little, the mood was cautious. But luckily for them, all other factions are scattered or have been discredited.

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Why Starmer shouldn't trust Trump

By James Meadway

It may, however, already be too late. The two-party system is on its last legs, with Reform today as the primary beneficiary of this collapse. Britain’s position in the world is still out of kilter post-Brexit. Discontent in the country runs deep, far deeper than a little more public spending can resolve. As Trump and all successful populists understand, electoral success requires enemies: the sort of zero-sum, dog-eat-dog politics the soft-Left will not speak to. When the chips are down, they are just too nice.

But, more immediately, it is difficult to depose a Labor leader. The plotters of 2016’s “chicken coup” against Corbyn found this out the hard way. Starmer himself has made it more difficult: a leadership challenger now requires 20% of a much-enlarged Parliamentary Labor Party to trigger a contest. The members, for their part, are doggedly loyal to their leaders, as Corbyn’s comfortable second leadership victory demonstrated. And Starmer will leave only if offered something better — some juicy international job offer like NATO Secretary-General — or if his inner circle quietly shows him the door.

Chatter inside the Party suggests this won’t happen before the May 2026 local elections — and these threaten to be brutal. If Reform could smash through Labor’s seats across the North, a motley crew of Left-wing independents and Greens could pose a similar risk for inner-city strongholds up for election next year, such as Hackney. There are rumors that Sadiq Khan is privately warning about this. And so, Labor’s soft-Left will be forced into the hardest decision it has faced in four decades: to continue searching for a crumbling center-ground, or move decisively with the harsher and more polarized times.

Labour’s primary economic goal has been reduced to avoiding US tariffs and scoring a half-cocked half-trade deal with Trump. In a bid to appease the President, the government will likely jettison the Digital Services Tax, levied on 2% of US Big Tech revenues here and bringing in $700 million a year — an all-but direct transfer from the UK’s poorest to Mark Zuckerberg’s pockets. Moreover, Starmer has funneled money away from welfare and towards a supposedly Trump-pleasing increase in defense spending. That’s while the Government’s own figures show that 250,000 more people, including 50,000 children, are expected to be pushed into poverty by the end of the decade. When Starmer says “everything has changed”, like Prince Tancredi in The Leopard, he is making sure everything stays the same.

Perhaps he thinks this will help Britain avoid “jumping into a trade war” — as if he had much say in the matter. If you don’t want to fight a war and someone else very much does, you will, by default, lose.

And his government has won strikingly little. Britain gained no special treatment, compared to any other large economy with a US trade deficit. Brazil and Australia, for example, both had the same 10% tariff applied. The crude, mechanical formula the Trump administration used to calculate tariffs was levied on the UK the same as almost everywhere else. Canada and Mexico, two countries whose leaderships have been notably more forthright, won a relative reprieve for negotiations.

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Trump’s tariffs are the end of globalisation

By Wolfgang Munchau

Contrast this unhappy island with the peculiar joy that has been overflowing the banks of the Spree. Following Chancellor-in-waiting Friedrich Merz’s announcement of a dramatic, debt-funded expansion of government spending, there has been a sudden, electric transformation of Germany’s possible economic fortunes. The cracking of the postwar European security system, somewhere between JD Vance’s speech in Munich and Volodymyr Zelensky’s dressing down in Washington, has provoked a deep recalibration of priorities across the continent. Germany must become, in Merz’s words, “independent of the USA”.

A consensus has incinerated Germany’s dogged commitment to the debt brake that had been promoted to a hallowed status. In a deal with the Christian Democrats and the Social Democrats, the one-time radical peaceniks in the Green Party are now happy to nod through an immense expansion of the Federal military budget with the questionable promise of a few more EV charging points. A split in the Left Party dotted the umlauts. Undesirables to the Left and Right shoved to the margins.

For 15 years, austerity has seen Germany banging its head against a fiscal wall — and it feels great to stop. After the government pledged for “whatever it takes” on defense spending, the Frankfurt Stock Exchange soared, led by arms manufacturer Rheinmetall whose share prices were up 140%. A further half a trillion euros has been set aside for domestic investment and some social spending, in the hopes of repairing the country’s crumbling infrastructure. Germany’s once-famed railways have got so bad that the US Department of Defense issued a complaint about delays in moving materiel to the Ukrainian frontline. Altogether, Germany is pledging more borrowing and spending than Reunification, and the Marshall Plan, the two foundational moments in the construction of its modern economy. This is a serious, genuine, 180-degree shift in orientation. Trump’s tariffs have only underlined the need for a recalibration.

While Trump’s re-election has transmogrified Germany’s fiscally constipated Christian Democrats into partisans for debt-fueled military Keynesianism, the opposite has happened in Britain. It has warped the Labour Party into steely-eyed austerians more than prepared to trim the supposed fat of the British state for the benefit of British Aerospace’s profits. Starmer is targeting an “overcautious, flabby” government for cuts beyond the brutal slicing of welfare. Labour ministers will point to Reeves’ tax-and-spend first Budget, in October last year, and claim that this new enthusiasm for the fiscal knife isn’t austerity. But last year’s sudden £70 billion flurry of generosity will not make any noticeable difference to the 800,000 Personal Independence Payment claimants, who are now losing on average £4,500. This is austerity, with a vengeance. But it is Labour austerity: cynically trying to buy off a few potentially noisy complainants in the public sector unions while shoving those without an institutional voice under a Motability car, all justified in the name of “security, dignity and agency”.

Starmer may not care too much. The Prime Minister’s various international appearances since January have been greeted with a chorus of happy barks from Britain’s commentariat. His first six months after his election victory saw him thank the country by spending an extraordinary amount of time out of it: and he clearly would rather strut around the international stage than grub around in the murk of Workplace Capability Assessments. It is not clear what his plan to win the next election might be.

The generous interpretation is that Starmer is playing to his strengths, and that his diplomatic efforts since last summer are now producing dividends in his close relationship with Trump. But handshakes in Washington do little for local elections, such as in Runcorn where the party expects a Reform victory in a once-safe seat. Defense spending, which is increasingly tech- and equipment-focused, has (as government assessments show) limited impact on jobs. The content and purpose of the planned increase in defense spending remains unclear. Pointing at Russia and making scary noises do not actually constitute a strategic plan. Britain’s military, and its notoriously wasteful contractors, have been gifted a blank check.

Labour has decided to remove one of Britain’s actual advantages in the world by chopping its significant foreign aid spending. Humanitarian costs aside, the hard-nosed calculation ought to have been that soft power can be leveraged in a world in the near-future where the Global South will matter more, and the old West far less. Britain’s “coalition of the willing” is anything but: those European countries pledged to Ukraine’s defense are locked in mutual disagreement over how, and even whether, to provide military support for any peace deal.

And, as everyone who has ever dealt with Trump discovers, a personal pledge at lunchtime can become a vitriolic tweet by midnight. Choosing to align so closely with a regime that views uncertainty as a weapon and treats all relationships as purely transactional is an invitation to failure. There are, it is true, hard economic reasons that encourage Starmer’s attitude: outside the EU, with few friends in the world, lumbering around with failing institutions, a stagnant economy, and some extraordinary external liabilities, the country’s elite may see few options beyond supplication. The Government’s notional opposition agrees: both the Tories and, even more so, Reform, offer no alternatives beyond national forelock-tugging with more or less enthusiasm.

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Trump will make China great again

By John Rapley

But that doesn’t mean other options don’t exist. One Euro-optimistic vision, towards which the world’s stock markets have been pointing, is a prolonged period of turbulence and lower growth in the US. As the Trump administration tears out the wiring of the global economic order, big money flees frightened by rumors of capital controls and the reality of on again, off again tariffs. Already The Telegraph reports America’s ultrarich are rushing to open Swiss bank accounts. As Trump’s America slides, Europe, led by a freely-spending Germany, attracts the investment; relations with China are normalized, trade accelerates; the war in Ukraine at least paused. Where once US growth meant European prosperity, that link has now shattered: in Trump’s first decade as a national political figure, a soaring US, floated aloft on cheap gas and demand for dollars, was mirrored by a stagnant Europe. If recent stock prices are any guide, we have been heading for a reversal: US flatlining, European growth.

It is certainly too soon after the tariff shock to make robust predictions, and too soon to declare that Europe is heading for a rebound. Already the fiscal strains of the attempted rearmament drive are beginning to show, and the EU’s infrastructure pledges do not meet even the requirements detailed in Mario Draghi’s blockbuster report last year. A 20% US tariff will be hard going, even if the EU has a meaningful capacity to retaliate, and to negotiate. But it is plausible to think that the era of “American exceptionalism”, of its uniquely rapid growth in a stagnant developed world, may well be over. And Britain, on current showing, is going to find itself on the wrong side of that Atlantic divide.

Britain’s economic fundamentals are substantially worse than other, similar economies. Our weakness when it comes to productivity growth, the size of government debt, and our import dependencies for essentials such as food and energy means that we have fewer options. Or rather few options that would not now involve seriously challenging power and wealth in this country. Calls for a wealth tax are growing. The absurd, £130 billion hand-out to the Bank of England “losses” is finally attracting political attention — although among national parties only Reform has been brave enough so far to call for its removal. The Treasury itself could finally learn to invest outside London and the southeast. If everything has changed, everything must change.