What didn’t Rachel Reeves say in her growth speech yesterday? The widely trailed address surveyed the wide expanse of the government’s economic programme — from the “difficult” decisions taken in the autumn budget to the latest controversy surrounding a third Heathrow runway.
The chancellor spoke unapologetically and, yes, optimistically about Britain’s growth prospects. “Everything I see as I travel around the country gives me more belief in Britain, and more optimism about our future”, Reeves said. “Because we as a country have huge potential.”
She vowed to unlock that potential with a no-holds-barred, unbridled say yesattitude to infrastructure projects. The refusal to sign off long-term initiatives had sustained and deepened Britain’s economic stupor; “We will introduce a new approach”, Reeves added, “changing the default answer to yes.”
The chancellor promised to be bold, to cut through political controversy and to govern against the grain of Whitehall’s naysaying nature. These are the extreme lengths Labour will go to, the argument ran, to better Britain.
The speech followed the prime minister’s revelation of a new “growth test” for his government on Tuesday. Speaking to business chiefs in the City of London, Keir Starmer explained his new policy rationale: “Should we do X? If it’s good for growth, good for wealth creation, the answer is ‘yes’, if it’s not then the answer is ‘no’.”
But critics note an exception that disproves the rule: Brexit.
In her speech on Wednesday, Reeves referred to the government’s EU-UK relationship “reset” and vowed to be “pragmatic” about the challenges inherited from the last government’s Brexit deal. “Pragmatism”, of course, was not the speech’s prevailing theme. Is this government comprised of GDP zealots, or not?
In a sit-down with Bloomberg on the Davos fringe last week, Reeves and business secretary Jonathan Reynolds explained the reasoning that governs Labour’s Brexit “reset”. It was put to the ministers that the most effective thing they could do to increase GDP growth “is to do a fresh deal with Europe — something like a customs union.”
The chancellor did not reject her questioner’s premise, but stressed her abiding pragmatism. “[The business secretary] and I both voted to remain in the European Union, but we’re outside the European Union”, she said. “We’ve got to move on.”
The government has decided “not to refight” the Brexit argument, Reynolds added. Reeves agreed: “We do want a reset of our relations. [But] we don’t want the antagonism and the battles that the previous government seemed to quite relish.”
There you have it: the government’s decision not to start a “battle” over Brexit is informed by a political calculation — not an economic one. The subtext of Reeves’ recent remarks, delivered in Davos last week and Oxford yesterday, is that Labour fears the backlash to any major renegotiation from already-antagonistic, pro-Brexit forces.
The risk is that the government’s economic strategy ends up looking incoherent. Ministers insist they are pulling every lever, pressing every button and flicking every switch on the Whitehall dashboard to unlock growth — except they aren’t.
And pressure is building. Liberal Democrat leader Ed Davey delivered a speech earlier this month calling on the government to negotiate a new customs union with the EU to “turbocharge our economy in the medium and long term.”
He continued to prosecute this case at PMQs yesterday. The relevant question is worth quoting in full:
“The chancellor has now admitted that we need to go further and faster in the pursuit of economic growth, and we agree, but the prime minister knows that we believe that means setting aside his objections to a UK-EU customs union so that our country can go further and faster in rebuilding our trading relationships with our European neighbours, especially with the threat to world trade posed by Trump’s tariffs and trade wars.
“If the prime minister will not change his mind today on a customs union, will he confirm to the House that when he goes to Brussels on Monday he will open negotiations for the UK to join the pan-Euro-Mediterranean convention so that we can start removing the growth-damaging trade barriers set up by the Conservatives?”
“Our No. 1 mission is growth”, Starmer replied. “[He] knows that in relation to the reset with the EU, which we are determined to achieve, we have clear red lines when it comes to the single market and the customs union. He knows where we stand on that.”
It turns out Labour does value something more than economic growth: its “red lines”. More specifically, it rates the political-electoral cost caused by renouncing its Brexit red lines as greater than the political-electoral gain secured by the growth a significantly closer relationship with the EU would inspire. Reneging on our Brexit promises would have dire implications for public trust, Labour would add.
But there is no disguising it: from Heathrow to Brexit, Starmer is picking which “wounds” to reopen selectively. Given Labour has gambled on growth lifting living standards, just how sustainable is the above trade-off long-term?
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Rachel Reeves vows ‘spades in the ground’ at Heathrow this parliament
Lunchtime soundbite
‘Some lives exude a dull grey, that the challenge is to fill the canvas, and some are so bursting in colour that the challenge is to contain them in a single portrait. No-one ever described John as dull or grey.’
— Sir Tony Blair, the former prime minister, addresses those gathered at John Prescott’s funeral in Hull today.
Now try this…
‘Labour vs. Reform: the fight for our future’
For British democracy to triumph, the prime minister must find his voice, writes Rafael Behr for Prospect.
‘Nigel Farage’s next act: Hammer Labour on energy costs’
Reform UK has started tying green policies to grimly high energy bills — and some government MPs are getting nervous, writes Politico’s Abby Wallace.
‘Labour’s plan for ‘growth’ won’t take off, but it will leave ordinary people behind’
We used to call this ‘trickle-down economics’, and we learned a long time ago that it is a myth, writes Guardian columnist Aditya Chakrabortty.
On this day in 2024:
Harriet Harman says it’s ‘ridiculous’ the Labour Party has not elected a woman leader
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Source: Politics
