Labour right to talk Britain up after some good news on the economy
The success or failure of Keir Starmer’s government will depend on whether they can persuade people that the cost-of-living crisis is well and truly over
Good news about the economy has been in short supply in recent times, so it is perhaps worth taking a moment to feel good about the 0.7 per cent growth in the UK’s gross domestic product (GDP) over the first three months of this year. It is hardly a whopping rise, more a return to the sort of growth that we used to regard as normal, but even that would be something.
The figures, which are expected to mean Britain has the highest growth in the G7 group of advanced economies, showed “the strength and potential of the UK economy" which is “beginning to turn a corner”, proclaimed Chancellor Rachel Reeves.
However it’s fair to say that under-pressure Chancellors have form in spotting the ‘green shoots’ of growth a touch early, so we should not get too carried away. And the corner the UK is about to turn may not necessarily lead us in the right direction.
Taxes, tariffs and bills
Labour’s decision to increase employers’ National Insurance contributions did not come into effect until April, so the GDP figure does not reflect this policy’s impact on the economy as a whole. Donald Trump’s unwarranted 10 per cent tariff on most UK goods is another recent imposition – and one that will have a strongly negative effect.
Furthermore, perhaps since the 2008 financial crash, there has been a marked disconnect between GDP growth and how people feel. Even in the relatively good times, many found themselves becoming poorer, struggling to afford the nicer things to which they had become accustomed or simply to pay the bills.
How people feel about their standard of living has always been a major factor in how they vote, and rightly so. While decent GDP growth is an encouraging sign – providing Labour with a welcome opportunity to talk Britain up, not down – the success or failure of Starmer’s government will depend more on whether they can persuade people that the cost-of-living crisis is well and truly over.
That said, the UK is the sixth richest country in the world and we’re growing faster than our competitors. Things could be worse.
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