‘Disastrous’. ‘Suicidal’. ‘A growth killer’. These are just some of the words that have been used to describe the Government’s economic strategy over the past few days.
But we can now see this criticism was wrong. As Keir Starmer demonstrated yesterday, and Rachel Reeves confirmed in her speech today, the problem isn’t that the Government is pursuing a disastrously damaging economic policy and strategy. It now literally has no economic policy or strategy at all.
When Labour entered office it had a clear economic plan. That plan had its critics. But it at least had the virtue of clarity, underpinned by a degree of ideological consistency.
Ministers would come clean to the country about the appalling nature of the public finances they inherited. They would then explain how that malign inheritance had forced them to make a difficult choice. After years of neglect under the Tories, public services needed to be protected. So as a result, £40billion of taxes would have to be raised from businesses. It would be tough. But the ‘black hole’ the new administration had uncovered needed to be filled, not least to reassure the markets, and stabilise the nation’s currency.
And we know had that worked out. The economy promptly tanked. Businesses began to lay off workers. Unemployment started to rise. Growth forecasts were revised down. The markets were sent into spasm. As one Minister admitted to me last week: ‘the Budget acted like chloroform on the UK economy‘.
So over the last 48 hours, both the Prime Minister and the Chancellor have attempted to undo the damage. Keir Starmer – implausibly – attempted to uncover his inner-Margaret Thatcher by telling a group of slightly bemused business leaders his number one priority would now be to ‘hard-wire growth’ into his government. Rachel Reeves – even more implausibly – declared she would be embracing her inner Donald Trump, would start to talk up Britain, and give the green light to a raft of new runways, roads and railways lines.

If she continues as she is, Chancellor Rachel Reeves (pictured giving her speech today) will prove herself ‘at best an economic dilettante, and at worst economically illiterate’
All of which is nice. But is also utterly economically and politically incoherent, when set aside the Government’s previously announced policies and objectives.
It’s great that Keir Starmer has suddenly decided he wants to prioritise economic expansion. But it’s impossible to align that ambition with a decision to impose £40billion of tax on British business. The Prime Minister’s stated desire to free the business community from what he called a ‘Japanese knot-weed of red tape’ is equally laudable. But again, how can that be squared with his plan to impose a new raft of workplace regulation via Angela Rayner’s Employment’s Right’s Bill?
A commitment to growth will be music to the ears of hard-pressed business chiefs. But who is going to break the news to his Energy Secretary Ed Miliband, whose dash towards Net Zero is becoming an albatross around the neck of the British economy?
If Keir Starmer and Rachel Reeves had stood up and said, ‘OK, it’s a fair cop. We messed up. We went too far in the Budget, we’re going to reverse it,’ they would deserve credit for their honesty and pragmatism. But that’s not what they’ve done. They have instead reached up and taken off the shelf some hackneyed cliches from the 1980s, in an attempt to pretend that Starmerism is somehow a natural extension of Thatcherism.
The reality is the economic strategy Reeves set out last November has imploded. But neither she, nor the Prime Minister, seem to be willing or able to explain what should be put in its place.
And among those being left in the dark are Keir Starmer’s own ministers. In the run up to the Budget they were told the Government’s priority would be to protect and reinvigorate public services. Labour’s private polling purportedly showed that after 14 years of Conservative Government, that was the voters’ priority. But over the past couple of months, as the markets have been thrown into turmoil and debt repayments have soared, those same Ministers have been told of the need to find major cuts in their departmental budgets. And now they are being told that protection of public services is no longer the government’s main objective, and has instead been supplanted by a dash for growth.

Keir Starmer should admit his catastrophic mistakes on the economy, says Dan Hodges
As one Minister explained: ‘What is the strategy here? What are we supposed to be saying to people? We’re the guardians of public services? Or we’re the new wealth creators?’
The truth is Keir Starmer and Rachel Reeves don’t have a clue. If they genuinely want to kickstart the British economy, that’s fine. But then have to admit they were wrong. In November Reeves told the CBI she ‘had no alternative’ but to impose a £40billion tax burden on businesses. ‘I know those choices will have an impact’, she insisted, ‘but I stand by those choices as the right choices for our country: investment to fix the NHS and rebuild Britain, while ensuring working people don’t face higher taxes in their payslips’.
We now know what the impact was. It garrotted growth. So unless she reverses those tax rises, shelves the proposed profusion of new employment regulations and calls a halt to the mad-cap dash to Net Zero, she has zero hope of resurrecting the economy.
Since taking over as Chancellor, Reeves has faced a raft of personal abuse, some of it deeply misogynistic. But she has to realise that her previous strategy is simply not compatible with her new stated economic objectives. And if she continues to try to claim stimulating growth is somehow consistent with imposing the biggest business tax burden in modern British history, then the charge she is at best an economic dilettante, and at worst economically illiterate, will be irrefutable.
What the country needs is not rehashed Thatcherite free-market rhetoric, or repackaged Boris-boosterism. What we need is a coherent economic strategy. Or indeed, any sort of economic strategy.
But at the moment we don’t have one. Keir Starmer and Rachel Reeves are not prepared to come clean and admit their 2024 Budget crippled business. And without that candour, and a reversal of those policies, they are hamstrung from doing what needs to be done to get the British economy back on track.
Another black-hole has opened up. One that’s sitting directly where the Government’s economic strategy should be. And if Rachel Reeves and Keir Starmer can’t explain precisely how they intend to secure the growth they now profess to crave, then it will swallow them.