Economic growth will be the linchpin of Labour’s strategy for government if it wins the election, as it is comfortably expected to do in two weeks. Rachel Reeves, Labour’s shadow chancellor, has ruled out raising those taxes that are the big revenue raisers, and has committed Labour to effectively adopting Jeremy Hunt’s fiscal rule that debt should be forecast to fall as a share of GDP in five years’ time. So if a future Labour government wants to invest in significantly improving financial support for children in poverty or in public services, it is vital it finds ways to grow the economy.
Labour says its approach is centred around delivering greater stability in order to encourage higher levels of private investment. But many economists think it will also take higher levels of public investment to achieve anything like the business investment needed to generate growth. Yet after it scaled back its proposals to invest £28bn a year in the green transition, levels of planned public investment under Labour would only be marginally higher than under Conservative plans.
There is, however, one obvious place Labour can look to generate growth: in reducing the trade barriers with our closest and biggest trading bloc that were erected as a result of Brexit. Labour has made noises about building a more positive trading relationship with Europe: Keir Starmer has said he will repair “the bridges the Tories have burnt” with the EU, and party........