Larry Elliott

John Healey’s early days as chancellor highlight the enduring power of fiscal orthodoxy, which threatens to constrain Andy Burnham’s ambitions to reverse decades of Thatcherism and rebuild Britain’s industrial base. Despite early symbolic measures intended to convey optimism and reconnect Labour with working‑class voters, tight fiscal rules, rising defence spending, and uncertain economic conditions leave the government facing inevitable tax rises and limited room to manoeuvre. Burnham seeks to assert greater economic control from No 10, but unless the government challenges entrenched ideas equating public finances with household budgets, its transformative goals will remain out of reach.

Argues that Andy Burnham’s proposed reindustrialisation strategy can succeed if he moves beyond Labour’s incremental approach, embraces a state-led industrial policy, and channels major long-term investment through a national investment bank. Highlights the need to rebuild manufacturing capacity, invest in technical skills, empower unions, and prepare for resistance from financial markets. Suggests that broadening the Bank of England’s mandate and using public borrowing tied to revenue streams can help avoid repeating past cycles of austerity and economic stagnation.

Postwar nationalisation under Clement Attlee provides a precedent for Andy Burnham’s interest in expanding state ownership as a response to economic challenges. Between 1945 and 1951, Labour implemented sweeping nationalisations across major industries, driven by wartime experience, economic fragility and public support for a larger state role. Compensation was generous despite fiscal strain, and several nationalised sectors performed effectively for decades. Later decades saw nationalisation shift toward emergency rescues, gaining a negative public image despite competitive productivity. Burnham is portrayed as more willing than recent Labour leaders to view state ownership as a proactive tool rather than a last resort.

Argues that leaving the European Union was justified, citing the EU’s long-term economic underperformance, the constraints it placed on Britain’s ability to reform its economic model, and the Brexit vote as an expression of working‑class discontent with decades of neoliberal policies. Highlights how Labour embraced a pro-EU identity while neglecting economic grievances intensified after the financial crisis. Suggests Brexit created an opportunity for structural change, though not a guarantee, and views the continued demand for reform as positive.

Youth unemployment in the UK is rising sharply, with more than a million young people not in education, employment or training and increasing numbers claiming inactivity-related benefits. Alan Milburn’s review highlights structural problems, including underfunded employment support, barriers in the benefits system and worsening mental health following the Covid lockdowns. Weak labour demand, the potential for higher interest rates and recent tax and minimum wage changes have further raised hiring costs in sectors where young people typically work. The article argues that Labour’s policies are not improving conditions and that solutions require expanded vocational training, better-prepared education pathways, managed migration and broader economic strengthening.

Criticism of Tony Blair’s recent essay centres on his reliance on artificial intelligence, nostalgia for past policies and failure to recognise the economic and political shifts since 2007. Labour’s current challenges are attributed to longstanding structural issues, weakened productivity, deindustrialisation and the legacy of free‑market policies from the Thatcher and Blair eras. The piece argues that the political centre has shifted leftward, making Blair’s prescriptions outdated, and highlights regional inequalities, climate concerns and the need for reindustrialisation and public investment. The government’s moderate AI strategy and Labour’s reforms are defended while Blair’s proposals are dismissed as unrealistic and politically unhelpful.

Brexit continues to dominate UK politics, with voter frustration stemming from stagnant living standards and a sense that neither major party has a coherent plan for recovery. Labour’s recent electoral losses reflect disillusionment across both pro-Brexit and pro-Remain constituencies. Keir Starmer’s strategy of seeking closer ties with the EU without pursuing either full re-engagement or a bold post-Brexit economic overhaul is portrayed as incoherent and politically damaging. Two viable paths are presented: using Brexit freedoms to rebuild the economy through active industrial policy or campaigning to rejoin the EU. Attempting to balance both sides satisfies neither, leaving Labour vulnerable amid worsening economic pressures and geopolitical instability.

Britain’s economy remains constrained by the tension between public demands for relief from rising living costs and financial markets’ insistence on fiscal restraint. Heightened inflation from the Iran conflict and rising mortgage costs have intensified pressures, while elevated bond yields reflect market fears of both inflation and political instability. Historical crises and recent episodes such as the Truss government’s 2022 budget debacle reinforce governments’ reluctance to challenge market expectations. Current policies under Rachel Reeves accommodate limited investment while prioritising fiscal discipline, yet structural challenges including an ageing population, decarbonisation commitments and weak growth persist. Political fragmentation is amplified by economic stagnation, but major parties remain wary of confronting bond market power, limiting prospects for transformative change.

Robert Skidelsky, an economic historian and prominent biographer of John Maynard Keynes, spent his career advocating Keynesian ideas and challenging free‑market orthodoxy. His work regained prominence after the 2008 financial crisis, leading him to reengage publicly in economic debate. His academic and political life was marked by shifts in party affiliation, controversy over his biography of Oswald Mosley, and consistent criticism of austerity policies. A crossbench peer in the House of Lords, he often argued for negotiated solutions in international conflicts and critiqued prevailing economic thinking. He is survived by his wife, children and grandchildren.

Weak global growth, rising energy prices and supply disruptions driven by the Middle East conflict are intensifying pressures on labour markets as businesses accelerate the adoption of AI to cut costs. The combination of high operating costs and rapidly advancing automation risks triggering large-scale job losses, particularly in white‑collar sectors. Forecasts from the IMF warn of recession, while research suggests an AI-driven feedback loop of declining demand, falling revenues and further automation could culminate in a crisis. Without rapid action on reskilling, industrial strategy and redistribution, the gains of AI risk being concentrated among a small minority while widespread unemployment grows.

A severe energy shock triggered by the US-Iran war threatens to push the UK into stagflation, compounding pre-existing economic weaknesses. Global supply disruptions are driving inflation and reducing growth, with Asia hit hardest and broader recession risks rising. The UK government seeks to project calm while avoiding major intervention for fear of unsettling bond markets, but past crises show that aggressive monetary and fiscal action can be taken when necessary. Proposed measures include interest rate cuts, reversing national insurance increases, energy bill support, and policies to strengthen economic resilience through greater self-sufficiency and renewable energy expansion.

A prolonged US-Israel conflict with Iran is driving up oil and gas prices, disrupting global supply chains and raising the risk of a worldwide recession. Iran’s guerrilla tactics and regional attacks are prolonging the war, exposing limits to US power and challenging assumptions of a quick victory. Higher energy costs are feeding inflation, threatening growth and reviving concerns about geopolitical vulnerabilities in global trade. The crisis underscores shifting global economic power toward China and highlights pressures on the US dollar’s dominance. Trump faces a choice between ending the war with limited gains or continuing it at increasing economic and political cost.

Labour’s electoral prospects remain viable despite Keir Starmer’s declining public support, but only if the party replaces him, stops policy missteps, and advances a clearer strategy built on investment, worker rights, and industrial growth. Economic conditions are expected to improve gradually as interest rates fall, inflation stabilises and investment increases, though too late to benefit Starmer. A successor could still capitalise on a fragmented political landscape and shifting economic momentum.

China’s long-term industrial strategy contrasts sharply with Britain’s shift toward a service‑dominated economy and decades of underinvestment in manufacturing. Rebuilding the UK’s productive base is framed as essential, requiring sustained industrial policy, stronger economic institutions, investment incentives, and protection measures similar to those used by developing economies. Strengthening foundations such as steel production and adopting targeted government intervention are presented as prerequisites to reversing the country’s industrial decline.

A declining liberal rules-based order, rooted in postwar US dominance, struggles amid outdated institutions and rising global powers. The International Monetary Fund, World Bank and trade frameworks no longer reflect modern economic realities, while inequality and slow Western growth erode domestic support. Donald Trump’s rejection of multilateralism accelerates the system’s unraveling, but its problems are structural, requiring reforms, investment, greater inclusivity and stronger European self‑reliance. Mark Carney warns the old order will not return, underscoring the urgency of rebuilding global governance for contemporary conditions.

The UK government’s inability to deliver its agenda stems from a state apparatus that is large but ineffective, weakened by decades of outsourcing, Treasury dominance and a cultural aversion to strategic intervention. While countries such as China, South Korea and the US pursue deliberate industrial planning and investment, Britain’s attempts at a modern industrial strategy remain rhetorical. Structural reform is needed, including reducing Treasury power, creating new economic institutions and adopting a pragmatic, experimental approach to investment. Without such changes, Britain risks continued economic stagnation, declining global competitiveness and deepening public cynicism.

Labour faces unprecedented unpopularity despite relatively mild economic conditions, with voter disillusionment driven by weak living standards, lack of a compelling plan and broader concerns such as immigration. Economic momentum entering 2026 is limited, with weak business confidence, falling consumer spending and delayed monetary easing. Policy missteps by the Bank of England and the Treasury, including slow rate cuts and higher employer national insurance contributions, heighten the risk of recession. With the government already deeply unpopular, even a mild downturn could prove politically disastrous.

A report by the Industrial Communities Alliance warns that cumulative decisions by both Conservative and Labour governments have effectively dismantled regional economic policy, leaving former industrial areas without adequate support. Labour has sharply reduced the UK shared prosperity fund and failed to restore assisted area status despite earlier opposition. Funding cuts significantly affect Wales, Scotland and northern England, while local authorities are expected to use limited resources for social care rather than job creation. The article argues that regional policy has historically mitigated economic decline and remains essential to addressing the widening north–south divide, with political risks looming for Labour in upcoming elections.

Rachel Reeves’s budget delivers short‑term spending increases and delayed tax rises, creating fiscal breathing space but raising concerns in financial markets about long‑term credibility. Forecasts from the Office for Budget Responsibility proved less bleak than expected, avoiding an income tax rise and enabling a larger fiscal buffer. The strategy relies on temporary relief measures such as energy bill cuts and a minimum‑wage increase, though future tax rises will affect even low‑income workers. With weak growth prospects and no major supply‑side reforms, the government hopes improved economic conditions will emerge before voter discontent grows, despite scepticism about whether such an upturn will materialise.

Rising taxes and a weakening economy constrain the upcoming 2025 budget, with Rachel Reeves limited by fiscal rules set by the Office for Budget Responsibility and monetary policy decisions controlled by the Bank of England. The forecast-driven framework guiding both institutions is portrayed as unreliable and restrictive, with economic outcomes shaped largely by global forces rather than domestic policy. The argument calls for reforming the system, including broadening the OBR’s remit and revising the Bank’s inflation target, to allow for more effective and credible economic policymaking.

Warning signs of an impending financial crisis include overvalued stock markets, slowing US growth, rising unemployment, and political pressure from Donald Trump on Federal Reserve chair Jerome Powell. Heavy reliance on high-income consumer spending and exposure to equity markets heighten vulnerability, while tariffs and inflation add further strain. The Federal Reserve faces a difficult choice between keeping rates high to curb inflation or cutting them to support markets, each option carrying significant risks for economic stability.