Rachel Reeves has already given up on growth

Whatever happened to Labour’s dash for growth? Supposedly, economic growth was going to be ‘Labour’s first mission for government’, to quote its winning election manifesto. Better still, we were told Labour would raise the UK’s growth rate to ‘the highest in the G7’. On the election-campaign trail earlier this year, Keir Starmer felt bullish enough to promise growth of at least 2.5 per cent per annum if elected UK prime minister.

Rachel Reeves’s budget, the first by a Labour chancellor in 14 years, was supposed to set out how the new government planned to meet these promises. This was the chance, in Reeves’s words from the despatch box today, to ‘turn the page’ on years of stagnation and to unleash a ‘decade of renewal’. But Labour has now missed that chance. Of course, it was always going to.

A lot of ink has already been spilled about the scale of changes to tax, spending and borrowing in today’s budget. Conservatives are fretting over the £40 billion worth of tax rises – bringing the UK tax burden to the highest in postwar history. Labourites, meanwhile, are trilling about the increases to the health and education budgets, the hike in the minimum wage and the various new funds for infrastructure investment, from the National Wealth Fund to Great British Energy. But when it comes to the critical question of growth, there was little announced today that’s going seriously to move the dial.

Tragically, Reeves’s budget looks like it will continue Britain’s dismal trajectory of stagnation. The Office for Budget Responsibility (OBR), which has crunched the chancellor’s numbers, projects an average annual growth rate of just 1.6 per cent over the next five years. It says the budget may boost growth very slightly over that period, but it expects there to be no material change to the UK’s economic fortunes in five years’ time from any of Reeves’s measures. Worse still, people’s real disposable income, the OBR predicts, will grow at just 0.5 per cent per annum. This means that, by 2029, the average Briton’s spending power will have increased by less than one per cent since 2019.

Now, these are just projections, not real data. The OBR is often wide of the mark. In fact, even its head once admitted that its predictions were ‘almost guaranteed to be wrong’. But if you accept that the OBR is clueless, this budget should be setting off even more alarm bells. For Reeves also announced a new Charter for Budget Responsibility to further embed the OBR, our unelected ‘independent fiscal watchdog’, in economic policymaking. A new ‘fiscal lock’ will ensure that the OBR is consulted before every major change in fiscal policy. How reassuring.

The Labour Party hasn’t just accepted the accuracy of the OBR’s projections – it has lowered its horizons in line with the projections. When Reeves read out those pitiful growth figures to the Commons, she elicited cheers from the Labour benches, as if the stagnant, sclerotic status quo were something to be proud of.

Reeves’s urge to empower the OBR is merely one symptom of Labour’s fundamental problem, summed up by another aside in the chancellor’s speech. ‘As a former economist at the Bank of England, I know what it means to respect our economic institutions’, she said, before thanking a rollcall of various unelected, arms-length economic bodies, from the Bank of England’s Monetary Policy Committee to the OBR to the civil servants of the Treasury.

Reeves, being a creature of the technocratic state, seems to imagine that Britain’s anaemic growth stems from elected politicians making ‘populist’ decisions and shunning the wisdom of the experts and institutions. But in truth, it is Britain’s unelected institutions and their orthodoxies that have got us into this slump. It is absurd to expect them to get us out of it again.

So much of Britain’s economic misery can be laid at the feet of the experts and state bureaucrats. Think of how, during the Covid pandemic, government scientists pushed for the country to be shut down for months on end, leading to the deepest economic slump since the Great Frost of 1709. Or how the Bank of England slashed interest rates during that period, and printed half a trillion pounds, all while dismissing the painful inflation this was bound to cause as fleeting and ‘temporary’. Or consider how our energy policies have been shaped largely by climate bureaucrats, who have long prioritised hitting Net Zero targets over security of supply and keeping costs low. This is why Britain has the highest electricity prices in the world right now – a leading cause of our industrial decline.

A chancellor who wanted to kickstart growth and bring an end to Britain’s stagnation would need to defy the diktats of the experts and reject their failed orthodoxies. Rachel Reeves was never the chancellor to do this. Labour’s ‘growth mission’ was doomed from the start.

Fraser Myers is deputy editor at spiked and host of the spiked podcast. Follow him on X: @FraserMyers.