After almost 20 years of poor economic performance, the U.K. has emerged as the next ground zero for the far right. Sclerotic growth, stagnant real wages, and crumbling public services are generating profound dissatisfaction. Economic optimism is now at its lowest level since records began; worse than even Britain’s “winter of discontent” in 1978, the 2008 crash, and the COVID pandemic.
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Yet Prime Minister Keir Starmer, who last July won one of the biggest parliamentary majorities in recent times, seems unable or unwilling to respond.
There’s a striking moment in his interview with The New Statesman months ago, where the Labour leader is asked if the country is “fundamentally broken.” “No,” he replies, making the case that his government will deliver the stability that Britain needs after 14 years of chaotic Tory rule.
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The doom-laden analyses of “Broken Britain” can exaggerate the scale of problems. The U.K. remains the sixth largest economy. The financial services and higher education are world class. Real wages are (finally) beginning to rise. Yet the major challenges that Britain faces require far more than stability alone can deliver.
The U.K. has had anemic productivity growth since 2008. It has averaged 0.4% since then despite productivity growth increasing at a healthy clip of 2.3% from the 1970s to mid 2000s. That has translated into British median wages that are about half the U.S. and Canada and one fifth lower than in nearby Germany.
And Britain is more unequal, too. The wealth gap between London and much of the rest of the U.K. is huge compared to other countries. That gulf is now larger than between East and West Germany, or Northern and Southern Italy.
Not all of this has been down to bad policy. The 2008 financial crisis had its roots in the U.S. and neither COVID nor the cost-of-living crisis that followed can be blamed solely on choices made at home. But the U.K. has fared worse in part because of decisions that were made—including the failed austerity policies under the Conservative government of David Cameron, which stripped local governments of the funds to invest and manage services, and, of course, Brexit.
Whatever the causes, much of what is wrong has been wrong a while. There are no quick fixes. But the Starmer government, sitting atop a parliamentary majority of more than 160 seats, could assume it had at least two terms to sort out the mess.
Yet these are not normal times. Survey after survey reveals the public has little faith in politicians to put country before party. That may be why the 2024 election saw Labour and the Conservatives get their lowest share of the vote ever; the huge Labour majority was built on a mere 34% support that was hugely efficient, but not particularly enthusiastic.
The Starmer premiership has, in just 14 months, plunged to lower levels of support than any other government at mid term. Starmer himself now has the worst satisfaction rating Ipsos has ever recorded for a British Prime Minister. The far right Reform leader Nigel Farage is now topping the polls, and would become Prime Minister if an election were held today. Even the Green Party, which has just four seats in parliament, is now neck-and-neck with Labour.
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Which means the government must start delivering quickly. Economists broadly agree on the kinds of measures that are required. Reforms to planning laws to enable better infrastructure investment and more house-building. The introduction of a functioning social-care system to relieve pressure on the National Health Service. A more equitable and effective way of taxing property wealth. Or reform of a tax system that is complex, regressive, and inimical to growth. Any and all of these would help generate growth. And GDP growth is desperately needed to repair the U.K.’s public finances and allow for much needed investment in public services.
The Labour government has made the right kinds of noises. Yet it is timid. Planning reforms have not gone far enough and Labour looks set to miss its target of building 1.5 million homes by the end of this parliament—planning applications in the first quarter of 2025 were even the lowest in a decade. Meanwhile, decisions on social care have been delayed for years, and tax reform has hardly figured.
But if now is not the time for bold action, then when?
The window is closing for Starmer. Labour MPs are becoming restive. The absence of a clear narrative about what the government wants to achieve means that attempted reforms—such as those to help control a rising welfare bill which failed last year—risk being seen simply as an attempt to claw back much needed cash rather than as part of a progressive reform agenda.
Stability alone, it’s worth repeating, will not be enough. It is hard to avoid the impression that Starmer and his Labour Party felt that simply not being the Conservatives was enough not only to get elected but to kick-start the economy. While the first assumption proved well founded, the second has not.
British politics is nothing if not unpredictable. It is rash to assume from today’s polls what might transpire when the next election is due in 2029. That being said, the government needs to show that it is making progress in turning round the economic fortunes of the country if it is to regain the support it has, to date, haemorrhaged.
The Fall budget marks a real opportunity to display the needed boldness. Surely, given the broad consensus around the problems Britain faces, it would not be too much to expect a government that dominates parliament to really tackle them—be that social care or the tax system or planning?
The clock is ticking. Pretty soon, it might be too late.