Labours first budget and likely outcomes

[Zigster]

The ones whose vote led to Labour winning the last election weren’t the ones who always vote Labour or those who still voted Tory (or Reform). They were the ones in the middle who could go either way.

I’m guessing those voters mostly think that Labour are a st show but better than the Tories. You only have to look at the new Tory leader to realise that, no matter how incompetent Labour appear to be, they are still better than the Tories.

[turbobloke]

Jawls said:

They are still significantly better than the previous lot (though Sunak wasn’t so bad).

Agree with other points but not that one - opinions differ! Noted your mention of Sunak, so...

On a wider basis the last Sunak gov't were more popular than Starmer's gov't after approx 100 days. Polls show Starmer as the worst PM i living memory (already not mid-term) and Labour have been in third place behind Reform and the Tories in recent polls of voting intention.

I appreciate your position, people see things differently and have their own perspectives, but overall I can't see where it comes from at this point and just wanted to indicate it's already a minority perspective, deservedly so in my view.

[Jawls]

Sure, I’m talking about my own view, not necessarily the country’s.

With Sunak, I think that:

1. His numbers weren’t realistic. So you had major spending cuts pencilled in for 2027 etc which just weren’t going to be realistic (Labour in danger of making same mistake but not to same extent)

2. In light of this, the NI cut (and I agree with him and Hunt that long term objective should be to abolish NI) was an act of salting the earth

3. I thought he was a weak party manager and much of the Tory rhetoric was extremely distasteful to me.

With the Tories generally, my professional life (I work in supply chain, private sector) is made more difficult and burdensome every single day due to Brexit. I know folks can disagree there, but I just can’t take them seriously as a party of business until they stop drinking the kool aid there. Labour are st on the issue too, but they’ve less responsibility for the current settlement.

[Steve H]

Jawls said:

With the Tories generally, my professional life (I work in supply chain, private sector) is made more difficult and burdensome every single day due to Brexit. I know folks can disagree there, but I just can’t take them seriously as a party of business until they stop drinking the kool aid there. Labour are st on the issue too, but they’ve less responsibility for the current settlement.

Any deal that vaguely represented the result of the referendum was going to have consequences. Fortunately for anyone on the Remain side, everyone that was responsible for doing the deal was pretty much of the same view. If Boris was a true believer rather than a political Leaver the deal would have been a lot more closed off.

But we are probably getting a little off topic there!


I do agree that a lot of the Labour vote was against the alternatives rather than for Labour but aside from the incredibly foolish fuel allowance withdrawal I have seen very little from them that I didn’t expect before the election which is why I am a bit surprised now that the popularity ratings are so poor.

[Wombat3]

Jawls said:

Sure, I’m talking about my own view, not necessarily the country’s.

With Sunak, I think that:

1. His numbers weren’t realistic. So you had major spending cuts pencilled in for 2027 etc which just weren’t going to be realistic (Labour in danger of making same mistake but not to same extent)

2. In light of this, the NI cut (and I agree with him and Hunt that long term objective should be to abolish NI) was an act of salting the earth

3. I thought he was a weak party manager and much of the Tory rhetoric was extremely distasteful to me.

With the Tories generally, my professional life (I work in supply chain, private sector) is made more difficult and burdensome every single day due to Brexit. I know folks can disagree there, but I just can’t take them seriously as a party of business until they stop drinking the kool aid there. Labour are st on the issue too, but they’ve less responsibility for the current settlement.

The economy was returning to growth under Hunt/Sunak. Growth fuels tax receipts. That's now been thoroughly torpedoed by Rachael from Complaints.

Hunt's rebalancing of tax was heading in the right direction IMO - reduce taxes on working people (via the NI cut) in comparison to the inactive and then bringing more people back into taxation overall (by freezing of allowances) . So more people have some skin in the game & also reducing the obsession with "taking people out of tax".

Most of the nut jobs in the Tory party had been moved out of the way by the time Sunak finished. Cleaning that up was not an overnight process but he pretty much did it. The pensioners would still have their WFA and the train drivers would not be turning down overtime because they really don't need the money anymore.

Meanwhile I see that numbers in the public sector are at their highest for 20+ years.

So now pretty much everything is heading in the wrong direction (growth/jobs/inflation/pub;oc sector productivity & likely interest rates etc to follow) .

Its fairly safe to say that economically at least we would be in a much better place than we are now if the Tories had carried on.

[Graveworm]

Steve H said:

Any deal that vaguely represented the result of the referendum was going to have consequences. Fortunately for anyone on the Remain side, everyone that was responsible for doing the deal was pretty much of the same view. If Boris was a true believer rather than a political Leaver the deal would have been a lot more closed off.

But we are probably getting a little off topic there!


I do agree that a lot of the Labour vote was against the alternatives rather than for Labour but aside from the incredibly foolish fuel allowance withdrawal I have seen very little from them that I didn’t expect before the election which is why I am a bit surprised now that the popularity ratings are so poor.

Because what was learned from Brexit and modern politics - they and every party now dismiss any empirical analysis or challenges as scaremongering and replace it with continued assertions that "It will all be great". Then take no responsibility whilst facing no real consequence and explaining it's not their fault. The difference is no one really believed good old Boris but they made the mistake of believing Keir so they are
They inherited the lowest inflation and highest growth amongst the G7 and our highest position in the manufacturing league table. This has been reversed in short order. Most of the Truss Johnson debacles that did for the Tories were no longer an issue, but no way they could survive that and they didn't deserve to.

[turbobloke]

Graveworm said:

Steve H said:

Any deal that vaguely represented the result of the referendum was going to have consequences. Fortunately for anyone on the Remain side, everyone that was responsible for doing the deal was pretty much of the same view. If Boris was a true believer rather than a political Leaver the deal would have been a lot more closed off.

But we are probably getting a little off topic there!


I do agree that a lot of the Labour vote was against the alternatives rather than for Labour but aside from the incredibly foolish fuel allowance withdrawal I have seen very little from them that I didn’t expect before the election which is why I am a bit surprised now that the popularity ratings are so poor.

Because what was learned from Brexit and modern politics - they and every party now dismiss any empirical analysis or challenges as scaremongering and replace it with continued assertions that "It will all be great". Then take no responsibility whilst facing no real consequence and explaining it's not their fault. The difference is no one really believed good old Boris but they made the mistake of believing Keir so they are
They inherited the lowest inflation and highest growth amongst the G7 and our highest position in the manufacturing league table. This has been reversed in short order. Most of the Truss Johnson debacles that did for the Tories were no longer an issue, but no way they could survive that and they didn't deserve to.

Quite. Labour are rightly seen as sleazy and callously incompetent. Some of their policies may have been more expected than others to some people but they've gone about it in such a way as their ideas can't and won't achieve what they were supposedly aiming to do. Instead we're facing older people in precarious positions approaching winter (wfa and waspi) with a recession beckoning, and numerous groups attacked because they don't typically vote Labour. The public sector has been cosseted and effectively bribed. Labour's lies including the black hole fiasco haven't helped. The OBR chief in their report said there was nothing in it supporting the idea of a £22bn black hole.

[Jawls]

Steve H said:

Any deal that vaguely represented the result of the referendum was going to have consequences. Fortunately for anyone on the Remain side, everyone that was responsible for doing the deal was pretty much of the same view. If Boris was a true believer rather than a political Leaver the deal would have been a lot more closed off.

But we are probably getting a little off topic there!

I don't agree that the referendum necessitated a hard Brexit (defined as leaving both customs union and single market), which is what we got. It was a close result, so in my opinion it would have been legitimate to maintain a very close economic relationship whilst leaving the political institutions (eg. go EEA & customs union). But of course, that didn't happen and there's no point us religitating the past.

Suffice to say, from a business/pro-growth perspective Brexit sucks ass and leads to voters like me who might ordinarily be sympathetic to a Cameronish Tory party not being willing to give the party the time of day. Other voters can take a different view of course. I quite agree that we've probably got better things to do than arguing about bloody Brexit online - there's been quite enough of that the past 9 years.

[Jawls]

Wombat3 said:

The economy was returning to growth under Hunt/Sunak. Growth fuels tax receipts. That's now been thoroughly torpedoed by Rachael from Complaints.

Hunt's rebalancing of tax was heading in the right direction IMO - reduce taxes on working people (via the NI cut) in comparison to the inactive and then bringing more people back into taxation overall (by freezing of allowances) . So more people have some skin in the game & also reducing the obsession with "taking people out of tax".

Most of the nut jobs in the Tory party had been moved out of the way by the time Sunak finished. Cleaning that up was not an overnight process but he pretty much did it. The pensioners would still have their WFA and the train drivers would not be turning down overtime because they really don't need the money anymore.

Meanwhile I see that numbers in the public sector are at their highest for 20+ years.

So now pretty much everything is heading in the wrong direction (growth/jobs/inflation/pub;oc sector productivity & likely interest rates etc to follow) .

Its fairly safe to say that economically at least we would be in a much better place than we are now if the Tories had carried on.

But Sunak's sums didn't add up unless you add either unrealistic growth expectations (how were the Tories going to deliver that, given that the parliamentary conservative party was structurally against many of the reforms that might unlock growth in the UK?) or major cuts. The public realm was on its arse (potholes, NHS waiting times, asylum seeker backlog, no seriousness about prison capacity etc). So under a new government it was either future major service cuts or tax rises. Labour, unsurprisingly, went for a big tax rise on business. Bad idea imo, should've just whacked a penny on income tax, but I wouldn't have wanted to see further cuts to public realm.

Totally agree with you re: taking people out of tax. WFA I don't particularly care about (aside from that it's a waste of political capital to defend the cut when it delivers small potatoes in savings). Re: trains - long term issue but on the lines I use everyday in the north west, there's no strike action. There was loads of strike action in 2023 and 2024 (my delay repay refunds prove it, haha!)

So I don't agree that economically we'd have been in a better position. We'd have had a weak government with no desire to address the major structural impediments to UK economy (totally dysfunctional housing market, crap transport links, expensive energy) and with major cuts baked into the future. That's a no from me.

To be clear, I don't think everything the Tories did was bad. Far from it. I'm probably a boring centrist dad type. Just explaining how, whilst Labour have disappointed me, they'd still have my vote.

[turbobloke]

Jawls said:

Wombat3 said:

The economy was returning to growth under Hunt/Sunak. Growth fuels tax receipts. That's now been thoroughly torpedoed by Rachael from Complaints.

Hunt's rebalancing of tax was heading in the right direction IMO - reduce taxes on working people (via the NI cut) in comparison to the inactive and then bringing more people back into taxation overall (by freezing of allowances) . So more people have some skin in the game & also reducing the obsession with "taking people out of tax".

Most of the nut jobs in the Tory party had been moved out of the way by the time Sunak finished. Cleaning that up was not an overnight process but he pretty much did it. The pensioners would still have their WFA and the train drivers would not be turning down overtime because they really don't need the money anymore.

Meanwhile I see that numbers in the public sector are at their highest for 20+ years.

So now pretty much everything is heading in the wrong direction (growth/jobs/inflation/pub;oc sector productivity & likely interest rates etc to follow) .

Its fairly safe to say that economically at least we would be in a much better place than we are now if the Tories had carried on.

But Sunak's sums didn't add up unless you add either unrealistic growth expectations (how were the Tories going to deliver that, given that the parliamentary conservative party was structurally against many of the reforms that might unlock growth in the UK?) or major cuts. The public realm was on its arse (potholes, NHS waiting times, asylum seeker backlog, no seriousness about prison capacity etc). So under a new government it was either future major service cuts or tax rises. Labour, unsurprisingly, went for a big tax rise on business. Bad idea imo, should've just whacked a penny on income tax, but I wouldn't have wanted to see further cuts to public realm.

Totally agree with you re: taking people out of tax. WFA I don't particularly care about (aside from that it's a waste of political capital to defend the cut when it delivers small potatoes in savings). Re: trains - long term issue but on the lines I use everyday in the north west, there's no strike action. There was loads of strike action in 2023 and 2024 (my delay repay refunds prove it, haha!)

So I don't agree that economically we'd have been in a better position. We'd have had a weak government with no desire to address the major structural impediments to UK economy (totally dysfunctional housing market, crap transport links, expensive energy) and with major cuts baked into the future. That's a no from me.

To be clear, I don't think everything the Tories did was bad. Far from it. I'm probably a boring centrist dad type. Just explaining how, whilst Labour have disappointed me, they'd still have my vote.

When Reeves' initial budget, and likely the second tax grab early next year, have had more time to impact on the economy, I suspect the situation may change. We must wait and see.

[Steve H]

Jawls said:

Steve H said:

Any deal that vaguely represented the result of the referendum was going to have consequences. Fortunately for anyone on the Remain side, everyone that was responsible for doing the deal was pretty much of the same view. If Boris was a true believer rather than a political Leaver the deal would have been a lot more closed off.

But we are probably getting a little off topic there!

I don't agree that the referendum necessitated a hard Brexit (defined as leaving both customs union and single market), which is what we got. It was a close result, so in my opinion it would have been legitimate to maintain a very close economic relationship whilst leaving the political institutions (eg. go EEA & customs union). But of course, that didn't happen and there's no point us religitating the past.

Suffice to say, from a business/pro-growth perspective Brexit sucks ass and leads to voters like me who might ordinarily be sympathetic to a Cameronish Tory party not being willing to give the party the time of day. Other voters can take a different view of course. I quite agree that we've probably got better things to do than arguing about bloody Brexit online - there's been quite enough of that the past 9 years.

One of the problems with unwinding an institution that had developed and grown over almost 50 years is that you can’t pick which bits you want to keep. It wouldn’t satisfy "leave means leave" which was the clearest definition of what the referendum was about, but more importantly the rest of the EU wasn’t going to let us keep the tasty bits and throw the rest away. They had to make it look difficult for us to stop others from heading for the door.

I think some of the consequences surprised some of the Leave voters and maybe they wouldn’t all vote the same way again but in or out were the clear and only choices on that one, if it had gone the other way there wouldn’t have been any compromises made no matter how close the vote was.

But my point was actually that the people tasked with putting it through absolutely did not believe in it and it would have been a much harder Brexit if they had.

[Tim Cognito]

I've been dropping in and out of the thread so apologies if this has been covered.

Most people want to see inflation under control and back to c2%?

Labour had to be mindful of this in the budget which is why they couldn't be splashing the cash.

As criticised here at length, the pencilled in NI rise will curb pay rises which are part of the inflationary spiral.

Latest pay rise figure was 5.2% which suggests this is still an issue which the NI Rise will help address?

Seems Labour are being criticised both for not doing anything to help "business" but also for not getting inflation down. The question I am getting to is - is it possible to do both?

[greengreenwood7]

Tim Cognito said:

I've been dropping in and out of the thread so apologies if this has been covered.

Most people want to see inflation under control and back to c2%?

Labour had to be mindful of this in the budget which is why they couldn't be splashing the cash.

As criticised here at length, the pencilled in NI rise will curb pay rises which are part of the inflationary spiral.

Latest pay rise figure was 5.2% which suggests this is still an issue which the NI Rise will help address?

Seems Labour are being criticised both for not doing anything to help "business" but also for not getting inflation down. The question I am getting to is - is it possible to do both?

this magical 2% number isn't a figure dreamed up by the public, it's driven by the Gov and others around the world; aside from which their figures are normally off in either direction by a magnitude.
alledgedly its at 2.4% for the year todate.....vs 2.6 for the Gov's figures.

as to 'splashing the cash'.....didn't they splash the cash on pay rises and on pumping Billions into various projects?

frankly at best they come across as devious, at worst clueless, and definitely not clever at managing the PR around announcements.
Sadly none of the Parties which spend 'our' monies have any accountability, save for waiting til the next election and the next load of lies and bullst.

[Graveworm]

Tim Cognito said:

I've been dropping in and out of the thread so apologies if this has been covered.

Most people want to see inflation under control and back to c2%?

Labour had to be mindful of this in the budget which is why they couldn't be splashing the cash.

As criticised here at length, the pencilled in NI rise will curb pay rises which are part of the inflationary spiral.

Latest pay rise figure was 5.2% which suggests this is still an issue which the NI Rise will help address?

Seems Labour are being criticised both for not doing anything to help "business" but also for not getting inflation down. The question I am getting to is - is it possible to do both?

Inflation was falling to below 2% before they took over.

The Inflation spiral is that prices rise so, if tax levels stay the same, wages need to rise, to enable take home pay to keep up with the cost of living. Then prices have to rise again to fund the wage bill.

There are a number of approaches the state can take - they can raise interest rates so the wealthy and corporations, will save, not borrow or invest and will spend less. That's fine, but it's not so good for those who don't have the luxury of that choice. It also stifles growth and indirectly makes our products more expensive so less competitive.

Alternatively the government can reduce costs for businesses and or taxes so prices don't need to rise to maintain the status quo. That's why helping business does reduce inflation. I suppose businesses reducing profits, in an altruistic utopia, could do the same but it doesn't do much to attract the less altruistic. Government can do some things to reduce costs for business - or they can reduce their own costs, thereby needing to take less in taxes, so fewer wage rises are needed. Either of which reduce the need to raise prices. Increasing NI and the minimum wage increases costs. The same is nearly always true with increased employee rights.

The fallacy of government driven growth is like mark to market accounting - they reap the rewards before they arrive. "If we do things that are inflationary and raise costs; we think it will fuel growth, enough to allow us to do what we should have done in the first place or afford to carry on with our largess, without anyone getting upset about it. The problem is, they behave as if they are right with no resources to have a clue if they are. They are the mirror of Liz Truss.

The few people in the world - with a credible enough track record, to even approach modelling or predicting what will happen accurately, are neither in government nor the public sector. But if they don't agree then no matter what; the people and institutions, that would need to be on board, for the dream to come to pass - won't be.

Edited by Graveworm on Wednesday 18th December 22:59

[MadCaptainJack]

MadCaptainJack said:

So, we have inflationary pressures, no meaningful economic growth, and high unemployment.

Wikipedia said:

Stagflation refers to an economic condition characterized by a simultaneous occurrence of high inflation, stagnant economic growth, and elevated unemployment.

To be sure, this isn't a slam dunk but it feels to me like there's a meaningful risk here.

Oh, look…

FT: UK borrowing costs climb as ‘stagflation’ fear stalks gilt market

The FT said:

“Stagflation concerns are back for the UK bond market,” said Robert Dishner, senior portfolio manager at Neuberger Berman.

[LooneyTunes]

Jawls said:

Suffice to say, from a business/pro-growth perspective Brexit sucks ass and leads to voters like me who might ordinarily be sympathetic to a Cameronish Tory party not being willing to give the party the time of day.

Your ire should be directed not at a party as a whole, who did what they had committed to in offering a referendum, but at individuals who:

1) Spouted complete BS about the effects; and
2) Those members of the public who voted based on plainly flawed arguments, or worse, “as a protest”.

I still remember a chap from the NE being interviewed whose reason for voting was to stop the Chinese from taking our jobs…

Labour’s approach to government is understandable: they finally have a chance to put their ideologies into action and are doing so with great relish. Those with experience in business should not be surprised that the labour government is getting things wrong: look at a few labour MPs/ministers and see how much business experience you can find… it’s not a world they understand.

Unfortunately, with little credible opposition (the conservatives having lost most of their big beasts), it is far from a foregone conclusion that Labour will only have one term.

[NRS]

Graveworm said:

Inflation was falling to below 2% before they took over.
[/footnote]

Really not sure that it was. Look at the other countries, they’re also down from the highs but starting to get stuck a bit above 2%. Markets had a wobble yesterday due to the Fed thinking it will be hard to get rid of fully. It’s not just a Labour problem most likely, so very hard to go below 2% when others can’t do it either and we import lots of stuff so are more exposed to their costs.

[turbobloke]

NRS said:

Graveworm said:

Inflation was falling to below 2% before they took over.
[/footnote]

Really not sure that it was. Look at the other countries, they’re also down from the highs but starting to get stuck a bit above 2%. Markets had a wobble yesterday due to the Fed thinking it will be hard to get rid of fully. It’s not just a Labour problem most likely, so very hard to go below 2% when others can’t do it either and we import lots of stuff so are more exposed to their costs.

Rising diesel and petrol prices isn't it? Labour could help (in more than one way) by removing the VAT element which is being paid on fuel duty not the fuel.

It's currently around 10p extra per litre for the tax on the tax i.e. for VAT on the fuel duty.

[Tom8]

Well predictions on this were correct. Extreme taxation, massive waste, ideas to punish people they don't like that will generate negative returns, recession and meltdown. Just the last two now and we have completed the bingo card. All thanks to a building society counter clerk.

A bit like that films about the hopeless amateur becoming England football manager. I think he may have succeeded in the end though...

[Graveworm]

NRS said:

Really not sure that it was. Look at the other countries, they’re also down from the highs but starting to get stuck a bit above 2%. Markets had a wobble yesterday due to the Fed thinking it will be hard to get rid of fully. It’s not just a Labour problem most likely, so very hard to go below 2% when others can’t do it either and we import lots of stuff so are more exposed to their costs.

It was as low as 1.7% and currently back up again, to the highest for 8 months it's going in the wrong direction, which is really unusual for a November. It was only kept down to 2.6/3.5 by flight price cuts - which won't happen again and the APD increases will fuel rises in whilst also further increasing costs for businesses.

Edited by Graveworm on Thursday 19th December 10:44