Sticking to the Tories’ nonsensical fiscal rules, as it says it will, would be a political and economic mistake, says the Guardian’s economic editor Larry Elliott
abour knows what it is like to inherit an economic mess. It did so in 1974, when Britain was on the verge of a period of high inflation and rising unemployment. It did so in the even tougher circumstances of 1945, and it will do so again if it wins on 4 July.
These, too, were the circumstances that confronted Clement Attlee’s postwar administration – only more so. Britain was on its uppers when the war ended, yet despite facing what its chief economic adviser, John Maynard Keynes, called a “”, the Attlee government embarked on a programme of radical reform that over the next six years led to the creation of the NHS and the cradle-to-grave welfare state. It remains the benchmark against which all subsequent Labour governments have been measured.
Clearly, Labour’s pitch to voters in 2024 is a lot different from the radical makeover it was offering in 1945. On the one hand, it says that the failures of the Tories in the past 14 years require a change of direction. On the other hand, it doesn’t seem able to sketch out much of a vision of what that change might be, beyond reform of the planning system, a focus on skills and the new deal for workers.
Liz Truss’s 49-day stint in Downing Street has made it even more difficult for Labour to deviate from the economic and financial orthodoxy in which an independent Bank of England sets interest rates and an independent Office for Budget Responsibility passes judgment on tax and spending decisions. Not, to be frank, that there was much evidence of the current Labour party wanting to rock the boat anyway.
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