New start?

Do I dare ‘get political’ and risk offending you? Assuming you have pretty thick skin and are not easily offended … I’m going to proceed.  I’m rather glad to see the back of the last Government. I appreciate that many people believe the narrative that Conservative governments are good at managing the national finances and Labour governments are not, however I don’t see any evidence to support this over the last 14 years or so.

In practice we saw a Conservative government launch a half-baked referendum on leaving the EU and ending our working relationship. Sure the EU has its faults, but not a single proponent had any real idea or plan for non-membership other than some rather Victorian notions of empire. I’m not sure that anyone could be worse than the collection of PMs that we have had over the last 14 years, who largely seem to be self-serving and unable to convey any vision.

So we have a new PM and Chancellor, the first female Chancellor in English history. It’s probably fair to say that this Labour leadership are right-leaning centrists and appear eager to reassure the public that they can handle our finances wisely, with economic growth being obviously important. We will see how this shapes up in practice.

Public spending can only really happen with public money, which is of course taxation and loans (Government debt). It is of course divisive political opinion about whether Government debt used to fund public spending creates wealth. On the one hand, better infrastructure and a healthy, educated workforce generate the conditions for growth and therefore more tax collected; on the other hand, debt needs to be repaid and the matter of how much and how quickly is of course the domain of spin doctors to suit your chosen narrative. Practically, we know on a personal level that spending more than you earn and building debt isn’t a great idea, but then this is public money – personal overspending is generally about consumption not investment into the hardwiring of our system (which is quite a different matter).

The truth is that life and politics are nuanced. Rarely is anything simple or either/or. All of us now have a refreshed understanding of inflation and for me, this is probably the more important element of the economics. Every year brings new challenges and we are undoubtedly at a watershed moment in technological advancement, perhaps the degree of change is as it ever was – overestimated in the short term with its impact underestimated in the long term.

We shall see how Mr Starmer handles the pressure compared to his predecessors.