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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Twice in the past half-century, in the swings to Margaret Thatcher’s Conservatives in 1979 and to Tony Blair’s New Labour in 1997, elections have brought a sea-change in British politics. Today the country is on the threshold of another momentous shift. Voters appear to have decided that, after an often turbulent 14 years in office spanning five prime ministers, the Conservative party’s time is up. There surely can be no other conclusion.
No party in power for so long can escape a reckoning, and not since at least 1979 has any government left the national affairs in such a desperate state. Growth in the economy and real wages since 2010 have fallen well behind the historical trend since the war. The tax burden is near a post-1945 record, government debt at its highest relative to output for 60 years. Yet public services are unravelling. Britain’s defences are depleted.
The Conservatives can point to external shocks: the aftermath of the financial crisis and great recession; a global pandemic and Vladimir Putin’s invasion of Ukraine. Much damage, though, was self-inflicted. Extended austerity weakened the public realm. Liz Truss as premier in 2022 carelessly provoked a market crisis. Brexit, the defining project of this Tory era, has proven an act of grave economic self-harm.
During the fevered EU withdrawal process, Boris Johnson’s government played fast and loose with the rule of law, undermining public respect for politics and institutions. Britain’s standing was diminished in the eyes of its allies. Rishi Sunak has taken steps to right the ship of state; Jeremy Hunt has been a serious chancellor. But the prime minister does not, even now, appear master of a party mired in bickering and sleaze. All too often since 2010, the Conservative party has prioritised management of its fractious party politics over sound governing of Britain.
The Financial Times has no fixed party political allegiance. We believe in liberal democracy, free trade and private enterprise, and an open, outward-looking Britain. Often this has aligned us more with Britain’s Conservatives. But this generation of Tories has squandered its reputation as the party of business, and its claim to be the natural party of government. The party needs a spell in opposition to resolve its internal differences. We would not, though, wish to see the Conservatives so shattered that they are unable to fulfil the role of viable opposition that is vital to British politics.
The Labour party of Sir Keir Starmer is better placed today to provide the leadership the country needs. Five years ago, under the hard-left Jeremy Corbyn, the idea would have seemed fanciful. Starmer has transformed what was a shambolic group hankering after the failed interventionism of the 1970s back into a credible party of government. Both the Conservatives and Labour, infected by different strains of populism, deserted the centre ground in 2019. It is Labour that has swung back towards it.
The FT still has concerns about Labour’s interventionist instincts and fervour for regulation. Its historical sympathy for the unions needs to be balanced with the interests of business and the wider public. Its understandable zeal to distance itself from Corbynism and its tax-and-spend past has forced it into an excess of caution. As with the Conservatives, its unrealistic fiscal assumptions will leave it struggling to fund and invest in a broken NHS and other public services. On many domestic questions, Labour’s answers fall short. Its manifesto too often tinkers around the edges.
While the challenges specific to Britain are exceptionally difficult, a new government will also take over at a time of great upheaval, with the postwar international order in distress. It must confront the same missions as other leading economies: combating climate change and mastering artificial intelligence, and dealing with a rising China, a revisionist Russia and, possibly, a second Trump presidency in the US.
Yet Labour has positive ideas, and Starmer and his shadow chancellor have worked hard to engage with business and the City of London and regain their trust. A less ideological approach to government is welcome. The party has rightly put revitalising growth at the core of its programme. The stability, predictability and competence it promises have been sorely lacking in UK governance for years. They are necessary ingredients for attracting investment.
The pledges to reform the planning system and devolve more powers to the regions target important constraints on growth and the ability to build the homes and infrastructure the economy needs. The commitment to fighting climate change and investing in the opportunities of green energy contrasts sharply with Conservative efforts to turn the green transition into a wedge issue.
The biggest danger is that Labour’s growth strategy will prove underpowered — and it is regrettable that its reluctance to talk about rebuilding trading relations with the EU closes off another avenue to boost the economy. It may soon have to choose between steep cuts to public spending, changing its fiscal rules, or pulling the tax lever; the Institute for Fiscal Studies warns that commitments to increased real-terms spending on health, schools and defence would imply cuts to other public services totalling £9bn a year by 2028. Despite proclaiming itself the party of wealth creation, a Labour government could well end up targeting wealth creators.
Few political options, though, are ever ideal. Britain must choose between a polarising Conservative party that has limited its appeal to an ever-narrower segment of the population, and a Labour party that appears to want to govern for the whole country. The risks of sticking with the exhausted incumbents outweigh those of bringing in a new government. Much of the country hankers for a fresh start. Labour should be given the opportunity to provide it.