Rachel Reeves’s long-distance plans

Certainly, there is evidence that the economy is struggling. Britain’s main market is Europe, which is in the doldrums and apparently stuck there – particularly Germany. The government has had to raise taxes in a way that is damaging to business, business confidence and job creation. Brexit never helps. Trump’s threat of tariffs alone is enough to throw a spanner in the works, and ministers have been spreading far too much doom and gloom about the state of the economy; keep smiling is one of the first rules of politics.

However, the main economic forecasts still suggest the UK will grow this year, although the highest estimates of around 1.7% feel optimistic. This steady outlook is partially because the increases in spending and investment announced by the chancellor are good for growth, while wages are rising faster than prices and interest rates are falling.

The government has been saddled with persistently low growth, appalling productivity, a crumbling state and empty coffers, none of which are going to be turned around overnight. It is disingenuous to claim that everything was rosy until Rachel Reeves took over, or that she can conjure up growth overnight, or that she has stymied a booming economy.

While it is true business confidence is down, to say, as the Spectator does, “When they can, businesses are getting out” is pushing it. Is it really that bad?

The examples cited in the magazine do not convince; apparently Santander is to quit the UK, WH Smith is to quit the High Street and WPP is to quit the London Stock Exchange.

Santander is supposedly leaving because it cannot find a way of making money out of its 14m customers, which is probably news to its 14m customers. It is also news to its chairwoman Ana Botín, who told the World Economic Forum in Davos, that Santander would remain in the UK “into the future”. Botín also reassured delegates that “We love the UK.”

WH Smith, it is true, is quitting the high street to concentrate on its other more profitable businesses. But then if that were a sign that the economy is heading for disaster maybe the Spectator shouldn’t have commissioned another article this week entitled “WH Smith died years ago”. The opening line even called WH Smith’s sale an “all-but-inevitable fate”.

WPP is just the latest in a long list of companies abandoning the London Stock market, but not the UK. It is a trend that started many years ago and is a sign of the LSE’s decline, as it fell behind New York and some European competitors, where companies can raise far more investment from a far larger pool. This is a worrying structural problem of deep political concern, which is why the government is trying to encourage UK pension funds to invest more in the UK. As with so many of the UK’s other structural problems, the Tories did nothing about this, instead spending years obsessing over Brexit, Wokeness and the Whitehall “Blob”.

I don’t know if a recession is inevitable. Certainly short-term growth prospects are not great, but the right-wing press is not just talking to its own readers when it publishes endless stories about the “inevitability of recession”. It is trying to set the media agenda.

On the morning of the chancellor’s speech, the BBC led with the headline that Rachel Reeves was under “increasing pressure” to deliver on her promise of higher growth. As if she had promised to boost the economy with some kind of “Barber boom”. No chancellor would ever say that. Her speech was about the long-term prospects for growth and outlined policies that will take years to bear fruit. That is the economic reality.

Labour are making a lot of mistakes, like not reforming the apprenticeship system, and allowing the university sector to suffer. But the key to its success will be if it can make long term growth in the UK slightly higher.

That is not especially headline grabbing. It will be years before we see the results and it will involve a complex process of reform. Better infrastructure, a better Brexit deal, an easier planning system, improved skills, better management, more homes, attracting foreign investment, an industrial strategy, more highly educated immigrants. Reeves addressed many of these in her speech and offered solutions and proposals, some obvious, some controversial.

She knows that a lack of spending by the water industry is blocking growth in Cambridge and elsewhere, that linking Oxford and Cambridge in a high-tech arc like Silicon Valley is a no-brainer and that Heathrow is vital to our international competitiveness. The Tories gave us shit in the rivers, ludicrous cuts to foreign student numbers, far too few new homes and “Boris Island” – the “new London airport” nowhere near London, with no transport links, no workers nearby and no hope of ever being built. 

None of Reeves’s plans will happen today, not many by next year, very few will grab headlines and most will never be noticed by most people. But they should make a difference.

If the UK economy grows by 1.5% this year, we will be lucky, perhaps very lucky. But longer term, we need 2% consistently and over 3% in good years.

The UK is trying to win an ultra-marathon, not a sprint, after 14 years of self-destructive, economically illiterate Tory floundering. We start at a huge disadvantage, but at last we have a chancellor who is boasting about increasing our national level of investment from a disastrous 1.9% of GDP to a barely adequate 2.6%, not boasting about reducing it.

She is both heading in the right direction and trying to wean the country of its addiction to short termism, by introducing long-term reforms to multiple sectors of the economy. 

By definition ending short-termism is going to take time, something the Spectator (founded 1828) should bear in mind.