Rachel Reeves on Labour’s plans for Britain’s finances

As many writers for this publication will know, accurately predicting what is going to happen in the next 12 months is a fool’s game. During the two and half years I have been shadow chancellor we have had the fallout from a global pandemic, a war in Europe following Russia’s illegal invasion of Ukraine, a global energy crisis and central banks across the world having to respond to sharp rises in inflation. And, at the time of writing, Hamas has launched a terrorist attack against the state of Israel and triggered the most dangerous conflict in the region for decades.

There has been uncertainty at home as well as on the global stage. Over the past 13 years Britain has had five prime ministers, seven chancellors of the exchequer, four general elections, a vote to leave the European Union and Liz Truss’s disastrous mini-budget. Insecurity has become the watchword for British politics—and that insecurity has come at a price.

With every new shock to the global economy, Britain suffers more deeply and for longer than our international peers. In 2024, we are predicted to have the lowest growth and the highest inflation among G7 countries, according to the latest forecasts from the IMF. We are falling behind in the global race for the industries and jobs of the future, with European countries and America charging ahead.

When I talk to chief executives and other business leaders—and I have spoken to more than 500 since I was first appointed—they tell me the same thing, time and time again: that although they want to invest in Britain they are put off by the turmoil in Westminster. Missing out on this private investment means there is less money in our economy, less money in our towns and cities, less money for our public services and less money in people’s pockets.

After 13 years of chaos and instability under the Conservative government, Britain is worse off. Working people are worse off. Government incompetence has become a drag on economic performance. But, in this age of insecurity, there is one certainty facing us in the next 12 months: a general election. It is a chance for the British people to vote for change and for a new economic model.

At the heart of Labour’s pitch for the next general election is a mission to deliver the strongest sustained growth in the G7, with good jobs and productivity rising in every part of the country. It is the most important mission for us because economic growth is the only way we can support new industries, increase wages, revitalise high streets, bring down household bills and reform our public services.

Delivering that mission can only be achieved by a future Labour government that puts economic security first: security for our national economy and security for family finances. It is an approach that I call “securonomics”.

It means rebuilding our economy so it is stronger and more resilient in a volatile world. It means a new industrial strategy for Britain that can strengthen our ability to make, do and sell more here and that seizes on the opportunities of the future, such as clean energy, artificial intelligence and life sciences.

It means getting Britain building again by taking on our antiquated planning system. And it means investing in British industries so we can create decent, well-paid jobs that give families the security they need to pay the bills today and plan for the future.

Government cannot deliver this mission alone, and nor can business. That’s why I have promised a new partnership, with government and business working side by side to unlock the opportunities in our economy and to draw on the talent and effort of millions of working people in every part of the country.

And economic stability can be realised only if we bring back stability to the nation’s finances. When I worked at the Bank of England, I learnt a very simple lesson: your sums must always add up. As chancellor of the exchequer I will never spend what we cannot afford. I will introduce a new set of fiscal rules which will apply to every decision taken by a Labour government. We will not borrow to fund day-to-day spending and we will reduce the national debt as a share of total economic output.

In the coming year the British people have the chance to vote for a stronger, more secure future, to vote for an economy built on financial stability and economic security. And with that, we can make working people better off—and get Britain’s future back on track. ■

Rachel Reeves, shadow chancellor of the exchequer