Austerity's not an option - Labour needs creativity to overcome the gloom
Labour inherited a mess. The UK economy has endured 15 years of low growth, living standards have fallen, and public services have suffered years of austerity. Turning around the UK economy was never going to be achieved within a matter of months. Even with the best domestic stewardship and stable global conditions, it would take several years.
One of the biggest economic problems is also political – it’s the lack of a feelgood factor. People do not trust politicians to make their lives better, and the evidence of the last 15 years is that their distrust is justified. Like business confidence, consumer confidence is fragile – as a result of both hard-pressed household finances and the gloomy outlook.
The high cost of housing leaves people with less disposable income to spend in local economies – in job-creating sectors like retail, hospitality and leisure. Capping rental costs would not only benefit hard-pressed tenants, but also many of those businesses hit by rising employment costs from the national insurance rise that takes effect in April.
Capping costs would be politically popular – a majority of Conservative and Reform voters back the public ownership of water and energy, which is itself a reflection of public frustration at rip-off utility bills post-privatisation. Labour could also raise funds through a windfall tax on those sectors that have enjoyed bumper profits in recent years. Thegiven it posted record profits last year. The revenue generated from these one-off taxes could be used to reduce the need for additional borrowing.The assessment of the Office for Budget Responsibility was that in the long run, Brexit will reduce our overall output by around 4 per cent compared to had we remained in the EU.
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