That the Conservatives crashed the economy is Labour’s best attack line for decades but Thursday’s spending-slashing, tax-hiking Tory Budget poses a challenge for Keir Starmer’s party too.
With Rishi Sunak enjoying no honeymoon poll bounce and the financial hell released likely to cement public hostility to the latest unelected Prime Minister’s austerity regime, Labour could afford to be bold.
An opposition rattling Downing Street’s gates is well placed to confront all the cuts and every extra cost imposed on the poor and low and middle earners already enduring painfully squeezed living standards.
Or it can compromise, condemning and blaming the Conservatives for the nightmare while refusing to fight for every scythed penny across the board.
The choice will define how radical a Labour Government would be when the Treasury’s £55 or £60-billion “black hole” itself is largely an invention. Shift the target, as the Cons did regularly in the past, for reducing debt as a proportion of GDP and it reduces or disappears.
Britain’s rate is below that of Canada, France, US, Italy and Japan in the G7(only Germany is lower) and reducing spending and raising taxes would deepen and potentially prolong a recession the Bank of England predicts will be the longest in recent history.
Experts at the Progressive Economy Forum calculate the so-called black hole disappears entirely if the debts are calculated differently.
Returning to a different measure previously used by the Government would even generate £14bn extra to spend, they argue.
Key Starmer lieutenant and Labour’s Shadow Chancellor, Rachel Reeves, makes a decent fist of alternative tax rises on rich non-doms like Mrs Sunak, imposing a Norwegian-scale energy windfall tax and cracking down on cheating international corporations.
She has a better grasp of reality and certainly fairness than Jeremy Hunt, a Tory axeman terrified of admitting Brexit’s clobbered the British economy twice as heavily as Covid.
The stakes are high. This week we discover the battleground for an election two years in the future.
