But it’s fiscal black holes that are dominating Westminster this week. Starmer and his Chancellor Rachel Reeves would rather you looked away now and tuned back in next weekend.
When Reeves’s economic homework is marked by the Office of Budget Responsibility, in figures published on Wednesday, it’s expected to halve its growth predictions.
The “headroom” refers to the amount Reeves could increase spending or cut taxes without breaking her fiscal rules, particularly the commitment to achieving a current Budget surplus by 2029-30.
As Civil Service unions responded angrily on Monday, Starmer predictably framed the cuts as efficiency improvements, promoting his go-to solution: AI.
The zero-based review has triggered political manoeuvring in Whitehall, with ministers proposing unpopular ideas to force Chief Secretary to the Treasury Darren Jones’s hand.
While Cabinet ministers are doing what Cabinet minister always do – sticking up for their departments – this “bleeding stump” strategy has its own dangers. It’s not seen as especially collegiate by Cabinet peers and the Treasury.
In an atmosphere where some Labour backbenchers are in the throes of an existential crisis about whether the party is left-wing enough, the bleeding stump strategy is just another example of exceptionalism pleading and it’s not welcomed at the top of government.
However, deep unhappiness pervades the highest levels of government. Cuts of up to 11.2 per cent have been proposed for departments outside the protected NHS and Ministry of Defence.
But if there is one thing more unpopular than spending cuts in Labour circles, it’s Donald J. Trump. When Reeves stands at the despatch box on Wednesday lunchtime, she is likely to say “the world has changed” because of the US president. And she won’t be wrong.
Voters support the UK’s decision to help fill the gap in spending on European security left by Trump pulling his support. But how to make savings elsewhere is the problem.
Reeves’s decisions prioritise Labour’s economic credibility in the eyes of bond market vigilantes. Her own party counters that the world’s evolution demands a parallel shift in the rules.
Meanwhile, Andy Haldane, the former Bank of England chief economist, issued a warning against the dominance of “Treasury orthodoxy”. “With the economy stalled, further fiscal belt-tightening is impossible to justify on macroeconomic grounds,” he wrote.
Businesses negatively impacted by higher employee national insurance contributions may benefit from a planned industrial strategy prioritising deregulation. Monday also brought a rare piece of good news: UK private-sector output growth hit a six-month high in March, driven by service companies anticipating tariff avoidance in April.
But with growth proving more sluggish than expected, Reeves can blame global turmoil for the economic malaise as much as she likes. It won’t stop the Conservatives saying it is a result of the major tax increase she imposed on businesses last autumn and how she left herself too little wriggle room. Expect potholes aplenty as Reeves tries to keep the Government’s show on the road.
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