If we don't change course, this country is doomed

Telegraph

27-03-2025

What to say about Wednesday's Spring Statement? The truth is that it barely matters. The Government has achieved its primary aim, which is to match one very large predicted number, ie, that of taxation, with another, spending, in 2030.
It's all guesswork. No one really believes in the welfare savings, the growth figures, or much else. But the numbers add up somehow. One side gives it ritual support, the other ritual opposition. And the world moves on.
The event is meaningless, not because things are going well, but because they are going very badly indeed.
If they are honest with themselves, Starmer and Reeves will be staring in alarm at what their stewardship has done so far to the British economy. They remind me of nothing so much as two incompetent magicians – the Incredible Starmo and his glamorous assistant Rachel – who have been doing the Smashed Watch Trick, fail to switch the Rolex in time, and now realise that under the cloth they've got a jumble of broken parts and one very angry audience member. Now they stare at each other in horror and wonder 'What are we going to do?' The Spring Statement has bought them some time. But it hasn't solved their problem.
Unfortunately, they are playing with their hammer not on an expensive timepiece but on the British economy. And they clearly don't know what to do now. They are boxed in. Their philosophy and their party tell them that state action will get the economy going again. Yet virtually everything they have done achieves the opposite.
And there is more to come: the Employment Bill killing jobs and enterprise, the Renters' Reform Bill wrecking the property market further, the net zero target destroying industry, the plethora of regulators, and the huge increase in tax, spending and borrowing to pay for it all – a jump of over 2 per cent of GDP in just two years. If we were going to spend all that money, couldn't we at least have put it into doubling defence spending rather than paying off trade union shakedowns?
Starmer and Reeves are now at the mercy of events. They might get lucky and be saved by some miraculous AI-fuelled change of circumstances.
Much more likely is that events will turn against them. Productivity won't go up as the OBR says it will. Tariffs will slow the global economy. Defence spending will need to increase further. And their own policy measures will make everything worse.
So this week's tinkering to meet the fiscal rules in five years' time means nothing. Almost certainly the crisis will be on them sooner than that. As Dr Dan Mitchell, prominent US economist and commentator put it this week: 'I've been assuming that Italy will be the next country to suffer an economic and fiscal crisis, but the UK is heading in the wrong direction so rapidly that I may need to change my prediction.'
So much is obvious to any intelligent observer not blinded by the stream of meaningless drivel emitted by government figures in the past 24 hours. But seeing that is the easy bit.
After all, Reeves is not entirely wrong in blaming her predecessors. It's just that she hasn't done anything different herself. The last Conservative government pushed up spending and raised taxes. It was just as committed to net zero. It had its own Rental Reform Bill. Indeed at least Reeves is doing some planning reform; the Tories dumped Robert Jenrick's planning reforms after one bad by-election.
The truth is there hasn't been any real attempt to get to grips with Britain's underlying problems for 30 years or so. Tony Blair and Gordon Brown benefited from the reforms of Lady Thatcher and John Major. They used this beautiful inheritance to make things worse: to push up taxes and spending, to begin the energy policy madness, to start importing large numbers of people, and to launch the process of collectivisation and over-regulation.
None of this was durably reversed under the Tories and Lib Dems. Most of the problems got worse. That's why productivity growth is now not far off zero and why GDP per head is actually falling.
Someone now needs to offer a proper, serious alternative. Either the Tories or Reform or both need to start explaining the problems and setting out what they would do instead. Otherwise voters will start thinking that no one can fix the country's difficulties. They aren't far off that now. Then they really will start giving up on mainstream politics.
What needs to be done is obvious. As I keep saying, we need a plan, over a decade or more, to reverse the power of the state and bring back economic and political freedom.
If we want growth back, tax, spend, and regulation need to come back down to early Blair government levels. Yes, that will be painful. But continuing on the current track will be even more so. The first thing to do when you're on the wrong path is to turn round. Meanwhile, we must all put up with the Incredible Starmo and Reeves Show. Roll up, roll up, and watch their next trick: the Amazing Disappearing British Economy.