British Labour Has an Economics Lesson for Democrats

U.K. Prime Minister Keir Starmer gives priority to economic growth and breaking down investment barriers over big spending

By Greg Ip. Excerpts:

"the public’s willingness to entrust the economy to Labour might have only been possible thanks to a policy pivot engineered by Keir Starmer when he became leader in 2020."

"“After we lost the 2019 election very badly, my first task was to change the Labour Party and to turn it into, amongst other things, a pro-business party,” Starmer said in an interview"

"Polls show voters think Vice President Kamala Harris, now the Democratic nominee for president, is too liberal."

"Harris sought to reset the narrative, describing herself as “pragmatic” and “a capitalist” who believes in an “active partnership between government and the private sector.”"

"economic growth. Starmer talks about it a lot; he calls it his “number one mission.”"

"President Biden and Harris don’t put much priority on economic growth, preferring to talk about how income is distributed"

"Britain has grown a lot less than the U.S., averaging an annual 0.5% since the end of 2019, second-lowest among the seven largest industrial economies and a fraction of the U.S., at 2%."

"The root cause is investment, which has been lower in Britain as a share of GDP than in other G-7 countries for years. Starmer’s one word explanation for this: Instability. Since 2019, Britain has had five prime ministers" 

"His chancellor, Rachel Reeves, has said her budget, due next month will raise some taxes, but the corporate rate will stay at 25%. (Harris wants to raise the U.S. corporate rate, to 28% from 21%)."

"Starmer has embraced industrial policy: the use of government resources to promote favored industries."

"the combined $21 billion earmarked for these funds pales next to what the U.S. has done under Biden: $53 billion for semiconductor fabrication and up to $1 trillion for renewable energy in the Inflation Reduction Act."

"The modest sums are a reflection of Labour’s concern about the budget deficit, a concern that Harris and Biden (or former President Donald Trump, the Republican nominee) don’t seem to share"

"Labour has zeroed in on this [policy uncertainty], quickly lifting a moratorium on onshore wind and reopening applications to build data centers in the Green Belt surrounding London that local authorities had previously rejected."

"Business is worried about Labour’s moves to increase some regulation, such as on worker conditions. The government plans to nationalize railways and limit new oil and gas exploration in the North Sea."