The Labour Government

[metalblue]

Thanks for replying. Why do you think there is likely to be an election in 2027?

Starmer is going to be faced with some stark choices if this budget, and welfare reforms, don’t start ticking the electorates boxes and Labour continue to struggle in the polls, of resign or continue to lead an increasingly ungovernable party. If the later path is chosen I can see him going to the people after a time and 2027 wouldn’t feel entirely improbable in that scenario.

There is a reason for all the u turns in this budget and the ensuing chaos. It’s not because folk are mansplaining stuff it’s because this is about the political futures of both Reeves and Starmer. Show me one political commentator who is not criticising the government over this shit show, even the likes of the guardian have had enough.

Westminster is a brutal place.

 

[Kompany Car]

Was Labour’s ‘fully costed manifesto’ daft or dishonest? I’d say both, actually.

After what this government has done, and is about to do in terms of fiscal policy, they won’t be in a position to call out other parties’ manifesto pledges for at least another 20 or 30 years.

At this stage with low growth and reducing levels of inflation, its about keeping the markets onside. Most would think low inflation is good, it is if you aren't holding any debt, but if you are holding large amounts of debt (eg. the UK government) it actually erodes it so its positive. The trick however is not to take on any further debt as this is charged at a higher rate when inflation is higher, the only debt should be that which you can demonstrate will result in economic growth.

The only real barometer is how the markets respond to the budget, everything else is peripheral if you believe that economic stability and future growth are the most important things.

 

[BlueHammer85]

Phew. £460 London to Darlington feels so much more affordable.

14 years Tories really helped. Hopefully more railways be nationalised and freeze cost further.

 

[Brewster's millions]

Thanks for replying. Why do you think there is likely to be an election in 2027?

Because of the likelihood of a further, possibly significant shift to the left in the government should Starmer be replaced next year (as seems likely) and the pressure this would place on the public finances and the gilt market in turn.

If the government remains opposed to increases in the basic rates of the major taxes and any significant reforms around spending, then they’ll eventually be unable to produce credible forecasts that satisfy the fiscal rules.

The government can probably avoid a major pinch point for another year or two, but a shift to the left when Starmer goes would further erode their breathing space as borrowing costs and departmental spending would both be higher than is currently projected. The current fiscal plan actually depends on a significant slowdown in the growth of departmental expenditure toward the end of this parliament, something which already looks unlikely and would obviously turn more doubtful once Starmer departs.

The sensitivity of the fiscal forecasts to borrowing costs is such that pressure would increase to the point that a change in fiscal policy would be required, whether that’s a shift to austerity or the abandonment of the fiscal rules entirely. Either one of those could bring a government down, as the Labour Party would presumably split with regards to the former, and the instability across markets that could follow abandoning the fiscal rules entirely would also be very disruptive.

The UK is in an almost unique position given the high proportion of debt linked to inflation and the still very significant size of its QE programme, which effectively transforms previously conventional bonds into floating rate borrowing. This serves to magnify the importance of market sentiment to fiscal policy and it’s just a shame that Rachel Reeves often appears so ignorant of this fact.

 

[Dave Ewing's Back 'eader]

Was Labour’s ‘fully costed manifesto’ daft or dishonest? I’d say both, actually.

After what this government has done, and is about to do in terms of fiscal policy, they won’t be in a position to call out other parties’ manifesto pledges for at least another 20 or 30 years.

I'd say crafty. Just plausible enough to get elected, though you could promise Nirvana after the Tory fiasco, and still get elected. And now elected, jumping through hoops to try and deliver some measure of what was contained in the manifesto - some people actually read it and remember.

 

[gordondaviesmoustache]

Because of the likelihood of a further, possibly significant shift to the left in the government should Starmer be replaced next year (as seems likely) and the pressure this would place on the public finances and the gilt market in turn.

If the government remains opposed to increases in the basic rates of the major taxes and any significant reforms around spending, then they’ll eventually be unable to produce credible forecasts that satisfy the fiscal rules.

The government can probably avoid a major pinch point for another year or two, but a shift to the left when Starmer goes would further erode their breathing space as borrowing costs and departmental spending would both be higher than is currently projected. The current fiscal plan actually depends on a significant slowdown in the growth of departmental expenditure toward the end of this parliament, something which already looks unlikely and would obviously turn more doubtful once Starmer departs.

The sensitivity of the fiscal forecasts to borrowing costs is such that pressure would increase to the point that a change in fiscal policy would be required, whether that’s a shift to austerity or the abandonment of the fiscal rules entirely. Either one of those could bring a government down, as the Labour Party would presumably split with regards to the former, and the instability across markets that could follow abandoning the fiscal rules entirely would also be very disruptive.

The UK is in an almost unique position given the high proportion of debt linked to inflation and the still very significant size of its QE programme, which effectively transforms previously conventional bonds into floating rate borrowing. This serves to magnify the importance of market sentiment to fiscal policy and it’s just a shame that Rachel Reeves often appears so ignorant of this fact.

Thanks, but all that has to be balanced against whoever is PM clinging on for as long as possible in the hope it will get better, and a shift to the left will probably make the leadership more closely aligned with the parliamentary party making a split leading to an enforced GE less likely.

 

[Chippy_boy]

I agree we have to control immigration, and we need them, but as for shrinking the state to balance the books, the only winners from that sort of policy are the very wealthy.

Read up on how neoliberlism has benefitted the wealthy to the detriment of ordinary people, and how the increasing unabated imbalance of wealth will impoverish increasing numbers of people.

Farage and his cohorts are multi millonaire neoliberalists to the core. Reforms largest financial backer is as extreme as it comes with regard to free market captalism, and don't kid yourself for one second their motivation for reducing the size of the state isn't about reducing their tax bills.

Farage is the worst option you could choose if you want to see public services and life in general improve, and please bear in mind immigration is nothing but a Trojan horse used to suck the gullible into thinking he is the saviour of the working class.

He's an elitist ex public schoolboy multi millionaire City trader that earns money from advising foreigners how to migrate to the UK and keep their tax liabilities to a minimum.

I don't have a problem with anyone wanting to legally minimise their tax bill. It's very simple: if you penalise investment, risk and hard work with high taxes, less people are will to invest, take risks and work hard. And on the other hand if you have a welfare state that is too generous, then more people are inclined to rely on the welfare state. It's really not rocket science.

Right now the balance is wrong. Taxes are too high already, people are leaving and avoiding paying their taxes by whatever legal means they can. And far too many people are on benefits.

Take the 2 child cap situation: What happens when you say to 2 unemployed people with nothing to do all day but stay at home copulating, that they can have child benefits for as many children as they like. They will end up with 3, 4, 5 kids all on benefits, living in poverty. That's not good for anyone nor for the state.

I wouldn't have a problem with it if Reeves lifted the cap for existing families only, but not more than 2 kids for new mums going forward. But I doubt well see that, just another state incentive to not work.

 

[metalblue]

14 years Tories really helped. Hopefully more railways be nationalised and freeze cost further.

That’s line is run by LNER which is state owned so…

Train pricing in this country is a joke, hopefully it will sort at some point with the nationalising of the train operators because when a single or a daily return is priced more than a weekly you know it’s all fucked up!!!

 

[meltonblue]

If odds are anything to by, they’ve gone from 1/3 to now 8/11 … closer to election the more people will see through the Russian puppets.

A lot of people are going off the polls right now, which are pretty pointless when it comes to the election.

If reform are still strong, there’ll be a shedload of tactical voting going on, more than any election we’ve had before.

 

[Brewster's millions]

Thanks, but all that has to be balanced against whoever is PM clinging on for as long as possible in the hope it will get better, and a shift to the left will probably make the leadership more closely aligned with the parliamentary party making a split leading to an enforced GE less likely.

Having a new leader more aligned with the left of the party, closer to the majority of the MPs, might make the government less likely to adopt austerity and for it to split around such a choice.

But it wouldn’t address the consequences of a possibly severe dislocation of the gilt market. I doubt any government would survive that if it didn’t eventually change fiscal policy in response.

 

[Brewster's millions]

At this stage with low growth and reducing levels of inflation, its about keeping the markets onside. Most would think low inflation is good, it is if you aren't holding any debt, but if you are holding large amounts of debt (eg. the UK government) it actually erodes it so its positive. The trick however is not to take on any further debt as this is charged at a higher rate when inflation is higher, the only debt should be that which you can demonstrate will result in economic growth.

The only real barometer is how the markets respond to the budget, everything else is peripheral if you believe that economic stability and future growth are the most important things.

All of which makes the charade of the past couple of weeks around income tax all the more regrettable.

The government essentially admitted that raising income tax is the most effective way to stabilise the fiscal forecasts, to establish a greater degree of headroom against the fiscal mandate and to break the constant speculation around the need for further tax increases. It wouldn’t have canvassed the idea so extensively if it didn’t believe so. Ultimately however they’ve now signalled that the current leadership doesn’t possess sufficient authority within its own party to implement the increase.

It’s probably the worst thing they could have done.

 

[hampshireblue]

There has to be a catch there somewhere, the difference between say Germany and the UK seems too large, also UK average wage single person tax burden has gone down over 8% since 2024?

This is what those figures are based on:

"According to the OECD’s Taxing Wages 2025 report and Eurostat data, among EU countries, the UK, three EFTA members, and candidate country Turkey, personal income tax rate varied from 4.1% in Cyprus to 35.7% in Denmark. These figures reflect the average wage of a single worker without children, presented in national currency values."

Personal average tax rates in Europe: Increases and cuts in 2024

The tax burden on workers, composed of income tax and social security contributions, varies widely across Europe. In 2024, this burden changed significantly in some countries, with notable rises and falls.

www.euronews.com

For those that haven't read it, it shows the UK personal tax liability to be towards the lower end of the European spectrum.

 

[hilts]

This is what those figures are based on:

"According to the OECD’s Taxing Wages 2025 report and Eurostat data, among EU countries, the UK, three EFTA members, and candidate country Turkey, personal income tax rate varied from 4.1% in Cyprus to 35.7% in Denmark. These figures reflect the average wage of a single worker without children, presented in national currency values."

Personal average tax rates in Europe: Increases and cuts in 2024

The tax burden on workers, composed of income tax and social security contributions, varies widely across Europe. In 2024, this burden changed significantly in some countries, with notable rises and falls.

www.euronews.com

Yeah I read it mate, i had a quick look at our welfare spend which is lower than a lot of countries.

So on paper it seems we should be taxing and spending more. This doesn't seem such a popular view though

 

[BlueHammer85]

A lot of people are going off the polls right now, which are pretty pointless when it comes to the election.

If reform are still strong, there’ll be a shedload of tactical voting going on, more than any election we’ve had before.

Yeh it’s way too early, the constant barrage of right wingers posting about Reform in polls is tedious- years away to next election , anything could happen, coalitions et

 

[bluethrunthru]

Yeah I read it mate, i had a quick look at our welfare spend which is lower than a lot of countries.

So on paper it seems we should be taxing and spending more. This doesn't seem such a popular view though

It would always be a popular view for most as long as somebody else pays the increased tax to cover. Even now you get Tories and ex-Tories advocating lower taxes and smaller Govt - ie more austerity. Alexi Sayles last library in Wolverhampton would have to go

 

[Vic]

Phew. £460 London to Darlington feels so much more affordable.

Where do people get these daft fares from? Max standard walk-up fare is £191.90 each way

 

[Vic]

Was Labour’s ‘fully costed manifesto’ daft or dishonest? I’d say both, actually.

After what this government has done, and is about to do in terms of fiscal policy, they won’t be in a position to call out other parties’ manifesto pledges for at least another 20 or 30 years.

Whatever Labour does, it will be hard to beat Reform's manifesto claim to raise the tax threshold to £20k

 

[hilts]

Where do people get these daft fares from? Max standard walk-up fare is £191.90 each way

Maybe he meant a return? £191 one way is not a good price

 

[Vic]

Maybe he meant a return? £191 one way is not a good price

Nearly always available cheaper if you buy before you start the journey. £90 now on the next train if you don't mind a bus from Bedford to Peterborough. But not the £460 he quoted (return?)

 

[hilts]

Nearly always available cheaper if you buy before you start the journey. £90 now on the next train if you don't mind a bus from Bedford to Peterborough.

I very much do mind a bus from Bedford to Peterborough when im supposed to be travelling by train:-)

Malaga to Madrid over 300 miles between £8 and £40. It madness what we pay and also bad for the economy. I would love to fuck off to london or Edinburgh without loads of notice.

Nationalise it and subsidise the ticket, its madness that it costs more for us to travel within the UK than it does to fly all over Europe.