Rachel Reeves' permanent austerity straight jacket

After 13 disastrous years of austerity failure, Labour's shadow chancellor wants to force the UK economy into a permanent austerity straight jacket!

When the Tories returned to power in 2010 they promised that their (economically illiterate) programme of austerity cuts, infrastructure under-investment, and wage repression would get the public finances back in order, and that the budget deficit would be eliminated by 2015.

It’s now 2023 and the budget deficit has nowhere near been eliminated. In fact the UK national debt has actually tripled since 2010, and it’s still growing!

It’s not just that the Tories missed all of their economic targets and created double the debts of all other UK governments in history combined in just 13 years, it’s painfully obvious that Britain is now a country in rapid economic decline, and that austerity penny-pinching is the root cause of most of the problems.

Thirteen years of wage stagnation have left the UK economy starved of demand; we’re one of the lowest ranked countries both for public investment and private sector investment; disastrous austerity funding cuts have wrecked local government finances all over the country; the social safety net has been catastrophically vandalised; outside of London our public transport network is a sick joke; compared to other advanced economies the UK is in productivity free-fall; per pupil education funding is still below 2008 levels; and public services like the NHS, police services, schools, and courts are all in disarray.

When Keir Starmer was running to become Labour leader he pledged to put an end to this ruinous austerity madness, but just like everything else he promised in order to cheat his way into the Labour leadership, this was simply an outright lie.

Given the furore over “Labour antisemitism” it’s astonishing that Keir Starmer has been allowed to pick Rachel Reeves as his economics minister, given her sickening track record of praising and whitewashing the legacy of the vile Nazi-supporting antisemite Nancy Astor, but somehow she gets a total free pass on this outrageous behaviour from Keir Starmer, capitalist media, and the BBC.

What’s even worse than Starmer’s antisemitism hypocrisy in promoting this antisemitism-whitewasher is the fact that Rachel Reeves is a militant austerity fanatic, who doesn’t just want to continue with the disastrously failed austerity policies of the last 13 years, she’s actually been bragging to the Financial Times that she wants to legislate permanent austerity!

This is exactly what she said:

"I will introduce a new set of fiscal rules. These rules will apply to every decision taken by a Labour government. We will not borrow to fund day-to-day spending and we will reduce national debt as a share of the economy. I am clear that these rules are non-negotiable. There will be no exceptions. As with our revised charter of budget responsibility, these rules will be put to parliament to back."

It’s absolute economic insanity to bind the UK into a permanent austerity straight jacket like this when it’s impossible to know the future economic circumstances the country could face.

Another economic crisis like 2008; war; natural disasters; a massive terrorist atrocity; some kind of external shock; another pandemic; even more unsustainable utilities profiteering; climate instability; or something completely unforeseen …

And Reeves is saying that she wouldn’t help the British people or British businesses under any of these circumstances ("no exceptions"), because her commitment to austerity penny-pinching is more important!

The period of austerity ruination since 2010 represents the biggest wasted opportunity at least since Margaret Thatcher squandered the North Sea oil and gas bonanza on tax breaks for the mega-rich and throwing millions of people onto benefits to deliberately erase unionised industries.

Between 2010 and 2020 we should have been taking advantage of all-time record low borrowing costs to invest in the drivers of future economic prosperity, like education; infrastructure; quality public services; research and development; transport modernisation; green technology; public health …

Instead we slashed investment in all of this to the bone, meaning we’re now in absolutely no state to generate the prosperity boom that Reeves keeps saying she wants to create (without ever explaining how she’s actually going to create it).

Even though the low-borrowing period is over, it’s still not too late to try and catch up some of the lost ground, but what’s urgently required is long term strategic investment, not a continuation of short-term austerity penning-pinching, especially when we know from experience that this nonsense destroys economic potential and starves the economy.

The last thing Britain needs is more austerity ruination, let alone a chancellor who is determined to legislate the UK into a permanent austerity straight jacket, but that’s what Labour is threatening to do.

The weirdest thing about Reeves’ austerity straight jacket is who it’s even intended to appeal to.

Aside from a few simpering comments from obvious Starmer loyalists, the replies to Reeves’ Financial Times piece are extremely negative, split almost evenly between people pointing out the economic insanity of what she’s pledging, and economic mouth-breathers blabbering on about “magic money trees” and “Labour borrowing” (as if their beloved Tories haven’t just borrowed double all the other governments in UK history combined in just 13 years!).

Reeves is never going to convince the economic mouth-breathers to support her, no matter what she says, and by pledging to make the failed Tory austerity agenda permanent she’s only ever going to piss off both traditional Labour voters and those who actually understand basic investment economics.

So who is this economic insanity aimed at?

This is a genuinely perplexing question, because, aside from the tiny cabal of clueless neoliberally-trained economists and PPE graduates to which she belongs, there’s no conceivable target audience for such palpable economic lunacy.