A “DOOM loop” sparked by the Labour Government’s ongoing failure to deliver on its headline pledge of growth is hitting the UK economy and means they are set to lose the next election, an expert has said.
Dr Nathan Coombs, the co-director of Edinburgh University’s Centre for Science, Knowledge and Policy, spoke to The National after new figures from the Office for National Statistics (ONS) said gross domestic product (GDP) contracted 0.1% in October.
It follows a 0.1% estimated fall in September – meaning it is the first time the economy has contracted for two consecutive months since March and April 2020, during the onset of the Covid-19 pandemic.
Chancellor Rachel Reeves called the data “disappointing” as she said the Labour Government was hoping to grow the economy – but Coombs said it was “not unexpected”.
“I think when the [Labour] Government took over, they very much wanted to differentiate themselves from the Conservative government, and they did this by emphasising what a terrible state public finances are in and there's going to be a need for hardship and sacrifice. That was very much the tenor of the new Government,” he said.
“There is some reality to that … but the problem is they also wanted to ally that with a growth mission for the government. The two things do not really gel together.
“If you want to distinguish your government for being about economic growth, you can't really combine it with a very negative framing of how terrible everything is and how we're going to need to all be tightening our belts and preparing to hunker down for a number of years.
“A lot of what growth is about really is instilling confidence in people.
“The thing that is lacking from the Labour Government is just being able to give people that confidence, give them that feeling of optimism, so that investment decisions can be made, risks can be taken. All of that is lacking.”
Coombs, a senior lecturer in economic sociology, said that Labour’s failure to deliver growth was contributing to its unpopularity, which in turn hit the prospects of economic growth.
“[Keir Starmer] staked everything on growth, and if you look at his poll numbers now, they're really terrible. I think it's one of the quickest declines for which we have data about an incoming government, lacking any honeymoon period at all and just immediately sinking to terrible polling territory,” he said.
“When these dynamics take hold, the government being so unpopular is not good for growth either, because it also contributes to that negative vibe in the country, of dissatisfaction and lack of confidence and uncertainty also.
“All of these things form a bit of a doom loop. Unless, it can be broken somehow … it's just my personal opinion, but I think it's almost guaranteed that they are going to lose the next election, given the polling numbers, given the economic situation.”
Chancellor Reeves has said she hopes GDP will start to improve as the Government targets economic growth.
“The numbers on today’s GDP are disappointing, but it’s not possible to turn around more than a decade of poor economic growth and stagnant living standards in just a few months,” Reeves said.
“Growth is the number one mission of this Government – economic growth that results in families feeling better off with more money in their pockets – and we’re driving that economic growth and we hope that those numbers will start to improve because of the policies that we’re pursuing in the months ahead.”
