The setting can sometimes be as important as the message. If the polls are correct, the Labor spokesperson for the Economy, Rachel Reeves, has a good chance of becoming, before the summer, the first woman to hold the position of minister of that portfolio in the history of the United Kingdom. And to deliver her central speech, in a long electoral campaign that will last until July 4, she has chosen the central Rolls-Royce factory, in the English town of Derby. Universal symbol of what British luxury once was. Current symbol, with the contract for the manufacture of a new generation of nuclear submarines, of a new era in which security and defense will be the axes of any economic growth effort. In this context, Reeves wanted to reassure British business, aware that both Conservatives and Labor need to be responsible and preserve budget balance.
The Labor Party has announced that, at least during its first term – if it reaches Downing Street – it will not touch the corporation tax, which taxes company profits, which the current Conservative Government raised from 19% a year ago. at 25%.
“The current tax is the lowest of all the countries that make up the G-7. And we believe that this percentage represents the correct balance between the needs of public finances and the demands of a competitive global economy,” Reeves announced. “The next Labor Government will make a decision in favor of business and economic growth: 25% will be the maximum figure for this tax during the next legislature (…) Companies will be able to plan their investment projects with the confidence that their income “They will be taxed at a specific rate for the remainder of the decade,” he assured.
The main opposition party has expressed three commitments on fiscal matters: extending the validity of the tax on extraordinary profits of energy companies, which Rishi Sunak has already implemented; impose VAT (UK VAT) on private school fees; and an increase, yet to be specified, on the profits of private capital. “There will be no additional tax increases beyond those I have already indicated,” Reeves said this Tuesday. It was the clearest commitment made to date in that regard, and it means tying the hands of a future Labor Government when it comes to seeking funding to improve public services in clear decline.
Business support
Labor’s strategy over the last two years has been a constant balancing act in which they have presented themselves as a pro-business and pro-worker party. Regarding the latter, the announced New Deal for Working People (The New Deal for Workers), reminiscent of the American Roosevelt’s historic labor rights revolution, has been renamed, as soon as the election campaign began, as Labour’s Plan to Make Work Pay (Labour’s Plan to Make Work Pay). Many of the initial proposals have been watered down to avoid alarm among the business community, to the point that Sharon Graham, the general secretary of the Unite union confederation, has said that the new version “has more holes than a Swiss cheese.”
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In return, Starmer had breakfast this Tuesday with a letter of support from 120 business and financial leaders, addressed to the newspaper The Timesin which they support the Labor Party, argue that “the time for change” has arrived and accuse previous Conservative governments of having left behind “instability, stagnation and a lack of long-term vision.”
‘Securenomics’ or the economics of security
Educated in budgetary rigor after her time in the Bank of England’s Research Department, Reeves has based the Labor Party’s economic proposal on the so-called “modern supply economy”, the theoretical construction promoted by the former president of the Federal Reserve of United States, Janet Yellen, to overcome decades of globalization and market deregulation.
This strategy, adopted by the Administration of President Joe Biden, which combines the stimulation of labor supply and increased productivity with strong investment in public infrastructure and fiscal facilities for the green economy, Reeves has named securenomics, or Economy of Security: “It begins with the recognition that the world we knew before the 2008 financial crisis has disappeared, and the global economy has been redesigned through a new era of insecurity, marked by the pandemic, the rivalry between great powers, new technologies and the climate crisis,” explained the Labor spokesperson for the Economy in Derby. “The priority of any Government today must be the security of the country, and that includes economic security for ordinary families, as well as the security of our national economy,” she said.
Two steps forward, one step back
The constant concern of Starmer and his team not to scare away the average electorate or the British business community has led them to make twists and turns in their promises. Many critics, without denying the substance of the proposals, believe that the proximity of the polls has provided Labor with a reality check that has forced it to take a step back after having taken two steps forward.
It came with the party’s commitment to invest almost €33bn (£28bn) in the green economy, with the intention of meeting the UK’s environmental targets and boosting new job creation. At the beginning of February, the Labor Party, to the scandal of many environmental organizations, backed away from that financial promise. “It is absolutely essential that all our measures are consistent with the fiscal rules with which we have established ourselves so as not to end up going into debt in day-to-day spending. We have to reduce debt relative to GDP. “It will only be if that condition is met that we will invest in what helps our economy grow, and that includes green plans,” Reeves defended this Tuesday, who has managed to convince his boss, the Labor candidate, not to abandon a single only minute the speech of budgetary rigor.
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