Britain’s economy is in long term decline, not yet recovered from the effects of the 2008 financial crisis, 14 years of punishing austerity and the Covid pandemic. The NHS, social care, courts, water, council services, etc. are in crisis.
Despite winning a landslide in terms of seats, Labour’s support is in freefall. The Tories are unlikely to make significant gains, and have not yet been forgiven for their record in office. Nigel Farage’s Reform UK is the major beneficiary of this draining of support from the two major parties.
Economy
A stagnant GDP and an inflationary trend spells stagnation. The Bank of England (BoE) has halved the UK’s GDP growth forecast from an already low 1.5% to 0.75%. It expects inflation to rise to 3.7%. These forecasts predate the recent market turmoil caused by Trump’s tariffs, and do not factor in any further economic shocks.
Hemmed in by her fiscal rules, Reeves refuses to raise taxes, borrow and therefore spend to repair devastated public services. This will further fray Labour’s social base which depends on these services and aggravate its relations with the unions that organise these sectors.
Labour’s few pro-worker policies—raising employers’ National Insurance, lifting the minimum wage, accepting pay review body recommendations, the Employment Rights Bill – have met with fierce resistance from the bosses. More concessions to the ERB are likely to follow.
Starmer’s project is to create ‘growth’ through attracting private investment, although there are no signs of success. Even if he were to succeed, the benefits would not be felt for many years, if ever.
The historic lack of investment, both public and private, is compounded by the related problem of low productivity. Labour’s attempt to tackle this by forcing the young and sick into low paid jobs will increase their economic precarity without turning around Britain’s economy.
AI and the digital revolution will not save the NHS in the short term, regardless of potential future benefits. Making staff work longer hours or increasing the role of private healthcare, without increasing staffing numbers, is likely to make things worse.
The Green New Deal has been gutted and with it the ‘million green jobs’. The utopian plan for 1.5m new houses lacks the skilled labour necessary to carry it out, while developers and housing associations are unlikely to invest. If they do, they will demand far fewer social rent units.
That is not to say that Labour will not achieve some modest economic gains. Deregulation of planning may bring some growth, though this will come at an environmental and social cost. Starmer may also be able to strike some favourable trade deals, though significant ones will take longer. Indeed, however much Starmer and Reeves want to provide investors with stability and growth, the prospects of this in the era of ‘Trump 2.0’ are extremely slim.
Starmer has opted for quick trade deal with the US and EU. Neither will have a huge impact on economic growth, despite lowering tariffs for British car (10%) and steel exporters (0%) and possibly saving them. The US deal is just the starting point for broader future talks, and further concessions to US standards and opening the British economy, possibly the NHS, to US exports and capital.
Labour could be pushed into Keynesian measures by the crisis, e.g. nationalising (in practice subsidising) British Steel, and further bending or breaking the fiscal rules, which could further antagonise the US as well as investors. But none of these are quick fixes either.
The threat from the right
Labour is haemorrhaging support to its left and right, but because there is no organised force, i.e. a party, to its left, it is turning to shore up its right flank. However, this will only further erode Labour’s support among its core base, the working class and the oppressed.
Leaving aside its deeply unpopular benefit cuts, Labour is vulnerable on a number of scores. Firstly the Starmer leadership is quite simply not very good. He rose to power by hammering the Corbyn left with the aid of the state and the bourgeoisie, but now stands accused of coming into office without a plan.
Secondly the size of his Commons majority invites factionalism and disloyalty, since MPs can rebel without bringing the government down. And thirdly the parliamentary party and many councils have rotted to the core. The racist, misogynistic and LGBT+ hating Tameside Labour WhatsApp leaks repulsed many honest workers.
As Labour turns to the right fearful of Reform’s gains, its dilemma will become ever more exposed. A prime example was Home Secretary Yvette Cooper’s Reform-mimicking Labour leaflets and video of shackled migrants boarding a plane. Another is Wes Streeting’s attack on DEI strategies in the NHS as being ‘anti-white’, making him look like Trump or Musk. Then Liz Kendall’s slandering of young people on benefits as ‘taking the Mickey’ alienated many of the 10 million workers eking out a living on benefits.
These glaring attempts to court right wing voters will backfire and anger many workers, including some trade union leaders. While right wing workers and middle class bigots will feel their prejudices confirmed and… vote Reform.
When austerity bites, Labour will feel the brunt of people’s anger. Whereas Labour councils were able, to some extent, to shift the blame onto the Tory government and service users were prepared to ‘wait for Labour’ in the past, this time Labour has nowhere to hide. If inflation rises there will be pressure on the unions to launch pay strikes.
The May elections showed the Tories remain unpopular and their party divided. Lib Dems and Greens continued to make modest gains. While these elections were largely in rural areas, they heralded the end of two-party politics. The result was enough to force Starmer into his first (partial) u-turn over the winter fuel allowance. More will follow.
But Reform has momentum. Farage has already distanced himself from Trump’s stance on Ukraine and tariffs. He has also wisely kept Tommy Robinson at arm’s length, although he will continue to use the street fighting rabble to his advantage, as he did after Southport.
Reform can use social media and the GB News channel to reach all age groups; its appeal to the youth is the most worrying in that Reform could become a stepping stone towards something further to the right. Unlike previous iterations of the populist racist right, Reform does seem capable of growing in all parts of Britain, including Scotland and Wales.
In normal circumstances, i.e. outside of a real social crisis, there is a limit to Reform’s growth, and further scrutiny plus the test of office could undermine it. On the other hand, an economic, social or political crisis could propel it further. And the big factor is that Trump 2.0 and far right gains in Germany and France could make Reform seem more like a party of government in waiting. In any case, it suits the bourgeoisie to keep Farage in the spotlight because he shifts the political dial to the right and puts pressure on Labour and the unions to move in the same direction.
Tommy Robinson’s movement poses as serious a threat on the streets as any far right/fascist movement since the 1970s. Regularly drawing 20,000 racists and reactionaries to its demos, the fascists here provoke fights with the police or the left and thereby build their street forces.
The fascist core is connected enough to coordinate street battles and attacks on migrants across the country, and can link up with Loyalists and fascists in Ireland. But its key weakness is the absence of a party to draw it all together. That may not last for long; certainly Robinson would like to be its leader.
So long as the opposition to the racist populist Reform and the outright fascist Robinson remains on the grounds of liberalism and democracy, which Stand Up To Racism does just as much as Labour, the Greens and so on, then this will prove inadequate to pull youth and unorganised workers away from them. A revolutionary alternative that can and does combat the ‘establishment’ will be necessary.
Unions
If there’s going to be any serious resistance to Labour, it will have to involve the unions centrally.
Unite remains the most important union, organising in industry and transport and regularly calling indefinite strikes. However, Sharon Graham continues to duck the big fights such as Grangemouth refinery, steel and Luton cars. Appeals to protect steel ‘as matter of national security’ and to ‘Buy British’ are patriotic posturing that could bind workers to the boss class in a crisis.
This comes after 18 months of condemning Gaza movement protests at BAE and other weapons manufacturers, in February suspending Unite’s affiliation to Stop the War Coalition. Now Graham has welcomed increased defence spending.
The two-month all-out indefinite Birmingham bin strike, nevertheless, has the potential to change the industrial landscape. Unite’s strategy is to encourage workers to take serious, indefinite, paid strike action, but then isolate the strike and lock strikers into a war of attrition, leading to compromise.
We need to counterpose spreading the action to other council unions and other beleaguered councils, using mass solidarity (megapickets) to keep the strikers going. This poses the need for a rank and file organisation that can fight for strike committees, build pickets, both mega and flying, and wrest of control of the dispute from the grip of the bureaucracy.
That is how we can begin to halt Labour’s march to the right and break the unions from Labour and win them to the struggle for international socialism.
