IFS Zooms In: The Economy One year of Labour government: Is mission-driven politics really happening?
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Jul 18, 2025 Stephen Bush, Associate Editor at the Financial Times, and Gemma Tetlow, Chief Economist at the Institute for Government, dive into Labour's first year in power. They dissect the government’s growth strategy, pointing out missed communication opportunities and the need for tax reform. The duo also explores NHS funding challenges, climate commitments, and the ambition of early childhood education initiatives. Voter sentiment and the effects of defense spending on economic growth are scrutinized, revealing a complex interplay between policy, perception, and political priorities.
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Mission-Driven Governing: Rhetoric Vs Reality
- Labour government promised a mission-driven approach focused on five missions, especially economic growth.
- Yet, evidence suggests more rhetoric than a new way of governing or unified driving force for growth.
Fiscal Rule Changes and Tax Limits
- Government loosened fiscal rules to protect infrastructure spending, avoiding easy cuts in tough times.
- However, self-denying ordinances on tax limits government's flexibility to respond to fiscal needs effectively.
Long-Term Plans Without Fiscal Sustainability
- Labour government shows some long-term planning in capital spending and infrastructure.
- Yet, no comprehensive approach to fiscal sustainability threatens long-term economic health.