Welcome to the Year of the Elections, Bloomberg's newsletter on the votes that matter to markets, business, and policy amid the most fragmented geo-economic landscape in decades. For Britain's Labour Party, the good news is that it appears set for a sweeping electoral victory on Thursday, ending 14 years of Conservative rule. The bad news is that it faces what it calls the worst economic and fiscal inheritance for any government since the war. With the National Health Service and other essential public services in crisis, growth anaemic, the tax burden at a post-World War II high and debt as a share of Gross Domestic Product close to 100% for the first time since the 1960s, the electorate is crying out for change. Keir Starmer's opposition is on track to win as many as 400 of the 650 seats according to some polls, giving his party as strong a mandate for legislative change as Tony Blair's landslide victory in 1997. There seems little Prime Minister Rishi Sunak can do to alter that. Labour's 20-point lead in Bloomberg's poll of polls is the same as it held when the election was called in late May. The Tory manifesto promised billions of pounds of personal tax cuts on top of the £20 billion handed out since November but the party's fortunes have not budged. WATCH: The new government will inherit an historic economic challenge as a result of Brexit, the pandemic, Russia's war on Ukraine and the debt burden exacerbated by all three. So what's the solution to Britain's growing economic crisis? Source: Bloomberg Britain's problems have been piling up since the 2016 Brexit referendum, which triggered years of Tory political infighting, and then the pandemic. The Conservatives have even lost their traditional title as the party of fiscal responsibility after Liz Truss crashed the pound during her short-lived tenure as prime minister in 2022. The electoral wipe-out expected would see several top Tory politicians losing their seats, including the Chancellor Jeremy Hunt. Sunak himself is even at risk. Brexit has barely featured in the debate, although Labour and the smaller left-of-centre Liberal Democrat party promise a better relationship with the European Union if they win. Even so, the right-wing Reform UK — rebooted from the former Brexit Party — has splintered the Conservatives' vote by targeting immigration, which at 685,000 last year was more than double pre-Brexit levels. Nigel Farage, Reform's leader, has a good chance of winning a parliamentary seat, at the eighth time of trying. The Liberal Democrats, campaigning hard against sewage dumping by water companies, lag Reform in the polls but are still likely to emerge as the third-largest party due to the UK's first-past-the-post electoral system. Labour, which Starmer has rebuilt as a business-friendly centrist party from the socialist leadership of Jeremy Corbyn, has promised to fix the UK's myriad problems by delivering growth. But its manifesto was light on detail and it will largely stick to existing Tory spending plans. The non-partisan Institute for Fiscal Studies think tank said those proposals are undeliverable as public services urgently need funds — in part due to the years of austerity after the Tories retook power in the 2010 coalition. Starmer's bid to be all things to all people — promising simultaneously a revolution in workers rights and to make "wealth creation our number one priority" — may be easier on the campaign trail than in office. — Philip Aldrick Starmer at a campaign event in Hitchin on Monday. Photographer: Jose Sarmento Matos/Bloomberg Coming later today: On the new episode of the Voternomics podcast, senior reporter Phil Aldrick and Abrdn Chair Douglas Flint join hosts Stephanie Flanders, Allegra Stratton and Adrian Wooldridge. |
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