It is almost universally assumed that the current UK government led by Sir Kier Starmer will be in office until 2029. Political and economic forecasts, business and investment strategies, and government policies are based on that assumption. In the words of respected Telegraph economics writer, Jeremy Warner:
“There is hardly any chance of a change in government for at least the next four years. Like it or not, we are stuck with the current lot for a long time to come”
On the face of it, there seems to be no argument with this. Labour has a huge parliamentary majority. Constitutionally, the government seemingly can only be turfed out before time by Parliament passing a vote of no confidence. Surely Labour MPs are never going to destroy their own government? In most circumstances, certainly not. But in all circumstances? I have been pondering this as the government stumbles from one policy car crash to another. Does the British constitution, and our very long history as an independent nation, suggest that a government or leader can remain in office no matter how incompetent, unpopular, and venal it may be? I find myself not believing that.
Wearing my amateur historian hat, let’s begin by going back in our history. England (and later the UK) was governed for many centuries by a system of hereditary and (near) absolute monarchy. There was no formal mechanism for getting rid of grossly unpopular or incompetent Kings (mostly), but in practise all monarchs needed the support of a good part of the nobility and at least the grudging acceptance of the peasantry. Kings that gained the active enmity of either group, or even more dangerously both, would be forced to radically change tack or be overthrown. Post-1066 five Kings were either killed in battle (Richard 111), beheaded by Parliament (Charles 1), or murdered (Henry V1, Edward 11, and Richard 11). Starmer will not suffer any of these fates no matter how unpopular or incompetent his governance. However, the parliamentary system that has evolved from this history has proved time and again – in line with our national character – to be flexible, pragmatic and decisive in a crisis. At some point confidence in a democratic government might fall so low that it loses all legitimacy, leading to overwhelming pressure for an early election.
How likely is this scenario? It may seem improbable now, but it is becoming less unlikely by the day. The fundamental problem is that the government’s plans and policies are imploding on contact with reality. When they took office, the economy was growing, and inflation was at target levels. It is now heading for recession if not already in one, the inflation rate and interest rates are rising, and the currency is falling. Domestic business, investor and consumer confidence has collapsed, as has foreign confidence. This has rightly been described as a “doom loop” scenario, one that is not the result of external events but primarily a consequence of bad policy.
These policy mistakes are described in my recent post- election articles, which anticipated trouble ahead, but even I have been shocked at the pace of deterioration. The government shows no sign of getting a grip and is characterised by a general incompetence and stubborn adherence to policies that are clearly failing and deeply unpopular: amongst others the removal of winter fuel payments, inheritance tax changes that will destroy family farms, VAT on school fees, and most damaging of all the headlong rush to net zero while the rest of the world returns to realism. The government is also proving itself to be a terribly weak negotiator, as these egregious examples demonstrate:
*Caving in to public sector union demands for large and inflationary wage increases, without requiring any compensating reforms or measures to improve the appalling levels of public sector productivity.
*Offering to give away the key strategic Chagos islands to Chinese ally Mauritius, which has no legal claim to them whatsoever, and to pay Mauritius large sums of money into the bargain! In the words of Dr Yi Zhu, senior fellow at Policy Exchange:
“There is no way in which the Chagos deal can be justified, whether it be in terms of national interest or morality…. If passed this would represent a low point in the history of British foreign policy”
*Entering very one-sided trade negotiations with the EU in which they want full access to our fishing waters, a significant return to free movement of labour and renewed adherence to their regulatory regime. Since our existing trade deal with the EU is already entirely tariff and quota free, we are essentially asking the EU in return to remove excessive paperwork. Buying a mess of potage with a crock of gold! To achieve this, they have engineered the departure of Sir Crawford Falconer – our outstanding post-Brexit trade negotiator – and set up a special negotiating unit of over 100 people, who instead should be concentrating their efforts on completing advanced free trade talks with India, the Gulf Cooperation Council, South Korea, Switzerland and others, and resuming trade talks with the USA as offered by the incoming Trump administration.
*Adopting a policy of virtual appeasement towards China, a regime which has a stated policy of undermining the West and which spies on us, infiltrates our institutions, steals our technology, undercuts our industries using unfair trading practises, persecutes its minorities, oppresses its people, supports Russia in its war against Ukraine and threatens to invade Taiwan. In return for ignoring or downplaying all these issues they hope to secure more UK access to Chinese markets and attract more Chinese investment in the UK in a pitiful attempt to prove there is a growth strategy. Have they also not clocked that China is now entering a long period of economic stagnation/deflation compounded by an extraordinary demographic collapse? If Ms Reeves was to leave the country at a critical moment it should have been to visit fast growing democratic India to complete/sign a free trade deal that is there for the taking. Now that would be part of a credible growth strategy.
In the last six months the UK has become an international laughing stock. Our enemies rejoice and our friends despair. I warned in previous articles that the UK’s economic Achilles heel is its excessive dependence on foreign borrowing. Major hedge funds and investment speculators smell blood, as can already be seen in the bond and currency markets. I wish I could envisage a scenario in which the government responds by changing course and slowly but surely restoring confidence. In the absence of that – or a change of government – the outlook for the next four years is grim.
I now return to my initial thesis – I don’t believe it is inevitable that the Starmer government lasts its full term. That is the potential good news. It is impossible to sketch a clear path from here to there, but could some of the following events – not necessarily in order – be part of the picture:
The economy is officially declared to be in recession. The Starmer/Reeves fiscal rules are decisively broken. Reeves resigns or is sacked. President Trump imposes tariffs on the UK, angered by the UK’s appeasement of China, failure to increase defence spending, and the Chagos surrender. The UK/ EU “reset” is abandoned to avoid humiliation, or a very bad deal is signed which becomes yet another major source of discontent. A major currency crisis develops. Labour loses record numbers of council seats and is beaten by huge margins in by-elections. Labour reaches new lows in opinion polls. There is widespread civil disobedience and unrest. Labour MPs resign or defect. Andy Burnham and Boris Johnson stand as MPs. The Tories and Reform UK start talks on an election pact. Mrs Badenoch accelerates her policy reviews, and produces a credible plan to restore stability, in preparation for an early election…… readers can no doubt imagine their own variations on the theme.
Robert Lee January 15th, 2025
