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Donald Trump’s return to power has shocked the world. More than 70 million voters put their faith in the former President to steer the American ship for the next four years. But while much of the coverage is focused across the pond, there is a lesson Labour must take from this. If they do not deliver on their pledge for economic growth, voters will turn to strongman populists who could turn our political system upside down.
Questions surrounding the US economy dominated the run-up to polling day. This was uncomfortable ground for Harris. She seemed incapable of distancing herself from Biden on economic matters. Under Biden, inflation hit a peak of 9.1% in 2022. Fuel prices, at one point, rose to more than $5 a gallon, and basic everyday necessities like groceries hit price increases of 21%.
The American public has had to live through this. While Harris was keen to move the debate to Donald Trump’s character, abortion rights and democracy more generally it didn’t work. Americans wanted someone to fix their dire economic situation – after all, the promise was that “Trump will fix it.”
But the message this sends to countries around the world is clear. Indeed, some are already facing the consequences of their actions. Macron has Le Pen at his doorstep and Scholz is staring down the barrel of an increasingly popular AFD. Voters do not care about the state of democracy or the protection of individual liberties if the economy isn’t where it should be. Trump’s comeback has been marked with repeated scandals, threats to the bodily autonomy of women, and the possibility of a politicised civil service. But voters are numb to this. Put simply, the price of my groceries matters more than abstract doom-mongering about the state of democracy.
The spotlight thus falls to Labour. If they fail to heed this lesson, they risk steering the UK down a similar path. Since they waltzed into Number 10, economic growth has been a key pledge of Starmer’s government. Britons up and down the country have struggled with economic hardship in recent times. Inflation peaked during Liz Truss’ tenure at 11.1%, and food prices “remain 20% above the level seen in July 2021.” While these figures have been on the decline for some time now, working people are still feeling the effects. The average weekly food shop, for example, has risen by 13% in the past year, and families are being forced to cut costs where possible.
Yet neither Starmer nor Reeves have seemed to recognise this. In their Autumn Budget, for example, Labour raised national insurance contributions of employers by 15%. While the Chancellor may delude herself into thinking this won’t impact working people, she is far from the truth. Raising national insurance contributions for employers will have a devastating knock on effect for working people.
The Jobs Foundation, a charity which champions the role of business in society, provided a comment in response to the budget arguing that raising national insurance contributions would, “place a significantly increased burden on businesses – some £25 billion.” Financial leaders in the City of London, have said raising employer’s national insurance contributions would “be a handbrake on investment.” If one thing is clear, it is that businesses will suffer and economic growth will be stifled because of these policies.
Employers will be forced to make a choice after this tax hike. Either cut costs internally, which could see thousands of people lose their jobs or take huge pay decreases, or raise prices on products, which will mean everyday people are spending even more money on basic necessities. What Labour have failed to understand is that when they raise taxes, working people pay the price.
History has shown when mainstream parties fail on economic management, the vacuum is filled by populists. Figures like Nigel Farage are eager to capitalise on disenfranchised voters who feel let down by mainstream political parties.
The stakes are high. Millions of voters already turned to Reform in this year’s general election. The more time Labour spends raising taxes and hampering economic growth, the more voters flock to Farage.
It’s a lesson Labour cannot afford to ignore: in times of economic distress, voters prioritise stability and prosperity over everything else. Without a solid economic strategy which benefits the majority, Labour risks leaving the door open for a Trump-style revolt – one which could reshape British politics in ways that are hard to predict and even harder to reverse.
