April 24 2025 - 7:00am
There was little cheer for anyone in the International Monetary Fund’s growth outlook, published on Tuesday. The finance agency projects a major shock as the result of Donald Trump’s tariffs. Should those stay in place, the IMF holds that the world will experience an economic slowdown that could cost around $1 trillion. For the US, it means a downgrade of expected growth from 1.5% to around 1.1%. The only solace, perhaps, is that Britain is set to enjoy better growth than the eurozone.
For the Labor government, this is another adverse wind. Keir Starmer came to power promising to focus on growth, but so far little has materialized. These global conditions will only make the task more complicated, in turn putting further strain on Labor’s domestic policies. More public spending will require either more borrowing or more taxation — neither of which is politically beneficial to the party, as shown by recent rows over inheritance tax, winter fuel payments, and the child benefit cap.
Labor was elected last year primarily because of public frustration with a lack of growth and the decline of public services. Voters sensed that they were paying more and more for less and less, and blamed this on the Tories. Labor’s current unpopularity is driven mainly by a failure to deliver on either front. Global trends will make this harder, but the public is unlikely to be forgiving.
The question for British politics is who will benefit from this. Normally, economic struggles would help the Opposition, but this feels like a departure from normality. It is rare for a government to struggle this much this quickly. The Conservatives remain distrusted on fiscal issues following their failures in office, while Reform UK — the other major Right-of-center party — has no track record to speak of. For both, however, performing better than European counterparts might provide some electoral leverage.
If, over the next few years, Britain continues to outperform European peers — something the IMF data suggests is likely — it may appear to vindicate Brexit. This, in turn, could be a political gift for the Right, becoming a key point of difference when set alongside Labor — a way of arguing that they have the real economic foresight and the ability to make long-term decisions. This is especially true of Nigel Farage, who lacks the baggage of the last Tory government. It may also help reinvigorate the political debates that saw many older Labor voters switch Right for the first time in 2019, while rendering it harder for progressive parties to make the case for greater economic integration with the EU.
There is a sting, however, for conservatives. Since this latest hit to growth arrives downwind of Trump’s tariffs, there is a risk that any closeness to him will tarnish them, too. For now, both the Tories and Reform want to play up their chances of winning a trade deal from the White House. Trump’s popularity, however, is plummeting among British voters. If he is seen as the cause of more economic turmoil, this association could become even more toxic.
What is clear is that a new wave of economic uncertainty has been unleashed. The IMF predicts a global contraction. For Britain, already tattered after a lost decade and a half of slow growth, this could be painful. The effects on our politics are harder to predict. For some, it will vindicate breaking with the EU; for others, it is a warning of what can sit in Trump’s wake. Perhaps, most of all, it will encourage those who believe what is needed now is a radical break with the politics of stagnation.
John Oxley is a corporate strategist and political commentator. His Substack is Joxley Writes.
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