![\"Prime](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/11\/\/b3acfd41-0f89-484c-9745-1b472075573e.jpg\")
<\/p>\nWhen Rachel Reeves presented her first budget last year, she hoped to address the so-called \u201cdoom loop\u201d mismanagement of more than a decade of Tory government. There will be a sense of d\u00e9j\u00e0 vu when she steps into the House of Commons this month for her second. <\/p>\n
The country is still spiralling. The choice Reeves faces is simple, however unpleasant: cut spending, increase taxes, or do both, to fill the hole at the centre of our national accounts. <\/p>\n
But if Reeves stops there, treating this budget as just another moment for clever fiscal arithmetic \u2014 a tax tinker here, a spending tweak there \u2014 she will be making a huge mistake. Her task is not simply to pull off this short-term balancing act, but to get Britain growing again \u2014 and we need a radical solution.<\/p>\n
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Rachel Reeves and Sir Keir Starmer<\/p>\n
JACOB KING\/PA<\/p>\n
Let\u2019s be clear: this stagnation is a catastrophe. Average real wages in Britain have not budged since the financial crisis, their worst run since the Napoleonic wars. If Britain had continued to grow after 2007 as it did before, everyone in the country would be almost \u00a314,000 richer on average. That alternative path is not a fantasy: the US took it. But while they kept on growing, we were left far behind.<\/p>\n
If Reeves fails to use this budget to get Britain growing again, she will soon be scrambling to make the numbers add up once more.<\/p>\n
Before the 2024 general election Labour swore it would not increase the big taxes, but that now looks inevitable<\/a>. At the end of its first year back in power the party celebrated the fact it had \u201cfixed the foundations\u201d<\/a>, but that building work looks like a botched job as the economy continues to stagnate. Productivity is decreasing, and inflation is at 3.8 per cent.<\/p>\n One broken promise is an unfortunate mistake; several is a pattern. Economic events seem to be slipping out of their control. <\/p>\n A better growth strategy<\/p>\n So what must Labour do in the budget to get Britain growing again? One popular view is that it still doesn\u2019t have a growth strategy and instead has a mishmash of policies.<\/p>\n This charge is unreasonable. Labour does have a growth strategy. The problem is that it does not go far enough.<\/p>\n At the moment the central theme, in the words of Steve Reed, the housing secretary, is \u201cbuild, baby, build\u201d<\/a>. It is true that Britain today is atrocious at building. The last time we finished a nuclear power plant was 1995. We haven\u2019t built a reservoir since 1992. The remaining rump of HS2 will still cost up to eight times more per mile than similar trains in Europe and Japan.<\/p>\n Steve Reed issued a call to arms for developers to \u201cbuild, baby, build\u201d when he became the housing secretary in September<\/p>\n DAN KITWOOD\/GETTY IMAGES<\/p>\n We keep falling short. Labour said it would leave \u201cno stone unturned\u201d<\/a> to build 1.5 million homes in this parliament, yet housebuilders said last week it was not going to happen<\/a>.<\/p>\n Either way, building alone will not be enough to lift the UK out of stagnation. What we know about the causes of growth is that they have a very different origin: the world of ideas, innovation, and technological progress. Just a few weeks ago, the Nobel prize in economics was awarded to Philippe Aghion, Joel Mokyr, and Peter Howitt for explaining innovation-driven economic growth<\/a>.<\/p>\n Innovation is why the US has soared ahead of us. It is not because they have better trains (a trip on Amtrak confirms this) but because they have a highly innovative technology sector and we do not. Take that away, and the productivity gap between the US and the EU almost entirely disappears<\/a>. <\/p>\n William Hague captured the basic lesson well. \u201cWe need less build, build, build: more think, think, think<\/a>,\u201d he wrote in The Times. The spirit of this observation, that growth is driven by new ideas and innovation, should infuse every part of the upcoming budget. <\/p>\n Building must focus relentlessly on places responsible for innovation. A decision last week to invest a further \u00a3500 million in the Oxford\u2013Cambridge corridor is exactly right. We need more of that, faster. <\/p>\n Starmer and Peter Kyle, the business secretary at the AstraZeneca site in Macclesfield, Cheshire<\/p>\n JASON ROBERTS\/GETTY IMAGES<\/p>\n But we must go further. If we want new ideas, we have to invest in them. Britain does not do this: we invest just 2.7 per cent of our GDP in research and development, below the OECD average, and less than half that of the global leader, Israel (6.3 per cent).<\/p>\n At the same time, we must also rethink how we reuse existing ideas in the age of AI. This means handling intellectual property reform with the same urgency as planning reform. <\/p>\n In addition, we must do more to protect the most innovative parts of the economy. That life science giants such as Merck<\/a> and AstraZeneca<\/a> are cancelling huge investments in the UK should be treated as a national emergency in the budget. That the value of the entire FTSE 100 is less than any of the four largest US tech companies is a sign that the City, once a creative engine for the UK, needs serious reform and support. <\/p>\n At all costs <\/p>\n Above all, Labour needs to make growth a priority in this budget. And while that might sound a little obvious, it has so far chosen not to do so.<\/p>\n \u201cGrowth,\u201d declared Keir Starmer at the start of 2024, \u201cis the lever that I intend to pull.\u201d The trouble with that line is that it makes the task at hand seem too easy. A far better metaphor is a wheel, not a lever. This captures the real, more difficult, choice: whether to steer the economy towards more growth but, at the same time, to accept that also means turning away from other things Labour believes are important. <\/p>\n Until now, the government has been unwilling to make that trade-off. That is what must change in this budget if stagnation is to end. <\/p>\n Labour is introducing new workers\u2019 rights<\/a> that will cost businesses \u00a35 billion a year according to the government\u2019s own analysis. But if this budget is serious about growth at all costs, it would delay these reforms \u2014 not because they don\u2019t matter, but because ending stagnation matters more. <\/p>\n Labour is pursuing a net-zero agenda that is driving up energy bills, decimating traditional industries and will cost the economy a fortune. But this budget should dilute these ambitions \u2014 not because the climate is unimportant, but because this price is too high given the economic calamity unfolding. <\/p>\n Ed Miliband is behind Labour\u2019s net-zero drive<\/p>\n PETER BYRNE\/PA<\/p>\n Labour is protecting the pension triple lock, which the Office for Budget Responsibility expects to cost \u00a315.5 billion a year by 2030. But if growth is the main goal, Labour would scrap this and use the savings to, for instance, fund tax cuts for small and medium-sized businesses and entrepreneurs \u2014 not because the triple lock isn\u2019t nice, but because this money could be used in pursuit of prosperity. <\/p>\n Labour is failing to reform a welfare system that keeps 25 per cent of working-age people in big cities such as Birmingham, Liverpool and Blackpool on out-of-work benefits. With growth the priority, this system should be overhauled \u2014 not to save money, but because it is inefficient to condemn millions of people, full of new ideas, to worklessness. <\/p>\n Labour will not consider a customs union with our biggest trading partner, the EU, despite the fact that Reeves is likely to blame Brexit for the state of Britain<\/a>. But if growth really is the be all and end all, then this is the moment to set out the intention to revisit that relationship. Putting the British economy first demands it. <\/p>\n A budget for the country (and for Labour)<\/p>\n![\"Steve](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/11\/\/64143d57-87ce-4816-9f20-693382b149e9.jpg\")
<\/p>\n![\"Keir](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/11\/\/d8d69089-cd16-4ffe-9789-0275bba3923d.jpg\")
<\/p>\n![\"Ed](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/11\/\/b81f6fad-6e39-414c-b91b-dd5c21a5fab0.jpg\")
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