Keir Starmer’s victory became assured in the autumn of 2022. This was the moment when the tension between the Bank of England’s attempts to reduce energy-driven inflation and the inability of financial markets to absorb higher interest rates humiliated Kwasi Kwarteng, a rookie chancellor determined to go on a borrowing splurge. A political party that offered three prime ministers – Boris Johnson, Liz Truss and Rishi Sunak – in 50 days could not be taken seriously as a governing force. But it was the nature of the economic crisis that trapped the Conservatives in the sumps of unpopularity. The very financial conditions that put Sunak in office in October that year forced his chancellor, Jeremy Hunt, to withdraw most of the energy-support package that Truss had introduced and eschew pre-election tax cuts.
The Labour leadership has internalised the financial markets’ disciplining power. Writing in the Financial Times in September 2023, the then shadow chancellor, Rachel Reeves, declared that Labour’s commitment to the electorate “starts today with a very simple promise: never again”. Whatever else happens, “with a Labour government, never will a prime minister or chancellor be allowed to repeat the mistakes of the ‘mini’ Budget”. The result is that despite the party’s landslide win, Labour’s approach to public expenditure is unlikely to differ that much from that of the previous government.
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