As he flew to Europe, hoping to bring about peace on the continent, Keir Starmer left behind a restless, uneasy Britain. His Government seems trapped between intolerable options. It strains for growth, but can’t invest as it knows it must, its path blocked by pre-election fiscal pledges. Its current path – straining to balance the books amid the global populist onslaught – looks similarly forbidding. Over its shoulder, Labour watches Reform advance – but its immigration fightback risks losing as many voters as it gains. And now its most existential nightmare yet: America’s long withdrawing roar from Europe, and with it, Russian aggression. Suddenly, on top of everything else, Starmer must revive a withered military by yesterday, potentially for deployment in Ukraine.
Yet history suggests that it’s exactly when there seems no escape that a breakthrough comes – because finally one overwhelming new threat overrides all the others. In the wake of JD Vance’s Munich speech last week, there was much talk of the late 1930s. Often such analogies are hopelessly vague. But factor in the economic aspect of the nightmares confronting Neville Chamberlain, and a more specific parallel appears. If crisis is an opportunity, then the solution Starmer is forced into could form the rescue of his administration – and the country.
As chancellor from 1931, Chamberlain faced the mass unemployment of the Depression, but resisted abandoning Treasury orthodoxy. As prime minister from 1937, faced with a rapidly re-arming Germany, he did much the same. All-out re-armament at speed was unthinkable: it risked deficits, higher tax, inflation, and too much state control over industry. Better to avoid war at all: after the First, a Second World War seemed apocalyptic, with the incineration of British cities by a foreign air force a widespread new terror. But still, the Nazi threat kept rising.
Churchill was demanding 20 to 30 per cent of Britain’s industrial production capacity be directed to making munitions; maverick Tories called for re-armament focused in areas of high unemployment. Labour’s foreign affairs spokesman Hugh Dalton dragged his party towards facing “the central brutal fact in Europe”: the re-armament of Nazi Germany. Yet still those dominant fears – deficit, inflation, state control, burning cities – blocked the path. Chamberlain did re-arm, but cautiously – building vital air and sea capability, not a land army. In 1937, the Treasury suspended orthodox rules on balancing the books; in 1938, the standard rate of income tax rose from 25 per cent to 27.5 per cent. But, by then, even this seemed inadequate. In Munich that October, Chamberlain sacrificed Czechoslovakia, partly because he was worried about the cost of war.
Finally, it became impossible to dodge the realisation that defeat by Hitler was the worst nightmare of all – worse even than a terrible conflict. And this brought a political breakthrough which would transform Britain, because that threat of defeat overrode old fears of deficits and a bigger state. If we can do this to fight Nazism, many asked, why can’t we do the same to fight unemployment?
In 1939, Chamberlain eventually announced conscription, but by 1940, with the Nazis approaching the Channel, his caution looked dangerously complacent. That May, in the great Commons debate over Britain’s military flop in Norway, MPs denounced the failure to adequately prepare, and the fact that a million men were still out of work. Socialist firebrands – left-populists avant la lettre – like Michael Foot savaged Chamberlain and his class as “guilty men”. Patriotism no longer seemed the property of the right. And young Brits committed to defeating foreign fascism – partly on the promise that afterwards, they would not be dumped back on the dole. This promise would underpin our politics for decades.
The threat we face today is not on the scale of 1940. But a tension similar to the late 1930s is emerging in government: between cautious orthodoxy and what we might call “emergency realism”. And there are hints Starmer is ready to try to be bolder than Chamberlain, even if that we’re starting from a weaker point. He is reportedly poised to override his orthodox chancellor on defence spending. On Monday, he made clear that “peace cannot come at any cost”. If Russia attacks a Nato member, as now seems likely, the consequences would be grim. But as Nato secretary-general Mark Rutte said earlier this month, “the best way to avoid war” is to “prepare for war”.
So maybe America’s terrifying retreat and the urgent need to re-arm will compel the government to overcome its many fears at last. Emergency realism offers a sincere patriotic basis to abandon Reeves’ pre-Trump fiscal rules. Even Chamberlain didn’t fund re-armament primarily by cutting. And if that breaches one election promise, it opens a way to fulfil another one: to inject economic stimulus beyond south-east England at last.
In 2023, Reeves conjured “securonomic” visions of an “active, strategic state” working with business to foster “cyber amongst the former coal and steel communities of South Wales, robotics and AI in business hubs in Lancashire’s mill-towns”. She doesn’t talk about securonomics much anymore – but might not hiking defence spending deliver regional renewal? The defence company Thales has a cybersecurity centre in the former steel community of Ebbw Vale, and AI teams in Lancashire. And in Glasgow it makes optronic systems, and parts for armoured vehicles; it has plants in Doncaster and Belfast too.
Between them, defence companies have sites scattered across the country, from BAE Systems’ shipyard in Barrow-in-Furness and aircraft engineering site near Preston to QinetiQ developing military AI in Lincoln. True, the Ministry of Defence spends most heavily is the south-east, but north-west England comes third, Scotland fourth. And perhaps government could insist the balance shifts further to the Midlands and elsewhere. Defence Secretary John Healey recently awarded Rolls Royce’s plant in Derby a £9 billion contract for new nuclear reactors for our submarines, declaring “defence can be an engine for growth”. And yesterday (18 February) he unveiled a new defence procurement infrastructure specifically to “re-arm Britain”. Of course, this mission will feel all the more national in scope if the companies that benefit from this new spending keep the dire national urgency driving it in mind, as much as their shareholders.
At the same time, re-arming to guard Ukraine, Europe and ourselves would be a long-missed expression of national unity and strength. Putinist Russia is an enemy we all find alien to our values and culture, and whom our collaboration with – in the form of flushing their dirty money through the City of London – is already a source of national shame. Polling suggests Brits are unusually pro-Ukraine, including on the question of sending troops as peacekeepers. This new national cause would expose the hard limits of Reform’s claims to patriotism, despite Farage’s retreat from claiming Nato provoked Russia’s invasion. The idea that a cynical, disillusioned Britain could pull together against external threats, led by a stronger, more protective state, may seem ludicrous. But we have done it before, and not just in the mythic days of 1940, but as recently as 2020. Besides, what other choice does Labour really have?
[See also: This is Europe’s war now]
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