It’s the opening of an article that is feeling all too familiar: it’s been a tough week for the government. This time, off the back of a disappointing show in Caerphilly and a distracting deputy leadership contest (i.e. last week’s tough week), comes the news that the OBR is expecting to downgrade the UK’s productivity forecasts by 0.3%. If true, this would leave the Treasury with a potential £20bn shortfall ahead of the Budget next month, wiping out much of the £10bn "headroom" previously set aside at the Spring Statement.
It's a problematic situation, according to the Chancellor, borne out by the longer-term economic shocks still being felt from the financial crisis and Brexit. It’s clear that, for the government, harsh measures are needed, along with time to feel their benefits. But does the government have the opportunity for either of these?
Since the general election, pledges made on the campaign trail seem to have dogged rather than driven the policy agenda. The commitment not to raise VAT, for example, was carefully caveated this week into a longer-term ambition for “this parliament.” Discussions on tax hikes now centre on keeping them “as low as possible” for working people and on them falling on the broadest shoulders, rather than ruling them out altogether.
So, where to go? It would seem that Türkiye and Dubai are a starter for ten. Today, the Chancellor is attending the so-called “Desert Davos” in Riyadh, pitching Britain as open for business after spending much of last week warming up relationships with the European Union. Yesterday, the Prime Minister was in Türkiye signing an £8 billion deal for 20 UK Typhoon fighter jets, in a move which the government says could sustain 20,000 jobs.
It's good-mood music, but whether this is enough to turn these plans into projects is another matter altogether. Economic woes aside, there are well-recognised structural issues that have been in train for a long time. Yet, there are encouraging signs from the government in this respect. For example, the long-awaited upcoming Planning and Infrastructure Bill, currently making its way through Parliament, aims to ‘back the builders, not the blockers.” But progress so far has been slow. The bill’s success will hinge on whether it can truly cut through the complexity of local planning and environmental rules that stall growth for years.
So, really, maybe the main question is whether the government will be allowed to do so in “this parliament.” Opposition parties are enjoying the same momentum that shone on Labour not 18 months ago, promising short-term solutions to these longer-term issues. It remains to be seen whether the government can weather the storm and start rebuilding political confidence through delivery.