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he obvious response from those in the media is that they do give immigration numbers publicity when this data comes out and what else can they do the answer is a lot when journalists interact with politicians on a day to day basis particularly those who benefit from popular misunderstandings they can make a particular point of mentioning the data like the latest immigration numbers a regular question for right wing populist politicians is why they are not welcoming the fact that immigration numbers have come right down the same can be done in the commentary that senior political journalists in the broadcast media regularly give in interpreting political news as i suggested earlier the media doesn t do this because they don t have sufficient incentives to do so the media worries about what politicians think and as a result is obsessed by balance but most politicians are more interested in favourable coverage than the facts in the uk the propaganda news media has an outsize influence on the broadcast media finally the uk regulator ofcom is hopeless public misunderstanding of facts in highly sensitive political areas will only be corrected when the media has an incentive to do what it can to correct them that incentive has to come from politicians and the media regulator because it is not going to come from anywhere else in assessing the health of a country s collective media the extent of public misunderstanding on key issues should be a critical piece of evidence media bosses should be held to account for this and asked constantly what they are doing to correct it because these public misunderstandings typically favour the political right and often come from the section of the media that supports the political right then we cannot expect right wing politicians to apply this kind of pressure indeed the political right would be happy to see little or no media regulation pressure of the kind i am suggesting has to come from the political centre and left our current labour government has failed dismally here for many reasons first as i noted some time ago it seems to have little interest in improving media regulation and has left those imparting a right wing bias to the bbc and media regulation in place second it has enacted some policies designed to reduce immigration numbers that will cause serious economic damage like helping to cripple one of the uk s most successful export industries third and most alarmingly it sometimes adds to public misunderstanding by repeating false narratives like immigration is adding to pressure on public services in this respect a government that has seen immigration fall drastically and yet is getting no credit for doing so has only themselves to blame 1 i would argue that the term the economy can have a similar quality to it posted by mainly macro at 07 36 no comments email this blogthis share to x share to facebook share to pinterest tuesday 26 may 2026 new ideas from labour on economic policy it may be a coincidence but the possibility of fresh leadership seems to have inspired a couple of papers published by labour groups on how to reform the uk economy in reality their appearance is probably more a testament to at least the perception of the lack of major reform coming from the current labour government ben zaranko has already discussed both in the observer but i think what i write here is complementary unlike ben i won t be discussing manchesterism for reasons well set out by joshi herrmann here the paper from the labour growth group is written by mark mcvitie with chris curtis mp its overall theme can be summed up by the following quotation britain has become an economy where position too often pays better than action and contribution we call this the extraction economy a settlement in which holding scarce assets protected licences legal leverage regulatory position or the power to shape and navigate broken systems can pay better than working building investing caring competing or taking productive risk this is a call to prioritise socially productive activity over rent seeking that will be familiar to many including economists the paper argues that to achieve this requires a shift from a distributive state to a capable one the democratic choices of the people delivered by a state that can choose build enforce reshape markets the paper argues that the uk state contains the power to act capably and implies that the reasons it doesn t lie in political attitudes the paper does have two important although familiar suggestions as to how to get the state to be more capable and less managerial the first is to give the prime minister more resources by building a department for the prime minister the second is to devolve power regionally and in particular financial power which this government has begun to do if manchesterism is anything it is this while i strongly agree with the second proposal i was not convinced either would in themselves necessarily achieve a more capable state the paper says that centralisation means that organised interests need capture fewer decision points but equally organised interests may find it easier to dominate local and less powerful politicians or even play one region off against another that criticism does not imply that financial devolution is wrong but that it is right for different reasons more generally if i ask myself why this labour government has been such a disappointment over the last two years i m not sure i would answer that at an institutional rather than personal level its major mistake it seems to me has been a wish not to upset most social and political groups leading to an inability to make key reforms this helps produce an excessive deference to the status quo it is the mindset of an opposition facing an unpopular government not a government determined to pursue its own vision ironically one group the government has felt free to offend have been its core supporters which has led to its current downfall to quote from the paper the british state increasingly treats conflict between objectives as an administrative problem to be managed rather than a political choice to be made the consequence is paralysis not balance this seems like a criticism of political leadership rather than institutional structure of course there are limits on what it is possible for labour insiders to say publicly in this respect however on one important point in the paper i clearly disagree to quote the tax burden as a whole is unsustainably high in time the economic benefit of this programme should provide scope to reduce it but for the time being we believe the burden must first shift from the payslip the overall tax burden is historically high but this is true in most countries and the main reason for it is the same a growing demand from an ageing and wealthier population for health services that cannot be wished away what is not historically high and what is certainly not unsustainably high is taxes coming from the payslip as the ifs shows uk tax revenue is lower than in most western european countries and in particular the uk raises far less from employees social security contributions than other countries while the overall tax burden has been increasing since the early 1980s taxes in median earnings have been falling almost steadily see this post and the chart from the resolution foundation reproduced there the second paper is by louise haigh there are clear commonalities with the growth group paper for example we must look to reduce regulatory barriers especially those that are holding back new and innovative businesses wishing to scale up labour s reforms of the planning system are praised by both papers and as ben zaranko points out this parallels us arguments around abundance while the growth group paper sees the central problem as vested interests around rent seeking holding back growth haigh focuses on short termism a central weakness in the uk s economic model is the systematic undervaluation of what might be termed preventative investment spending that reduces future fiscal pressures while raising long term growth our institutions appraisal frameworks and political incentives are poorly configured to recognise these benefits tending instead to favour interventions with immediate easily measurable returns but isn t it the high cost of borrowing that is currently holding back investment it is therefore possible for two things to be true at once that the current institutional framework is ill suited to supporting long term growth and that the immediate constraint on government action is the cost of borrowing in financial markets a credible reform agenda must address both improving the framework over time while demonstrating in the near term that public investment will strengthen rather than weaken fiscal sustainability i agree with haigh about the importance of public investment public investment is often complimentary to private investment so increasing the former should help raise the latter where i would have a different view is on the details of how you achieve that the key fiscal rule the golden rule already excludes public investment and i have written chapter and verse on why it is essential that it should the other fiscal rule falling debt to gdp doesn t but i have also long argued that this second fiscal rule is not fit for purpose and should be simply abolished once this is done public investment decisions would be unconstrained by fiscal rules which is a much more straightforward way of achieving the goal that haigh wants typically when she became chancellor reeves tinkered with the fiscal rules in a way that wasn t very controversial rather than making more radical but logical changes in contrast the paper s suggestion of extending the time horizon of these rules from five to ten years while allowing more of the benefits of public investment to become apparent makes targets too easy to game by governments leading to the rules losing credibility five years is about right because in obr forecasts the economy pretty well always returns to trend within five years yet it is also sufficiently close that it is hard to game unless you don t believe you will win an upcoming election i also don t think taking away responsibility for growth from the treasury works as i discussed in the context of the kerslake review here it is perfectly possible for a chancellor to override traditional treasury concerns as gordon brown showed what i think it is also important to acknowledge and which too many within labour including these authors avoid acknowledging is that the main reason our public services are weaker than in other western european countries is not because of our fiscal rules or treasury attitudes or vested interests but simply because we put less resources into them by paying less tax take the health service for example the only hope we have of stemming the growing demand for health services is to focus more on prevention which however it is classified is a form of investment this is an age old message pushed by expert after expert but it doesn t happen at scale and will not happen as long as the resources going into nhs front line services are tightly squeezed where i do agree with haigh is that decisions about selling the bank of england s large quantity of public debt the result of earlier quantitative easing should not be in the hands of the bank when short term interest rates are free to move the bank s debt sales have fiscal consequences rather than implications for inflation and therefore should be a treasury concern making it so would not compromise central bank independence in any meaningful way given that the bank is not only making government borrowing more expensive by selling its debt now but also by selling the debt when it s relatively cheap making a capital loss unlike other central banks it is surprising that the chancellor has not done anything about this it emphasises the point i made earlier that the government is unduly cautious about doing anything that might upset the status quo when so many voters feel that nothing works in the uk what you don t need is a government that only offers small change posted by mainly macro at 07 46 no comments email this blogthis share to x share to facebook share to pinterest tuesday 19 may 2026 why labour s current disarray is ultimately the consequence of osborne s austerity i want to expand on a footnote to last week s post as i said there we now have clear evidence that austerity from 2010 onwards helped fuel right wing populism brexit and farage however that post argued that right wing populism would have emerged anyway because its fundamental cause was a trend towards ending elite taboos on the right against appealing to xenophobic and racist voters which we see across the world so austerity just helped populism arrive more quickly and with brexit more dramatically in contrast i do think a lot of the problems we see in the uk labour party today stem from osborne s successful devastation of public services and it is less clear they would have happened anyway a conservative cutting public services to numbers way below what the public were comfortable with should have been a gift to labour of course so i think the story of how it turned out otherwise is worth spelling out it is easy to forget how almost universal the belief was in the uk media during the austerity years that reducing the budget deficit had to be the major macroeconomic priority basic macroeconomics understood since keynes said that when interest rates were stuck at their lower bound cutting the deficit would damage a recovery this was ignored despite it being in the worst recession since wwii we now know from empirical work at the imf that trying to cut the deficit in this situation not only prolonged the recession but in all likelihood made the public finances worse in the medium term as well as few now defend osborne s policy today it is easy to forget how much it seemed to be common sense to the media and large parts of the electorate at the time i invented the term mediamacro to d escribe this in contrast a majority of academic economists opposed austerity as it began unsurprisingly given it violated what we all taught and this majority grew steadily over the next few years as the damage became clear and the intellectual arguments for austerity collapsed but none of that made much impression on the media the result was that labour in opposition found their arguments against osborne s policy were getting nowhere and so they were gradually discarded 1 despite uk workers facing a cost of living crisis at least as bad if not worse than over the last few years the conservatives won the 2015 election and the media s promotion of austerity played a key part in that the reaction to this among many prominent labour figures was to almost completely accept the case for osborne s austerity ironically just when public opinion was final...