“Operation Save Starmer” — Economy + Inflation Tailwinds; Bank Rates on Downward Path
Inside Downing Street, Starmer’s allies now believe they can “Keep Keir In”. New figures show the economy growing above expectations, inflation has slowed to 2.8% — the lowest level in over a year — and Rachel Reeves’s preferred environment of lower interest rates to protect mortgage holders is likely to remain the Bank of England’s stance with unemployment beginning to rise. Reeves’s cost-of-living package this week — free bus travel for children, the cancellation of a planned 5p rise in fuel duty, a VAT cut from 20% to 5% on summer attraction tickets, 100 food-tariff removals, and a £120m support package for the ceramics industry — is the substantive policy spine of the Prime Minister’s argument that the hard decisions are bearing fruit.
On Starmer’s reckoning, Burnham is far from “nailed on” in Makerfield, and Wes Streeting will have a struggle to get back into the leadership race on favourable terms having resigned from cabinet only to fail to secure “the numbers”. Friends of Reeves believe there is a world in which she survives the transition to a Burnham premiership precisely because it would reassure the markets. Reeves’s allies have been lobbying Labour MPs in defence of her job, warning that the “biggest fear for the bond markets and the unions is Ed Miliband”. The chancellor question is now “almost as important as that for prime minister”.