The Labour Party's win: Britain must not squander a chance to arrest its decline

Keir Starmer became prime minister after the Labour Party's landslide victory in the UK election, defeating Rishi Sunak's Conservative Party. (Bloomberg)
Keir Starmer became prime minister after the Labour Party's landslide victory in the UK election, defeating Rishi Sunak's Conservative Party. (Bloomberg)


  • This election caught the UK at a high-stakes juncture as it stares at long-term decline—Brexit alone can draw a long sigh—unless its policymakers set things right quickly. In addition to expansionary fiscal and monetary policy, the Starmer government should fix infrastructure and higher education.

I recently spent ten days in the United Kingdom, driving through the English countryside and occasionally giving lectures. My journey included visits to historical landmarks like the majestic Durham Cathedral, completed in 1133 CE, and the little village in Lincolnshire where Isaac Newton was born. But I also saw, in London and across the country, signs of urban decay and neglect, as well as homelessness, poverty and despair.

Having grown up in India reading the Brontë sisters, Arthur Conan Doyle and P.G. Wodehouse, and having been a student in London in the 1970s, I was somewhat familiar with both sides of the UK: the opulence of its imperial past and the pockets of entrenched poverty. Indians’ deep familiarity with British culture is rooted in the rich and complicated shared history between Britain and India. 

Legend has it that when the great Indian writer Nirad Chaudhuri, known for his photographic memory, arrived in London from Kolkata for the first time, he could direct the taxi driver through lanes the driver was not familiar with.

Also read: UK polls explained: What led to Rishi Sunak’s defeat and how did Keir Starmer-led Labour secure a win after 14 years?

Although I relished the landscapes and the conversations with strangers, I could not help but notice an atmosphere of widespread discontent and social turmoil. Everywhere I went, people spoke about job scarcity, declining real wages, the dismal state of the health-care system, long wait times for medical treatment and crumbling infrastructure. Trains frequently ran late and often were cancelled, despite government reforms aimed at improving service quality.

Official data supports such anecdotal evidence that the British economy faces significant challenges. The UK’s GDP grew by 0.7% during the first quarter of 2024, pulling the country out of recession and providing the leadership with some good news before the general election of 4 July. 

But despite that slight uptick, real household disposable incomes remain 0.6% lower than they were in late 2019, indicating that the benefits of economic growth have not reached the average citizen.

While the UK has been hit hard by the covid pandemic and war in Ukraine, its economic difficulties can be traced back to poor decisions over the past quarter-century, particularly in the past 14 years, with Brexit being the most prominent. With the exception of 2021, when GDP increased by 8.7% thanks to the post-pandemic rebound, the UK’s growth rate has remained below 4.5% since 2000.

[The results of the general election saw Rishi Sunak’s Conservative Party handed a massive defeat by the Labour Party, whose leader Keir Starmer will now be the country’s prime minister.] 

The new government [that Starmer will lead] must go beyond the important short-term policy imperatives and develop a long-term growth strategy. In addition to expansionary fiscal and monetary policy, this strategy must rely on two main pillars: infrastructure and higher education.

Also read: Over two dozen Indian-origin politicians elected to UK Parliament

The UK must invest heavily in physical infrastructure such as roads and railways, as well as the severely underfunded National Health Service. Given that the benefits of infrastructure investments are often difficult to quantify and take a long time to materialize, they cannot be left to the private sector. 

As Oxford economist Paul Collier recently pointed out, the economic short-termism of British policymakers has led to an “annual scramble to scale back spending," leaving “no voice for the future."

Likewise, the UK needs to devote far more resources to higher education. While public British universities were once global leaders, attracting the best and brightest from around the world, they are now facing the risk of an “irreversible decline." But with increased investment and a carefully crafted plan for allocating it, the country’s higher-education system could regain its global standing. 

To be sure, funding these investments would require tax increases. But given that the UK’s tax-to-GDP ratio was 35.3% in 2022 (the latest year for which data are available), compared to 39.3% in Germany and 41.9% in Denmark, the new Labour government would have room to manoeuvre.

While mobilizing the financing for large infrastructure investments would be challenging, ensuring that these funds are spent effectively is critical. Governments have a tendency to overlook the returns on such investments since, unlike private investors, bureaucrats do not have any direct stake in the game. 

Therefore, it is necessary to draft a comprehensive plan detailing how the money will be spent, even if returns take a long time to materialize. Although government investments in infrastructure and education could take more than a decade to yield significant returns, the next government must act urgently to foster long-term growth.

Also read: UK Polls: With Rishi Sunak on his way out, England-bound international students from India may have a reason to cheer

This election found the UK at a critical juncture. The stakes were enormous. Putting Britain on a path towards a prosperous, sustainable future requires bold government action. Unless British policymakers can muster it, the country will continue to decline. ©2024/project syndicate

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