ANDREW NEIL: The evidence suggests this will be a year of economic revival that could lift Britain out of its gloom. But this is why I predict Starmer and Reeves will screw it all up yet again... and be kicked out of office | Retrui News | Retrui
ANDREW NEIL: The evidence suggests this will be a year of economic revival that could lift Britain out of its gloom. But this is why I predict Starmer and Reeves will screw it all up yet again... and be kicked out of office
SOURCE:Daily Mail
On this first day of 2026, let us start with some surprising New Year cheer: prospects for the British economy look better than they have for quite some time.
On this first day of 2026, let us start with some surprising New Year cheer: prospects for the British economy look better than they have for quite some time.
A number of global developments are set to unfold in the coming year which together could lift us out of our current economic slough of despond.
The gravest risk to this rosy scenario is, of course, the dead hands of Keir Starmer and Rachel Reeves – all the more dangerous when coupled with the congenital economic ignorance of today’s Labour Party.
Together they could snuff out any green shoots of recovery before they have a chance to flourish, just as they did in 2025, a miserable year for the economy under Labour’s enterprise-sapping tutelage.
None of the good economic news set to grace our shores in 2026 has much to do with Starmer-Reeves. It will happen despite them – above all the rapidly growing global glut of oil and gas, which will exert substantial and welcome downward pressure on energy prices.
Despite weakening demand for oil, the Saudis are pumping out more and more of the black stuff to regain global market share. The US is over-drilling too, encouraged by Donald Trump’s ‘drill, baby, drill’ exhortations.
The International Energy Agency reckons demand for oil will rise by 1.6million barrels per day in 2026. But production will increase by almost 6million barrels, even without Russia re-entering official oil markets.
Such a huge increase in supply over demand can only mean one thing: oil prices will continue to fall in 2026, perhaps quite dramatically.
Together, Sir Keir Starmer and Rachel Reeves could snuff out any green shoots of recovery before they have a chance to flourish, just as they did in 2025
The same is true for natural gas. The wholesale price of gas in Europe is already close to pre-Ukraine war levels.
Yet Trump is still pushing to turn America into the world’s biggest exporter of liquified natural gas (LNG) – sent as frozen liquid in massive ships across the globe. America’s capacity to export LNG is on track to increase tenfold in this decade.
This huge expansion is taking place just as several major markets are cutting their use of gas. China is rolling out massive new wind and solar electricity-generating capacity because it wishes to reduce its dependence on shipborne energy supplies, which it fears could be too easily disrupted by the US Navy.
Chinese LNG imports fell almost 20 percent in 2025 – not one LNG tanker from America has docked in a Chinese port for almost a year – and will decline further in 2026. India, Thailand and even Pakistan (where farmers and factories are installing cheap Chinese solar panels on a massive scale) are also reducing their appetite for LNG.
As with oil, surging supply of gas coupled with weakening demand for it can only mean one thing: the price of gas continues to fall, perhaps even to plummet.
The economic significance of falling energy prices in 2026 will be immense – the equivalent of a £1trillion stimulus for the oil-and-gas guzzling economies of Europe, including the UK. Not before time.
The British economy is stuck in a stagnant rut in which growth of 1.5 per cent is regarded as close to boom times. The Eurozone is faring no better. Cheaper energy this year could be just the boost Europe and the UK need to pump some life back into their economies.
But the good news doesn’t stop there – and once again China will play a pivotal role. A new wave of cheap Chinese imports – everything from electric vehicles, batteries and solar panels to machinery, steel and chemicals – will swamp the world economy this year.
Given Trump’s tariffs have somewhat closed off America, Europe and the UK are now their premier destination.
This is not good news for what’s left of our industrial base. But it will result in the defeat of inflation in 2026 by exerting serious downward pressure on prices – ‘disinflation’ in the jargon – which is especially significant for Britain.
Eurozone inflation is already pretty much on target at two per cent and set to fall further; it’s under three per cent in America.
But we came close to four per cent earlier this year, thanks to the Starmer-Reeves addiction to borrowing, high taxes and big wage rises, all of which pushed up prices. UK inflation is only now falling back towards three per cent again.
Chinese disinflation will push UK prices down further. I expect us to hit the official two per cent inflation target (at last) before spring is out. That will pave the way for further cuts in interest rates in 2026, which will be good news for households with a mortgage and small companies who’ve borrowed to expand.
The Bank of England, which has been wary of cutting interest rates too fast or by too much because our inflation is the highest in the G7 club of the biggest market economies, will find safety in numbers when it comes to further rate cuts.
The US Federal Reserve benchmark interest rate is currently 3.75 per cent. I expect that to fall to three per cent this year, propelled downwards by a new Fed chairman more likely to do Trump’s bidding when it comes to cheap money.
The UK benchmark rate is also 3.75 per cent. Lower inflation will allow us to follow in the Fed’s footsteps towards three per cent. The Eurozone benchmark rate is already two per cent. That probably won’t change. But if it does, it will be down, not up.
Falling inflation followed by more cuts in interest rates are another reason to be cautiously cheerful about the economy in 2026. There’s one more – rearmament, another potential stimulus to the economy.
The Germans are leading the way in Europe with a massive boost to defence spending from a low base. The Poles and Scandinavians are also doing their bit to deter a revanchist Russia from further military adventures with stronger defences.
But Britain is a laggard. Our government talks a lot about extra defence spending but seems to have mislaid its cheque book.
We will spend very little more on rearming in 2026 than we did in 2025 – yet another failure of the Starmer-Reeves government. The military and economic case for a major boost to defence spending is overwhelming. The UK government needs to get on with it.
A new wave of cheap Chinese imports – everything from electric vehicles, batteries and solar panels to machinery, steel and chemicals – will swamp the world economy this year
Rearmament is potential stimulus to the economy. The Germans are leading the way in Europe with a massive boost to defence spending from a low base
Falling energy prices. Lower inflation. Falling mortgage rates. More defence spending. Together they amount to a real opportunity to break out of the economic doldrums. What could possibly go wrong? Easy: Starmer-Reeves.
In the summer of 2024 they inherited the fastest-growing economy in the G7. For a while the new government was carried along by that momentum. But the wrecking ball of its first Budget in November 2024 took its toll in 2025.
Growth went from a respectable 0.7 per cent in the first quarter of last year to a worrying 0.3 per cent in the second, a pathetic 0.1 per cent in the third – and a likely stagnant 0.0 per cent in the fourth quarter just ended.
But the sad catalogue of Starmer-Reeves failures doesn’t stop with a slump in growth. It includes higher inflation, rising unemployment (4.4 per cent a year ago, now over 5 per cent), the lowest investment of any G7 economy and reckless borrowing.
The Tories borrowed an incredible £311billion in 2020-21 to counter the impact of the pandemic. Labour wanted them to borrow even more. But within a year the Tories were getting a post-pandemic grip on the public finances: borrowing fell to £120billion in 2021-22.
Labour promptly reversed that: borrowing soared back to £153billion in 2024-25 and looks like being roughly the same in the current financial year.
So, even with some good economic news coming round the corner, what is to stop Starmer-Reeves screwing it up all over again in 2026? Especially since, to save their skins, they are now in thrall to Labour’s soft Left, which has become the dominant force in the party and which wants to borrow, spend and tax more.
Of course, neither might be around for long enough to make a second hash of things.
I have covered the troubles of many previous prime ministers as their party fell out of love with them – from Ted Heath way back in the early 1970s to Margaret Thatcher in the late 1980s, John Major in the 1990s and Tony Blair and Gordon Brown in the first decade of this century. But I have never witnessed anything like the visceral dislike – bordering on hatred – that Labour backbenchers have for Starmer (and, by extension, Reeves).
I have covered the troubles of many previous prime ministers as their party fell out of love with them, writes Andrew Neil, including Margaret Thatcher and John Major
An Angela Rayner government (perish the thought) is hardly likely to be a pinnacle of fiscal rectitude
The settled Labour consensus is that he’s a dud – as useless at politics as he is at policy, twin defects that were amply on display this week after he welcomed an Egyptian activist to our shores, seemingly unaware he was an anti-Semitic, anti-British, anti-white extremist with a violent streak. That had even the PM’s cabinet ministers shaking their heads in despair.
Labour MPs have been biding their time waiting to ditch Starmer after the May elections, which are universally expected to be a disaster for him in England (at least in those parts where Labour is allowing elections), Scotland and Wales. But a growing number are no longer prepared to wait that long: they want to dump him as soon as possible.
This is not necessarily good news for the economy. The bond markets, where governments go to borrow, fear any change at the top would result in an even more Left-wing government.
They’re right: all potential successors are to Starmer’s Left, bar Health Secretary Wes Streeting – and even he’s tilting that way to curry favour with the soft Left. Manchester Mayor Andy Burham, who doesn’t hide his leadership ambitions, complains about Labour being ‘in hock’ to the bond markets: there’s a simple way to avoid that, Andy — stop borrowing so much from them!
An Angela Rayner government (perish the thought) is hardly likely to be a pinnacle of fiscal rectitude. Ditto one led by Ed Miliband (another perishing thought).
The above three and several more, spent much of 2025 on manoeuvres to replace Starmer. They will pick up where they left off in the New Year, with renewed vigour. The danger for the UK economy is that, in response to these Labour Party machinations indicating a clear lean to the Left, the bond markets decide to dump British debt, forcing up government borrowing costs to unaffordable levels.
That would be the modern equivalent of the 1976 economic crisis under a previous Labour government, which led to the humiliation of being bailed out by the International Monetary Fund. But history doesn’t quite repeat itself.
Rather than a second IMF bailout, the British government would more likely be left to retrench on its own, forced to slash spending and raise taxes because it had run out of room to borrow any more. It would make the so-called austerity of the Cameron-Osborne years look like the good times and split Labour asunder.
I do not predict such a cataclysm for 2026 (though I wouldn’t entirely rule it out either). But if anything is likely to provoke the notorious bond vigilantes to do their worst this year it is the prospect of an even more profligate Labour government than the Starmer-Reeves regime.
It would certainly overwhelm all the potential good economic news that awaits us this year – and it speaks volumes for our current predicament that the best international investors can see for us is a continuation of Starmer-Reeves. Truly blessed we are not.
Compared with Starmer’s ‘end of days’, Kemi Badenoch starts 2026 in much better shape than she began last year. The Tory leader has gained in confidence, come across as the decent person she is and often bested a flat-footed Starmer at Prime Minister’s Questions.
Her (perhaps insurmountable) problem is that she heads a political brand which could be tarnished beyond rescue and which has haemorrhaged support to Reform, which might not be reclaimable.
That said, Reform ended 2025 slipping a little in the polls having peaked at just over 30 per cent (while the Tories started to gain a few points from a very low base) and with a sense in some quarters that Nigel Farage had somewhat lost his mojo. He and his party certainly no longer dominate the national discourse the way they did for much of last year.
We will find out soon enough in 2026 if the Tory revival is real or if Reform quickly bounds back to establish its credentials as the new and dominant party of the Right. Only one or the other can happen – not both. For Starmer there are no good prospects. Even if he survives until the May elections the results will be dismal for him.
Labour will lose control of the Welsh Parliament, which it has run since the latter was established in 1998. A year ago Labour was poised to take the Scottish Parliament. Now, thanks to Starmer’s deep unpopularity north of the border, the SNP will hold on to power and Labour could come third (behind the SNP and even Reform).
While Reform could be given a new lease of life with a strong showing in England’s local elections in May, Labour will continue to shed its Left base to the Greens and their glib new leader.
I started off with some good cheer for the New Year. My fear is good economic prospects will be more than thwarted by bad politics. Starmer and Reeves will be brought down by their own socialist conceit: that economic growth can be fostered by a bigger public sector, higher taxes, more public spending.
It can’t. In fact, that’s how you stifle growth. But, amazingly, as both are dispatched to the wilderness for failing, Labour will double down on its socialist fantasies –and what should be a year of economic revival risks becoming yet another of economic misery and missed opportunities.