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Change Election Changes Nothing

from Maudlin Economics,

by Patrick Watson, Editor

Last week’s UK election, which put the Labour Party back in charge after 14 years of Tory rule, is being widely portrayed as a major political shift. Gavekal’s Anatole Kaletsky foresees little meaningful change because the two parties are indistinguishable on the most important policy issues. Key Points: The Labour government promises many new spending programs but seems unprepared to do what will be necessary to fund them. Brexit will remain a structural handicap, weighing down Britain’s growth, productivity and living standards. Yet incoming PM Keir Starmer has ruled out any steps toward a pro-European shift. The pro-growth policies that will now be considered are small and unlikely to make much difference. New trade partnerships with China might be beneficial, but Labour has the same Cold War attitude as its Tory predecessor government. In a reply to Anatole on the Gavekal web site, Louis Gave noted the outcome was less a victory for Labour than a giant loss for the Tories. Many former Tory votes went to smaller parties, not Labour. This could put the new government under pressure fairly quickly. Anatole sees a UK economic or political crisis as very likely within the next year or so.

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