The Labour government risks being unable to deliver the economic growth on which it has staked its success or the improvement in public services it has promised, travel industry leaders were told yesterday.
Sonia Sodha, chief leader writer and columnist for The Observer newspaper, told Abta’s Travel Matters conference in London: “The times when governments had money to spend are gone.”
She described the recent Budget as “hugely consequential in shaping what politics will look like over the next four years”, saying: “We saw Labour go into the election with a risk adverse ‘Ming vase’ strategy and mop up massive disaffection with the Conservative government.
“In the Budget, we saw [Chancellor] Rachel Reeves do as much as she felt she could given that strategy.”
Sodha noted the key things Reeves did were “to raise taxes to fund public services and relax the government’s debt rule to borrow more to invest” and warned: “There are risks with this approach – £40 billion sounds a lot, but the money will go quickly on public services.
“The impact on growth could be marginal. Many economists, including the Office for Budget Responsibility, question whether it is going to deliver in time for the next election.
“The growth forecasts don’t look good and that is worrying for Labour.”
She suggested taxes going up “may stop things getting worse” but asked: “Are things going to get better?”
Sodha told the conference: “People are not going to feel meaningfully better off in 2029.
“The lessons from the US are sobering. People in the US didn’t feel any economic growth and [Kamala] Harris was not able to make a case for the administration to get another four years.
“Labour might find themselves with similar issues. Economic growth has to be felt in people’s pockets. People vote according to how they feel not according to what politicians tell them.”
Asked about the resignation of transport secretary Louise Haigh last week, Sodha said: “Unless there is something we don’t know, it seems extremely harsh to force her to resign.
“What message does that send? It sets a different standard, when there will be more scandals.”