Starmer and Reeves operate in a difficult economic context

A faltering economy, rising government borrowing costs, plummeting popularity ratings: it’s no wonder that senior ministers, notably the chancellor, aren’t losing many smiles these days.

Also remember that Sir Keir Starmer and Rachel Reeves are the duo who best personify the Labor project of the 2020s; the rebirth and return of the party, based on confidence in the economy.

And yet the markets are collectively voting on Starmer and Reeves’ economic plan, and it’s not exactly a ringing endorsement – ​​and shaky markets can cause political wobbles.

They should not be exaggerated, but they should not be ignored either.

What we are witnessing is the brutal task of government; an unforgiving backdrop of economic stagnation, which critics say ministers have made worse.

Some Labor MPs are worried about the difficulty of governing, the groans in their inboxes and the prospect of the government having less money to spend on their priorities than they hoped.

In this context, it should not be so surprising that journalists are verifying that the Prime Minister has confidence in his Chancellor, which the markets do not seem to believe – yes, he did, he told us, without, however, explicitly committing to keeping her in office. until the next elections, as requested by the speakers.

Cue a number of exciting headlines before Downing Street announced that it did indeed intend to keep Reeves as chancellor for the remainder of this parliament.

People at Number 10 dismissed the exchanges as absurd, given how close Starmer and Reeves have been for years and how intertwined their political destinies are.

Each of them must hope that the markets will stabilize, that the cost of public borrowing will fall and that the prospect of very difficult decisions will thus recede.

Once again, the prime minister stressed that the government’s so-called fiscal rules – the parameters it sets for borrowing to appear credible – are non-negotiable.

This, coupled with an existing commitment not to raise taxes further, strongly suggests that the government will have to spend less than planned on all sorts of ideas if it continues to spend more than planned on servicing the cost of borrowing.

And then comes artificial intelligence, an industrial revolution humming on countless hard drives and computer chips.

The Prime Minister is eager to exploit his opportunities.

You bet it is, you might think: maybe he can get more for less from utilities with high-performance computers that do things better and faster, at least according to theory, than human beings.

Perhaps, as many hope, it will revolutionize the economy – and everything else – by transforming productivity and boosting economic growth.

Sir Keir Starmer takes an intentionally optimistic and positive attitude towards AI, emphasizing the opportunities rather than dwelling on the risks and threats.

For a prime minister accused by his detractors in recent months of denigrating the British economy, his tone on AI had an encouraging side, attempting to do what prime ministers can do: be the country’s mood-setters on a question and how it happens. approach.

But history tells us that revolutions, industrial or otherwise, are earth-shattering things, and that means there are losers too.

Navigating this – as a society and for our governments – is the challenge ahead.

Navigating these bumpy markets and a stagnant economy is the challenge of the moment.