Why are living standards now this government's most pressing issue?
2024 has been a year of elections. In fact, by the end of the year around half the world will have gone to the polls - from the UK and USA to Mexico and Pakistan. It was also confirmed this week that Ireland will be heading to the polls before the end of the month.
Donald Trump's shock return to the White House this week has shocked many. Reading the Exit Polls on Tuesday night showing in-depth voter behavior data from across the United States, it was clear that one of the key reasons people opted to vote for Trump is that the felt worse off than they did four years ago. Such sentiment was true in the UK too - an election which saw Rishi Sunak lose two thirds of the Conservative Party's seats in the House of Commons.
The economic situation following the COVID-19 pandemic has impacted governments around the world - with many being defeated at the ballot box. The pandemic caused economies to take an almighty economic hit, and voters are punishing governments when they feel worse off than they did last time they went to the polls.
Keir Starmer and Rachel Reeves will be looking closely at what happened in the USA this week and will want to think carefully about how to repeat what has happened across the Atlantic - a one-term administration.
As former Shadow Chancellor and Education Secretary Ed Balls said on Wednesday morning - doing so is urgent. Last week, the Office for Budget responsibility said that the UK is on track in this Parliament to have the second lowest standard of living increase of any Parliament since the Second World War. In fact, only the last Parliament (2019-2024) was lower.
The next general election is potentially only three and a half years away - and action takes time. If the economy does not start to grow more strongly and living standards rise, there is a risk this government becomes one-term like has happened to many across the world.
It is an issue that is already on the government’s radar – indeed, improving living standards is a key reason people voted for a Labour government. In the Budget last week, you can already see Starmer and Reeves taking action - from record rises in the Minimum and Living Wage, to investment in the health service, and avoiding Treasury plans to increase Fuel Duty - something that directly hits consumers in the pocket.
The political situation in Britain is volatile, as it is around the world. For a government elected on 34% of the national vote share, it is imperative that is starts to show – quickly – how it is improving people’s lives.