Political Fix: Labour's year in review

0:04Welcome to Political Fix with me, George Parker. 2025, it's almost wrapped up. And I think we all need a break after an exhausting year in British politics. Not another one, as they say. In this special live episode of the podcast, we're bringing you some thoughts on where we think things stand for Sir Keir Starmer's Labour government and the reset of the Westminster scene after a turbulent year. It's not exactly been smooth sailing, at least at home. When the Prime Minister entered Downing Street in July 2024, he promised to stop the chaos. And yet over the past 12 months, he's faced down rebellions from within his own party, overseen scandals and sackings and delivered a constant barrage of bad news from health and housing to small boats and, of course, a chaotic budget.

0:52He has fared a little better on the world stage, securing a comparatively competitive trade deal with Donald Trump, as well as a tentative rapprochement with Europe. But with every international success, Starmer's standing domestically seems to diminish. And he ends the year, on some measures at least, as the most unpopular PM ever. Here to help me analyse why Starmer is having such a tough time, the FT's politics correspondent, Anna Gross. Hi, Anna. Hi, George. Political columnist and writer of the Inside Politics newsletter, Stephen Bush. Hi, George. And the FT's economics commentator and writer of the newsletter on central banks, Chris Giles.

1:30Hi, Chris. Hi, George.

1:35so chris let's kick off with where things are right now for the labour governing party we're two weeks on from the delivery of that long-awaited budget the big defining episode i guess of the second part of this year in my mind there were two main factions that chancellor rachel reeves wanted to appease in the budget the markets and her own party how do you think she did on the markets front? Well, actually, we're now two weeks on, pretty well, in fact. So, financial markets, particularly bond markets, have been pretty difficult for governments over the last two weeks. In Germany and in the US, 10-year bond yields have gone up by about 0.2 percentage points.

2:15What have they done in the UK? They've basically been flat, gone up a tiny bit. So there's been a decrease in the spread between Germany and the US and UK debt, because UK debt was really expensive. So it's now still expensive. It hasn't come down, but it's not gone up like other countries. So in some sense, the markets are saying, relatively speaking, we like this. And business reaction generally? Bad. There was an Institute of Directors poll. Four out of five said it was bad. You might expect that from the IOD, but it's just been the public and business really didn't like it. There's a lot of tax,£26 billion of additional tax raising.

3:00To put that in context, that's getting on for 1 % of GDP. So that is a decent fiscal consolidation. A lot of it's coming in later in the parliament, so more 2027, 28 and 2029. but it's not surprising that business and the households are a bit unhappy about a budget when the main thing is they've got to pay more tax. Stephen, how's the budget gone down politically? Not that well. It has staved off the risk of an immediate change in leadership which could have happened if the budget had made Labour MPs particularly unhappy but what it hasn't done is provide any sense to members of the Parliamentary Labour Party that there is a plan to turn things around which is why now when you talk to Labour MPs they don't go, yeah, things will be better next year.

3:47They go, well, we'll have to change the leader at some point next year. Yeah, and Anna, I mean, it's true that unlike some budgets that we've covered in the past and Chris and I, we've covered many, budgets which start to unravel. In this one, the real fallout after the budget was the chaotic way in which it was born, the journey between the announcement of the budget and the delivery of the budget and then thereafter. Anna, what did you think of that? Rachel Reeves was at a select committee talking about this. And obviously it stung her, hasn't it? I think it's been, it's really, really damaging that there was so many leaks.

4:17They actually impacted markets when they came out. It added to a sense that the government was sort of in turmoil. It was in chaos. It wasn't able to make kind of sensible decisions and see them through. And there was the question of whether income tax was going to rise. That was heavily pitch rolled. It was heavily indicated that's what they were going to do, including just in a week or two before the actual budget. and then that unraveled in a very sort of chaotic way and I think one of the sort of original sins a lot of people feel in the party was the fact that they pledged before the general election last year not to increase income tax and not to increase national insurance and they could have quite easily done that reverse Rishi Sun at the former prime minister's 2 % cut to national insurance and I think they felt, oh yeah, maybe this is our moment to do that and then decided actually this will be incredibly unpopular and thrash trust in government.

5:09Well, indeed. And one of the things that came out of the Treasury Select Committee was that the principal leak inquiry into the budget was the story that you and I wrote together about them dropping that plan to raise income tax. In the end, do you think they just bottled it? Yeah, I think, you know, there was briefings straight after our story that actually this was because they got some data from the fiscal watchdog, the OBR, that was much better than expected. That has subsequently pretty much fallen apart, that argument. They got that data much earlier, all of the data that they got from the fiscal watchdog.

5:43So it really looks as though they looked at the picture and thought, we are already incredibly unpopular amongst Labour MPs as well as amongst the public. And to do something like this, to kind of brazenly break probably the most important manifesto pledge would just be too damaging. And Stephen, the budget seemed to be the two principal things we talked about with Chris, the markets. putting aside an extra£12 billion as headroom against the fiscal rules. But the other big thing they had to raise that£26 billion of tax for was to basically pay for additional welfare spending, including the ending of the two-child benefit cap.

6:21That was obviously something which has cheered up Labour MPs to a certain extent, but to what extent? So it's cheered up Labour MPs and then it will mean that by the end of the Parliament, half a million children will be out of poverty. But the main way that it's cheered up Labour MPs is they say things like, well the good news is when I lose my job in five years I'll be able to say that I've with them we've made this positive contribution to children's features so lots of Labour and Peace think it's absolutely the right thing to do but as one of them put it to me they said okay but what's the thing which we're doing to be politically successful and not just successful in policy terms so they like it but they know it's not the kind of thing which wins you an election and also the public according to the polling at least doesn't like this extra welfare spending No, so I think in some ways the best analogy to it is George Osborne cutting the 50p tax rate in 2012, which was hugely unpopular with the public, was the kind of thing Tory MPs expect.

7:15Now, I would say actually as a wet centrist, it's good that the Tories did that and it's good that Labour did this thing. And one of the things you want when you have a change of government is you do sometimes need them to do radical things that the public doesn't like. But the big picture problem is the government had to be dragged into doing this radical thing. there is unfortunately no Labour caucus that's going to drag them into doing radical things on growth, on our EU membership, on the other big problems that we have. And without the willingness to do that, they are not going to be as electorally successful as the coalition government under David Cameron and George Osborne was.

7:47Chris, when you look at this from an economics perspective, do you see any political strategy behind the economics of this budget? Does the budget lay the economic conditions for an improvement in their position? Well, I think the best you can say, and I think it's quite important, is to say that the UK public finance is starting off at the moment in an unsustainable position. We're borrowing roughly 5 % of national income. And that is internationally bad. It's quite close to the 75th percentile of advanced economies. But the budget, and including previous budgets, equally from the last government, means that the UK now has legislated, well, once this legislation for this budget goes through, which it will, will have legislated for a fiscal consolidation, bringing it much closer to the 25th percentile, so better than all other countries.

8:37And so if you can achieve it, then you can say, we have repaired our public finances. We are now in a position where the economy can go stronger. I, the Chancellor, had a three-pronged growth strategy, which was stability investment reform. I've now achieved stability and we're doing investment and we're just doing reform and then things will pick up. But that will be, you know, towards the end of the decade. So you've still got to get there before you be able to say that. But that's where I'm sure the strategy ultimately lies. And whether that's massively popular, just saying, right, we've sorted out the mess we've had in, because the public sort of thinks you should be able to do that immediately, but it takes time.

9:19I mean, she should have done some of this in her first budget, shouldn't she? Leave us the second year was a bad move. Stephen, And do you think there's enough that she's laid a pathway, at least, to the next election, where as we get close to the election, whoever's leading the government at the time will be able to say, we're on the right track. Don't take a risk with the other lot. Maybe. I think you're exactly right to say that she should have done all of this in the first budget. And broadly speaking, successful governments do two very painful budgets that they know will pay off and give themselves time.

9:45They don't do a wishful thinking budget and then do a half wishful thinking, half painful thing. But because the challenge at the next election will almost certainly be from the nativist right in the shape of Nigel Farage, that gives the government an advantage that the alternative will be more scary. So it will, I think, come down to the question of can these fairly small improvements coupled with a change of leader and people looking at the change and going, not sure about that, be enough? Maybe. Yeah. And what do the polls tell us about the reaction to the budget? Not great. I mean, I was looking at some YouGov polling today.

10:18So about 11%, I think Rachel Reeves is doing a good job as Chancellor, which is down from 15 % before the budget. It's lower than quasi-quatting after the 2022 mini-budget. I think it's the lowest of all time. So what's going on with these polls? Because I think it's really interesting, isn't it, that Rachel Reeves is someone who, according to polls, the public really dislike, and is the least popular Chancellor in polling history, as you say, even more unpopular than the person who crushed the British economy until three years ago now. Do you think, Anna, there's an element of misogyny going on here, which is certainly something that Rachel Reeves herself believes.

10:52It's really hard to say. I definitely think there is probably an element with Rachel Reeves, and you can see that in some of the language that's used to describe her. You know, you've got Reform UK politicians constantly calling her Rachel from accounts. That's misogynistic, for sure. But Rachel Reeves and Keir Starmer are pretty on a par in terms of their unpopularity. They're basically, they're in it together. And so you can't claim the same for Starmer. And I think there's something that, you know, I am actually surprised by it when you go and speak to people around the country, the level, the kind of visceral dislike.

11:24It's not everywhere. It's not unanimous. There are still about a fifth of the public that still say they would support Labour. But there are a lot of people who absolutely hate this government. And you ask them, why is that? And they say they've lied, they're false, they're phony. And that message, that feeling seems to have spread pretty far. And it's going to be very hard to turn around, I think. I think that's probably true. And Chris, you know Rachel Reeves well, and you've known her for a long time. Are you surprised at the sheer level of dislike and vitriol aimed at her? I am a bit surprised, because if you ever meet her on a relatively private basis, and when journalists meet politicians, it's never entirely private, but then she's a different person.

12:06So she's fun and quite lively, and it's very different from her appearances in front of Parliament or the camera. Yeah, Sam Fleming and I did a magazine piece for the FT where she actually said, I think in this piece you're going to conclude that I'm different in private to what I am in public. And why is it so difficult to show yourself in public? And it's something that obviously troubles her a bit, I think. Steve, just to broaden it out a bit, the fact that Keir Starmer and Rachel Reeves are so unpopular, I think we can all agree they've made some serious mistakes. They wasted their first year in office.

12:39You know, like all politicians, they've done some dumb things. But the fact that they are individually the least popular prime minister in history and the least popular chancellor in history, does that tell us something about the way that mainstream politicians are operating at the moment and the way the public view them? Yes, because I think part of the reason why they are, in large parts of the country really hated in a way which is hard, I think, if you sit down and look at their actual mistakes and the scale of the inheritance they had, it's hard to feel that that is proportionate, is that if you've had a series of dodgy builders, right, like something has gone wrong with your bathroom, right, by the time of the fifth plumber who you thought was going to fix it, you are angry not just with them, but they have all of the cumulative anger, and ultimately the big picture problem in British politics is we had the global financial crisis, which here has particularly badly because financial services were one of our real jewels in the crown.

13:32We had an energy price spike after the invasion of Ukraine, which was particularly bad for us because gas sets the price of our energy. And we've had slow and sluggish growth. And we've had since 2016, a series of failed prime ministers. And I think one of the reasons why there's so much genuine hatred for Keir Starmer and Rachel Reeves out in the country is because people had invested so much hope in the idea of, oh, well, now the corner is going to be turned. and then they remember that first big speech he gave where he said things will get worse. I think for lots of people, they were just like, but I didn't, particularly in this country, people vote for the Labour Party when they want things to feel better.

14:09And I think that's the big reason why they're so... Yeah, it's a bit of a strange inversion of Blair's 97 election slogan, that's for sure. Let's talk about the next year's May elections, which we're going to be talking about incessantly over the next few months. There are elections to the Scottish Parliament, the Welsh Parliament, and also to English local authorities, generally seen as likely to be a bloodbath for Labour and indeed the Conservatives. But let's focus on Labour for a bit. Do you think, Anna, that a leadership challenge against Keir Starmer is now inevitable, either before or more likely after those elections?

14:41I wouldn't personally go with inevitable, but I think it's looking more likely than it's not. Yeah. And in that scenario, who will be the potential contenders? I think the four real contenders are Andy Burnham, although some have written him off. I think he's still in the fray. He's still, even this week, said, you know, if people were to say they want me, then I'll be there kind of thing. Of course, he's the mayor of Manchester for the people who are tuning in from abroad. Of course. Not currently an MP, which is a slight impediment to becoming leader of the Labour Party. Quite a significant impediment, true.

15:13Not insuperable. Then we've got Angela Rayner, who is the former deputy prime minister. She's really made no attempt to sort of hide that she has some ambitions. Wes Streeting, the health secretary. And then I think, you know, the most popular cabinet minister in this government and the former leader of the Labour Party, Ed Miliband, is also in with a shot. As Kemi Batenot, the Conservative leader, said, recycling himself as a Labour leader. Appropriately enough. Do you agree with that analysis, Stephen? Well, I don't think Andy Burnham is viable because under the terms of the Labour rulebook, he just has such a complicated route back.

15:51But I think it will come down to West Streeting from the right of the party, someone from the middle of the party, Ed Miliband, Angela Rayner, someone like that who starts as the strongest candidate. And then because of the very high bar to get nominated, there won't be anyone from the far left who's a contender this time. So it will be someone from the cabinet, but we don't yet know who. Right. Okay. And already, yeah, people in the markets are talking about how they might respond to a change of leadership. And we've all written about the fact that the markets have invested a certain amount of faith in Rachel Reeves and her fiscal policy.

16:23Do you think, Chris, there'll be a lot of nervousness if we get locked into a protracted leadership contest next summer? Yeah, absolutely. Because Keir Starmer and Rachel Reeves are the people in the Labour Party who say They care about the markets. They care about fiscal policy. They've legislated for a big reduction in the deficit. And pretty much everyone else has said things like, oh, we shouldn't be in hock to the markets, which is all that means. It sounds very, very much like people on the populist right and Liz Truss and 2022, and the markets are very scared about that happening again.

16:58Exactly. And it's not entirely clear that any new Labour leader would be able to pursue a radically different economic course, because despite Andy Burnham saying we shouldn't be in hock to the bond markets, the fact is we are, aren't we? Well, yeah, I mean, one of Labour's blind spots is they do not have a large number of people who have worked in the private sector or who have deep thoughts about fiscal policy. Rachel Reeves, before the election, I spent some time talking to various people in the Treasury and going, who do you think the plausible candidate, so this is before Rachel Reeves has become Shadow Chancellor, the plausible people Keir Starmer could appoint as Shadow Chancellor, So back when he was running for leader.

17:33And that exercise came up with six names, of whom Rachel was one of only two names who was on every single person's list. And the other person actually was Ed Miliband, who obviously was quite a different form of politics. But broadly speaking, we're a small, open trading economy, which has to get other people to purchase our debt. We are, at the moment, still running a fairly large current account. So the constraints are the constraints. I think in practice one of the reasons why the Labour Party might find a leadership election causes things to get worse not better is that whoever the next Chancellor is would I think have to do some quite radical and difficult things the Labour Party wouldn't like purely to reassure markets that they were as sensible as Rachel Reeves but yeah this is not a party whose major interests are in fiscal policy so they kind of are living in a bit of a fantasy world about this idea and if Keir and Rachel go then the constraints become easier somehow

18:32Now, up until now, we've been talking about the potential opposition to Sir Keir Starmer from within his own party, which is, of course, where the most imminent danger to his future lies. Let's talk about the external competition. Anna, do you think there's any evidence that Kemi Badenoch, the Conservative Party leader, is starting to find her feet in that job after quite a difficult first year? Well, definitely. I mean, and you can see it in polling. There's a YouGov tracker that has been tracking her fame, her popularity, and how well people think she's performing and whether she could be the leader going into the next election.

19:03All of them have upticked considerably over the past sort of month, two months. And you can see it. I think she's become a lot more confident in PMQs. She's landed some good blows. And also, I think one of the things, and I know this from talking to reform donors and supporters, one of the things that they point out is that where the Conservatives have always been strong in the kind of public imagination is on the economy. And so at the time around the budget, when there's been all of the leaks and all of the discussion about Labour's policies, the Conservatives have managed to say, land some kind of strong messages around welfare and around fiscal responsibility and things like that in a way that reform actually hasn't.

19:42So it's an area where they're stronger than reform. And Chris, on the economic side of things, it's quite interesting that they seem to be rather belatedly have decided to pivot, to use the jargon, onto the economy. Start talking slightly less about small boat crossings. They seem to be much more confident on that terrain. And indeed, Rachel Reeves' budget has opened up a clear dividing line, which they're happy about, which is Labour appears to be the party of higher taxes and bigger welfare state. Yeah, and the Conservatives have decided to go on a big welfare cutting programme, very large, and it's not entirely clear who loses out yet.

20:18But basically, they're trying to define it as people that most people in the public don't care. about. So if they're trying to say it's foreigners and feckless people, basically, and that will be there. It's much harder to do that in office than it is in opposition. And so, but if you can say, which they are saying, we will save, is it 43 billion pounds, I think is the magic number at the moment. Is that right? Which is in context, that's getting on for one and a half percent of GDP. Well then, you know, the whole of the consolidation is three percent of GDP. So that's half of the work done for you on the spending side, if it was true.

20:53And I think there'll be a lot more close examination of the exact plans as the election comes closer. And so it will get harder for them just to come up with a big number and say, this is easy to do. And the government is just dumb for not being able to do it. But at the moment, at long last, they've got a couple of tunes to hum, haven't they? And also, Kemi Beton announced she was going to remove stamp duty on home sales, which went down with a storm with a party membership. Is it affordable? I mean, anything's always affordable if you're willing to take the other choices that you need to make.

21:24It's all about choices ultimately, and you can afford it within a sensible fiscal outlook, either by raising other taxes or cutting spending. But we know from the 2010 to 2016, 17 period that cutting spending is also unpopular with the British public. The real problem for all of politics is the British public want a lot of public spending. They want very low taxes, and the two things don't add up. Yes. Stephen, do you see any sign of improvement from Kimmy Bader? Do you think she'll be leading the Conservatives into the next election, or indeed beyond next May's local elections? So there's been some performance in that she has grown slightly into the role, but equally she has partly done that by shrinking the Conservative Party and shrinking the nature of the role.

22:06And then she took over a party which was flirting with first, that still we shouldn't forget regularly flirts with fourth place, which means that she is now being judged as if she were the leader of a minor party, right? So she gets points going, oh, she's raising issues. Yeah, the sums don't add up, but it doesn't matter because we all know she's not actually going to be the next prime minister. Now, that might be enough for her to lead the Conservatives into the election because the remaining Conservative MPs mostly do not want the party to shift further to the right, which we pretty much all think is what would happen if there were a change of leader than Robert Jenrick would win that leadership election, the current Shadow Justice Secretary, and move them even further towards the nativist right.

22:47But I think in practice, we kind of clearly have block politics in the United Kingdom now, a left block and a right block. She has ceded leadership of her block to Nigel Farage. And yes, she now has some issues on economics where she can add value. But that's kind of true for Ed Davey, right? There are some issues where he can add value, but he's still ultimately a junior partner in the left block to Keir Starmer. And that's what she's done. She's turned them into a junior partner. And so that's the reality. Okay, let's talk about the senior partner in this alleged relationship, Nigel Farage and Reform UK.

23:20You spend quite a large part of your time putting Reform UK under the kind of scrutiny that other mainstream political parties come under. And you've done an excellent job on that. I just wonder what your assessment is of how Reform UK ends 2025. Riding a high still, I would say, generally. You know, there's still 10 percentage points above any other political party and opinion polls. They've had 20 defections of former Conservative MPs, a couple of them sitting Conservative MPs. They've had some damaging things recently. There was the Guardian story about racism. This was Nigel Farage's alleged racism at his private school in South London.

24:00Correct, which he denies. Which he denies, but he's become quite irritable, understandably about. Exactly. And there's been some other scandals and things that have kind of dented him somewhat, but not really. And I think, you know, they can look ahead to the May elections and they're expected to do extremely well there. And Farage's narrative at the moment, public narrative, is that after May, both Labour, but principally for me, the Conservatives are going to be decimated. They're not going to be really an important party anymore at all. and there's going to be a flood of MPs, of donors, of everything coming over to us.

24:36And that will be the moment where our replacement of the Tories kind of crystallises. Yeah, it's going to be a fascinating aftermath of those elections where you could have the two main parties or traditional main parties locked in some sort of leadership crisis. Chris, in the event that Reform UK look like they might be becoming a plausible government in waiting, how will the markets respond to that, do you think? well i think it will be interesting because they've recently ditched essentially their manifesto from 2024 which had a lot of wishful thinking in it and quite openly said we need to take get rid of all this wishful thinking because we're now a party of government if they are a party of government the place they'll be looking for certain is italy and looking at georgia maloney and saying we want to do that because people thought the markets would really take against her and take against Italy, but she's been utterly orthodox on anything economic and particularly anything public finance related, such that Italy is now looking better than France in terms of how the market looks at that.

25:37And that's what reform, if they've got any sense, and it does look like they have got sense on this, that's what they're looking at. Yes. Do you think that's plausible, Stephen? Yeah. I mean, the scenarios in reform look at rightly is Italy. The scenario in reform's opponents to look at is France, where you have a similar party to Maloney's party, one with direct links to fascism in World War II, which has successfully supplanted the party of the centre right. But there has historically been in France this rallying behind whichever force is best placed to keep out the far right. Now, you have a reformed leadership which is ruthlessly focused on looking respectable, looking like Maloney.

26:15But, you know, they last week had to kick out their council leader in Staffordshire. And that is the great source of hope in the anti-reform party existence. You can point to, look, you know, they haven't changed. They aren't a party of government. They are quite scary and sinister. And that is really, I think, possibly the most important thing happening in the right of politics is can reform modernise and present themselves as Maloney or will they end up being seen as Vichyite? And just to come in on that, there's some really interesting YouGov polling on tactical voting and how that might work to try and keep out reform ahead of a general election.

26:49And it found that a lot of left-leaning voters, whether they're Greens or Lib Dems or Labour, would coalesce around a Labour candidate to try and keep reform out, as you might expect. But 25 % to a quarter of Conservatives would also vote for Labour to keep reform out. And this speaks to your point about, you know, the Overton window has shifted so much that there are a lot of conservative voters who don't feel kind of represented by either party really on the right at the moment. It's a very fluid situation. Now, one of the things Nigel Farage doesn't want to talk about anymore is our old friend Brexit.

27:23And listeners and viewers will know that was the one thing that Nigel Farage has most been famously associated with. But other people are starting to talk about the aftermath of Brexit and reversing some of it, Chris, aren't they? This idea that the Liberal Democrats have been advancing, that maybe we should rejoin the A Customs Union with the European Union. It's quite interesting. we've just come back over from Prime Minister's questions, where Keir Starmer seemed to be very strongly against going into a customs union, pointing out that we'd have to give up some of the advantages of Brexit, in inverted commas, namely our ability to do preferential trade deals with America on things like cars and pharma.

27:54Do you think there's a serious debate going on about going back into the EU customs union? Not really, no. I think there's some pushes from the Lib Dems, but I think from the government itself, you know, if you listened, I listened to Rachel Reeves, Chancellor this morning giving evidence and she made a big point. In fact, she grotesquely exaggerated the benefits of trade deals with the US and with India and with the EU itself to say this was the really big growth strategy. It's very hard to pivot from that to say, well, actually, no, maybe we chuck our lot back in with the EU. Yes, it was noticeable the Office for Budget Responsibility didn't actually positively score any of these trade deals.

28:32No, because they're small. And the deal with the US is worse than we had before Trump tariffs on that side. It's managing damage. The UK got a better deal than the EU. That's absolutely true. But it wasn't a good deal. Yes, that's true. Stephen, do you think that Keir Starmer can manage his own party when it comes to European questions? I mean, there's still quite a strong view, isn't there, in the party that we should go back into the Customers Union. Some people dream of going back into the EU eventually. I mean, Keir Starmer has never shown any ability to manage his party on the EU question.

29:03When he was shadow Brexit secretary, including several people around the cabinet, who I think would probably rather forget than this is the case, he started out in the position of, no, guys, it can't be stopped. What are you talking about? We need to protect our leave flank. And then as the centre of gravity in the Labour Party moved towards going, actually, we think we'd like to stop this. And when it started to be a threat on their remain flank because of the Lib Dems and the Greens and others sort of eating their lunch, he moved with them. And Keir Starmer, like many Labour politicians, is someone who supports the European project, but it's never been a salvation issue for him.

29:34He's never been something he was going to lose votes for personally. But because of the atmosphere around the government, that means you're more committed pro-Europeans, like, say, David Lammy, who was really the first person to properly kick off the conversation about the customs union within the government, feel more able to go, oh, but maybe I can express myself. And I think while that's going on, Keir Starmer may, as he did as Federal Brexit Secretary, find himself being pushed along with the tide towards a more pro-European position. And just very quickly, a couple of other big international relationships.

30:05Chris, China, we think the Prime Minister is going to be going to China for the first time by British Prime Minister since 2018 in January. We think the government's going to approve this massive mega embassy on the site of the old Royal Mint next to the Tower of London. There's something happening there on the Chinese relationship, isn't there? Yeah, there's a move to the early 2010s, not quite the golden era of that time, but there's a move to say that China is now on probably the best measures, the largest economy in the world. It is a long way away from us still, but it's going to be a big trading partner forever into the future unless there's some sort of major political hurdle or war or something.

30:45So it makes sense to have a good relationship, but not a naive relationship. And I think that's where the government will be trying to strike the balance. And it's a difficult balance to strike. And lots of people will say that it's just going to bend over backwards and kowtow to, you know, to use a sort of rather unpleasant language to the Chinese. And we'll get very little, but we'll give up a lot. Well, he's tried that tactic with the Americans and Donald Trump through reasonably successful effects. Anna, would you say that's dealing with the Trump administration and Donald Trump has been one of the surprising success stories so far of his premiership?

31:22I think broadly, yes. But we've seen over the past few weeks and months that Trump's been quite critical of Europe and also some failed criticisms of the UK over Ukraine, over immigration, over oil and gas recently. I think it was just this week. So, you know, I think, yes, broadly, I think he's prevented the worst of tariffs and other things, but it's not necessarily led to a particularly warm public, positive public messaging. Whenever Trump feels like he's quite happy to throw a grenade over at the UK. And it feels like we're approaching a bit of a moment of truth, doesn't it, Stephen, over Ukraine.

32:00And, you know, if Trump really does pull the rug out from under Zelensky and ask the Europeans to suck it up, that is a big moment, isn't it, for the relationship? Yeah, because the argument in favor of what Keir Starmer has done and how he's pursued that relationship, if it weren't for Keir Starmer's own diplomacy, then the rug would have been pulled already. Well, if the rug does get pulled, then at that point, people will quite reasonably go, OK, what are we actually getting for all of this relationship? You know, do we have a situation where we have a relationship which is both naive and bad, to invert the question about China?

32:32So I think, yeah, what happens with Ukraine will be the central test of whether or not the United Kingdom's America policy has to change.

32:42Now, we've got time for our political fix, stock fix. Unusually, we're going to do it for the whole year, looking back over 2025. Chris, who are you buying or selling for this year? I'm going to buy the UK economy because in 2025 it performed, everyone's miserable about it. 79 % of the public think it's in a bad shape, but it's a lot better than was forecast a year ago. And 67 % think it's going to be worse next year, even worse. And I think it's going to be a little bit better. So I'm not suggesting it's a miracle, but buy the UK economy. Well, I think it's a really interesting question, isn't it?

33:19That the economy has been written off for so long. And I remember we were covering the British economy during the austerity years, and people thought the economy was never going to grow. And then suddenly, out of the blue, unexpectedly, it suddenly started going pretty quickly, didn't it? Yeah, you can now look at the data now, and the 2013 to 2015-16 period was actually historically high levels of growth in an austerity period. So at the time, we were reporting how miserable and how terrible the data was, but the data has been revised considerably. The same is true of 2017, and the same is becoming true of 22 to 24.

33:54So we have a bit of a problem in this country of having miserable data statisticians who tell us it's really bad and then quietly it gets revised up later. But that affects the mood of the whole country. And do you see any trigger for the more optimistic outlook for the economy you just set out? Well, the obvious trigger is that the savings ratio, household savings ratio, is very high. So if the public start to feel a little bit more happy about the world, there is money to spend. And in the past, we've always have been able to rely on the British consumer. So it's very odd at the moment we can't.

34:28Stephen, who are you buying or selling? I'm buying Scottish nationalism. We shouldn't forget, started this year having had a very sharp defeat. Okay, yes, the votes were quite close, but in terms of seats, they had been shellacked in the general election. And they were facing a government which had some difficulties, but facing a real nightmare for them, which is, what if you have a successful social democratic government across the United Kingdom showing that the union works. This is the thing that they always talked about as a big fear for them. And they had gone through their own leadership changes.

35:01The government looked very tired, was itself very unpopular. And John Swinney, the first minister and their leader, was facing a real struggle not to be dragged towards increasingly extreme positions on the constitutional position. Now, he's managed to stabilise the government, turn their popularity around, and they look like they are going to be re-elected in the devolved elections next year. Yes, the successful social democratic government in London maybe didn't deliver quite the flow they feared. Anna, how about you? I'm also going slightly left field. I'm going to buy the Rothermere's. So they already own the Daily Mail, very influential tabloid newspaper.

35:37They are, looks like, successfully probably going to buy the Telegraph, another pretty influential newspaper on the right, very big broadsheet. and also the wife in the couple, who's Claudia Caroline Harmsworth, she went slightly under the radar last week, but she donated£50 ,000 to Reform UK. So there's another area in which she's going to be, and that couple are going to be, having enormous influence on British politics. George, how about you? Well, very quickly, I think I'm going to go, not the particularly original idea, but Wes Streeting, I think, though he's seen as being too far on the right of the party to ever secure the crown, I think he's shown some decisive leadership this year, abolishing a massive crango at NHS England, taking on the junior doctors, which I think had to be done.

36:23And also, when he was outed in that disastrous briefing by Number 10 as someone who might be organising a coup against Keir Starmer, he came out of it rather well. And it basically gave him a showcase for the fact he's probably the Labour Party's most effective communicator. So, you know, it's going to be an interesting year for next year, but I think for now, we'll be buying West Streeting. so thank you very much and by the way Anna well done for making it along you and I were both at the FT Christmas party last night but still standing after a long year and a long night and that's it for this special episode of Political Fix Live I've put links to subjects discussed in this episode in the show notes do check them out they're articles we've made free for Political Fix listeners there's also a link to Stephen's award winning Inside Politics newsletter where you'll get 30 days free Political Fix was presented by me, George Parker and produced by Lulu Smith Flo Phillips is the executive producer Original music and sound engineering by Breen Turner Broadcast engineers are Andrew Georgiades and Bianca Wakeman Manuela Saragossa is the FT's acting co-head of audio I hope we'll meet here again next week for our special Christmas quiz Until then, goodbye

37:40Thank you.