The government “should do what any good housewife would do if money was short”, Margaret Thatcher told the Dartford Conservative Association when she was adopted as a candidate in 1949. “Look at their accounts and see what was wrong.” Throughout her political life she would return to the analogy of the prudent housewife – cementing the metaphor of the economy as akin to a household budget in voters’ minds. Of all the mythology surrounding the former prime minister, this has had the most profound impact on our national psyche.
Pat phrases dominate the political narrative: as a nation we must “live within our means”, “balance the books”, avoid the moral failing of debt (“maxing out the country’s credit card”). It is a powerful allegory because it sounds so relatable, so much like common sense. That is, until you put it into practice. Even some ministers serving in the 2010 and 2015 governments have expressed regret to me about cutting the state so drastically instead of borrowing to invest while borrowing was cheap. Social care, prison overcrowding, polluted rivers… almost everything in the overflowing “too difficult” box now being passed from government to government can be traced back to the austerity age.
Many in Labour and across the left have long been exasperated by the mainstream acceptance of the “household fallacy”. Concern that the public was being misled grew so acute that the BBC commissioned an internal review in 2022 of its economics coverage and the language used by correspondents – including the “credit card” and “household budget” analogies and the term “tax burden”.
Since Brexit, Covid, and high inflation, public conceptions of the economy in the UK have shifted. In 2017, most of us believed in “economic naturalism” – the idea that the economy is a naturally occurring phenomenon, like the weather, which cannot be influenced by governments. But by 2024, this had changed: we now more strongly believe in a “designed economy” – the view that laws and policies shape how the economy works and who benefits, as discovered in a first-of-its-kind study by the research agency FrameWorks UK. This change arrived at the same time that, when asked what the word “economy” meant to them, Brits put “prices in shops” above “debt and deficit”; they hadn’t done this in the years of coalition retrenchment.
There is an opportunity here, then, to seek a new economic consensus: Andy Burnham’s wish, for example, to “rewire the state”. But the left’s lack of a metaphorical alternative to the “household budget” is a hurdle, given it is trickier simply to argue for more investment (borrowing is now much more expensive) and for higher taxes, given that the cost of living is the public’s deepest concern.
Some researchers are trying, though. I’ve spent the past week watching focus groups composed of a variety of people – from classroom assistants to engineers to HR professionals – who voted Labour but have since drifted to the Greens, Reform and the Tories, discussing the economy. Commissioned by a new project called Narrative for a New Economy, the research by the polling firm Survation is due to be presented at Labour’s autumn conference, briefed to ministerial teams and shared with Team Burnham.
These conversations have been fascinating – a homeless outreach worker in South Wales leaning Green was just as likely to describe the economy as “broken” as a self-employed accountant in an affluent part of Cheshire. When participants were asked how they would describe the economy, answers included “a mess”, “weak”, “expensive”, “unstable”, “stagnant” and “on its arse”.
When describing the economy as broken, most put its condition down to poor political priorities rather than to other reasons, such as global shocks, immigration or failings on the part of individual citizens (such as not working hard enough).
When it came to that magic metaphor – something that would finally evict the prudent housewives from our brains – three options were tested. The first was that the economy is “rigged”, a line used by the Green leader, Zack Polanski, to suggest the super-rich and multinationals are playing by their own rules. This was taken more literally by many participants as a direct reference to corruption, such as in the case of the ex-SNP chief executive Peter Murrell’s embezzlement, or the PPE contract scandals during Covid. The second option was that “working people are the engine of the economy”, which sounded “gimmicky” to some, and again was taken too literally – to mean key workers in essential industries.
The third was the Joe Biden anti-trickledown maxim to build the economy “from the bottom up and middle out”. This resonated the most, particularly the implication that it would “put money into ordinary people’s pockets” and “grow the middle class”. But even here, the wording still put some off. “This isn’t a matter of up and down, it’s not a game,” said one. “There should be a balance for everyone.”
As Burnham enters his first parliamentary session as PM, he faces the constraints of costly debt, rigid fiscal rules, and Labour’s manifesto pledge not to raise the three main taxes. Questions are piling up about how he will pay for his summer policy blitz. He needs a way to answer them that commands the confidence of markets – and a public more and more convinced that the economy is broken by design.
[Further reading: Andy Burnham’s real work is just beginning]
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This article appears in the 02 Sep 2026 issue of the New Statesman, Meet Generation Screwed
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Subscribe here to commentGreat article because it is raising really important questions about how our UK economy actually works, how money works and who benefits most from the prevailing view that we have too much debt, too much tax, so therefore the only answer is more cuts (i.e. more austerity). I was disappointed to see John Healey trot out the old Thatcherite image of our government having maxed out its credit card.
There is no such thing as our ‘government credit card’, and if there was, it would have no limit to money creation. Our UK government spending does not rely on how much money is taken in tax receipts, does not need to borrow anything from the ‘markets’, and does not need to make cuts in order to spend.
The first thing Burnham and Healey should do is abolish the Full Funding Rule. This was brought in by Thatcher and her Chancellor Howe in the early 1980’s with the specific aim of constraining any UK government from spending outside of tax receipts and borrowing. It was a political move, not an economic one. Yet twice we have recently seen our own UK government spend massive amounts to support the whole country during the 2008 financial crisis and also 2020/2021 covid crisis.
Did the ‘markets’ blink and say no? Did we even worry where the money was coming from? We were grateful that our government was prepared to step in and help everyone get through it. It was money creation, all done by computer, at the Bank of England.
There is a myth that says we have a National Debt – we don’t. Instead we have our UK government’s investment over many hundreds of years in our money supply, without which we would not have any economy at all. Austerity was the worst move by Osborne, because at precisely the time our economy needed more government spending to help lift us quickly out the doldrums, we ended up bumping along for 14 long years with no significant growth at all.
There is also an obsession with the government deficit, i..e the difference between what the government receives in taxes and borrowing, and its spending. Again this obsession stems from a fundamental misunderstanding that assumes all debt is bad, a very Victorian attitude. Reducing the deficit means taking money out of the economy, and restricts growth.
OK, so now people would say our UK government cannot simply spend money because it will cause inflation. This would only be true if there wasn’t the surplus capacity in the economy to use up that money. Inflation does not automatically follow government spending. Judicious government spending that makes use of our unemployed, our under-used services and manufacturing and the key supports of our economy, e,g transport, health, care and education will not cause inflation and will help to get growth going again.
Let’s hope Burnham and Healey are not so hidebound by the myths that we fail to get our country on its feet yet again.
We need a dose of MMT!
The particular truths that should be repeated as nauseam until people get it are:
“Taxation does not fund government spending” (government spends first, taxation pulls excess money from the economy, mainly to control inflation).
“Government ‘borrowing’ is not debt as generally understood, and does not fund spending either” (it’s a savings deposit scheme on which the government pays interest, and the government cannot go bankrupt).
The government is constrained not by invented “fiscal rules”, but by actual available resources – people and materials. Government should spend to ensure all available resources are utilised, anything else is a waste. Doing so is not inflationary.
For more bite-sized information, see Richard Murphy’s excellent series of infographics, in his “Politics of Care” Substack blog, or here:
https://www.taxresearch.org.uk/Blog/downloads/infographics