In 1969, as Labour plotters circled, Harold Wilson declared: “For the benefit of those who have allowed themselves to be carried away by the gossip of the past few days, I know what is going on. I am going on.”
Keir Starmer has started 2026 with much the same message as his favourite Labour leader: “I will be sitting in this seat by 2027,” he vowed in his 45-minute BBC interview yesterday. It’s indicative of Starmer’s imperilled position that such declarations – just 18 months after he entered office – are becoming familiar.
The Prime Minister’s fightback is defined by three messages, so let’s look at them in turn. First, he insisted that the country is “turning a corner” and that this year voters would “feel the change”. Starmer pointed to rising real wages, falling inflation and six interest rate cuts as signs of progress – though without a unifying phrase such as David Cameron and George Osborne’s “long-term economic plan” (which helped the Tories win re-election in 2015).
It’s true that the living standards outlook is less grim than is sometimes suggested, but don’t assume that this will translate into the feel-good factor the government craves. Voters are still scarred by a decade of stagnant real wages and April will bring higher water bills, higher council tax and, for some, a higher tax bracket. Unemployment now stands at 5.1 per cent, less than one percentage point behind the EU’s typically higher rate (and up from 4.1 per cent in July 2024), a trend that risks depressing wage growth as the public compete for scarce jobs.
Starmer’s second message was that the UK is once again pivoting towards Europe. But in a riposte to those inside the cabinet, such as David Lammy and Wes Streeting, who are sympathetic to a customs union, he said this should take the form of closer alignment with the European single market. The Prime Minister has no intention of relinquishing the trade deals with the US and India that he regards as signature achievements (government critics riposte that the forecast GDP gains are meagre).
An article by Matthew Harries, research and campaign director of the Labour Movement for Europe, widely shared in party circles, argues that the UK should look to emulate the Swiss model: a patchwork of deals that enable extensive single market access. But Starmer’s insistence that there should be no return to free movement – which Switzerland accepts, albeit with an “emergency brake” – places a hard limit on the Europe reset. Could a UK-EU deal be done on partial free movement for particular professions and services? It’s an interesting question but not one that No 10 says it’s exploring.
The absence of a transformative offer on the economy or Europe is why Starmer’s third message matters. “Under the last government, we saw constant chopping and changing of leadership, of teams, it caused utter chaos, utter chaos, and it’s amongst the reasons that the Tories were booted out so effectively at the last election,” he warned pretenders to the crown.
Starmer’s internal foes recognise that a leadership contest in government is no simple matter. Unlike in 2006, the last time Labour deposed its leader (Tony Blair), there is no consensus on who should come next. The UK’s national debt is now 96 per cent of GDP rather than 36 per cent, as it was back then – raising the spectre of market instability – and, as the US assault on Venezuela reminded us, we have entered a new and dangerous era of great-power competition. In this fraught world, Starmer’s best hope is that his party concludes this is no time to roll the dice.
This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here
[Further reading: Labour must confront capitalism once again]
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