Merlin Weekly Macro: An unmitigated disaster for mainstream parties

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“Plumber and plasterer to parliamentarian”, the alliterative proclamation of victory for Zack Polansky’s Green candidate, Hannah Spencer, in the Gorton & Denton by-election in Greater Manchester. With 41% of the votes up from 13% only 18 months ago in the 2024 general election, it was a thumping great Green win. For Reform, it was the curate’s egg: placed second, it made significant progress doubling its percentage of the vote to 29% but failed to secure the seat it had been tipped to win. For the three traditional Westminster parties, unmitigated disaster: Labour’s share of the vote halved to 26%, a substantial majority in one of Labour’s most enduring and safest ever seats overturned to a distant third; as for the Tories and the LibDems, wipeout and the loss of their deposits along with the Official Monster Raving Loony Party and the rest.

“Get a grip, pal!”

Labour’s internal recriminations have begun. A fulminating Karl Turner (Hull East), never short of an excitable opinion, railed and wailed on Radio 4 that Greater Manchester Mayor and Labour leadership-challenger-without-a-seat, Andy Burnham, would have won “without a shadow of a doubt” had he been allowed to stand; “Starmer needs to get a grip. And he’s a pal of mine!”. When you’re potentially facing a political P45 in three years’ time, it’s a case of home truths to the Leader, pal. Would Burnham have retained Gorton & Denton for Labour and been the hero of the hour? Who knows. One suspects he’s sitting at home with mixed emotions: wishing for what might have been, ruing the lost opportunity to propel himself to No 10, while also breathing a huge sigh of relief that he is still Mayor of Greater Manchester when there was a distinct possibility that he may have been neither a metropolitan mayor nor a Westminster MP.

However seismic a result in that particular constituency with its acute political sensitivity to a Prime Minister under intense pressure, mostly through a series of unforced self-inflicted errors, it will be the May local and the devolved nations’ national assembly elections which will give a broader perspective on the rapidly splintering state of UK politics. This by-election was an intense microcosm of the tensions whose polarising pervasiveness in British politics is showing every sign of accelerating: immigration/integration; the politics of Palestine; economically, as Polansky put it pointedly, the divisions between “grafters and grifters” (and here, “grifters” in the Green lexicon are what they regard as the feckless rich); the politics of envy dividing the “haves” and the “have nots”. May’s elections will confirm the extent to which the populists on both sides are ringing the changes.

Whatever happens in 2029 at the next general election (and there is much turbulent water to stream under many bridges between now and then), this government still has three-and-a-half years to run. How does Labour respond to the twin threats from an insurgent Marxist Green Party on the Left and a disruptive socially Right wing Reform Party which is as equally determined to destroy Labour as it is already successfully inflicting deep pain on the Conservatives?

More Europe

Labour is shipwrecked and drowning at sea about how to manage a stumbling economy, let alone having any idea of how to create a vibrant, competitive, match-fit and confident one. Amid the international turbulence created by Donald Trump, Labour’s instinctive natural reaction is to cling to the nearest life raft, even if that vessel itself is leaking. It’s called Europe. With his manifesto commitment to “resetting the UK’s relationship with the EU”, Starmer has already begun the process of “dynamic alignment” in specific areas of interest: trade and mobility, the Erasmus student exchange programme etc. There is the obvious momentum towards pooling resources on defence and security. But the evidence is pointing to the desire to go much further, including open arguments inside Labour about rejoining the Customs Union.

There is a defensible position for being fully in the EU and a member of the eurozone; it happens not to be an opinion shared by this author for the many rehearsed reasons aired frequently in these columns about the EU’s structural and governance deficiencies and illiteracies. There is a defensible argument for being completely out of the EU but having links with it, as we would with the US, Japan, India, Australia etc, and being masters of our own destiny. But asymmetric “dynamic alignment” is wholly indefensible: to put oneself in a position of unconditional conformity and with zero say in future rule-setting or changing is simply stupid, as well as being a surrender of sovereignty and profoundly undemocratic.

Donald Trump divides the world between winners and losers. The US is a winner. Europe in his mind is a loser. Trump accurately identified that since 1990, the aggregate of EU member states’ share of global GDP has dropped from 25% to 14%, while the US has stayed remarkably stable at around a quarter of the global economy, and China has risen from less than 4% to 18% over the same period.

The cliché is that “America innovates, China imitates and Europe regulates”. China is now also an innovator. The free-market, entrepreneurial, innovative, risk-taking, light-touch regulation America remains a powerhouse of the global economy. Protectionist Europe, on the other hand, expending much energy on merely holding itself together, sanitises, homogenises and pasteurises everything in reach; in the words of Giorgia Meloni, it “regulates itself to death”.

This week, Peter Kyle, the UK Trade Secretary, declared that “EU alignment is where magic happens”. No it does not. Nothing quite demonstrates the growing economic and wealth divide between America and Europe as the chart below depicting the yawning productivity gap separating the two blocs. To mis-quote the rock legends that are Queen, “It’s a pretty funny kinda magic” that a) produces such a result and b) says that you want to join such a system without any say-so in how it develops.

Mind the gap!

Eurozone and US cumulative Total Factor Productivity Growth (%)

“Soak the Rich!”

The second response is likely to be a louder clarion call for wealth redistribution, and specifically the demand for wealth taxes. Rachel Reeves has so far resisted the temptation (though her new mansion tax surcharge is a wedge in the door, as was her initial assault on the continuity of capital with small business and agricultural assets on death). But this is a demand from the Left that will not go away.

This is far less about fiscal maths and balancing the books; this goes to the heart of political socialist ideology. Polansky has just taken the battle to Starmer, or whoever follows him. In 2019, espousing such Marxist ideology, Labour’s Jeremy Corbyn convincingly lost a general election dominated by the Conservative argument to “Get Brexit Done!”. Corbyn has since demonstrated why he was temperamentally unfit for the highest office; but the socialist verging on neo-Marxist ideology that he and his then shadow chancellor John McDonnell were preaching is now becoming unnervingly mainstream, whether expressed through the Greens, the SNP in Scotland, Plaid in Wales, as well as the left-wings of the Labour and LibDem parties.

The political landscape has changed significantly from the old predictable days when two principal parties slugged it out between themselves and the main battleground between the Tories and Labour was about how best to run the National Health Service.

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