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In October 1991, the then chancellor Norman Lamont said he thought he saw some “green shoots” of recovery. He was ridiculed, as Britain was in the midst of a deep recession that it would not clamber out of until the following summer. Insouciant in the face of the scorn heaped upon him, Mr Lamont defended himself robustly, even long after the event – not least by writing letters to this newspaper. Despite this valiant defence, “green shootism” became notorious because it suggested a ruling class that was congratulating itself well before ordinary people felt a recovery.
This has not stopped politicians since 2010 from claiming that Britain was bouncing back from the series of shocks it has experienced. After austerity had produced economic stagnation, George Osborne, the Tory chancellor in 2013, seized on a few quarters of growth to claim Britain was “turning a corner”. Just months before the 2024 general election, Rishi Sunak, the Conservative prime minister, said that the country was starting to see the “green shoots” of recovery. Voters resoundingly rejected that claim when Labour was elected in a landslide.
The current chancellor also risks sounding too rosy to a populace made glum by a lost economic decade. After last week’s better than expected growth figures, Rachel Reeves made the case that her plan is working, citing – with satisfaction – the approval of the International Monetary Fund. Some of this fighting talk might be about Ms Reeves’s position being under threat if there is a change of Labour leader. Yet it remains too early to tell whether her economic strategy has been vindicated.
The early signs are less than propitious. Unemployment unexpectedly rose in the last quarter to 5% – with one in seven young people now looking for a job. Vacancies are down to their lowest since early 2021. The Resolution Foundation says real household disposable income per person is expected to grow by only 1.1% cumulatively in the next five years.
Others are more bullish. Prof John Van Reenen of the London School of Economics, an adviser to the government, has made the case that “a more productive economy is being delivered under this Labour government”. Productivity, he rightly claims, has been bedevilled by incorrectly measuring the size of the workforce. Using the “best current estimates of employment”, he says, shows output per worker running at 1.6% a year since the third quarter of 2024, compared with just 0.3% annually over the previous decade.
The LSE economist is not wrong to ask whether the labour-market data had understated productivity. But one ought to be much warier of turning a possible measurement correction into a political story about Labour’s growth strategy. One swallow does not make a summer; one smaller denominator does not make an economic revival.
The more relevant comparison is not Labour’s period in office with post-2014 politics, but Labour versus the Tories after Trussonomics. There the fiscal regime looks more continuous than many admit: fiscal rules, constrained current spending and faith that private investment will supply the growth. The productivity improvement may be real, but the claim that it vindicates Labour’s economic model is doing some heavy lifting. The bigger problem is that voters are not feeling better off; and announcing an economic take-off looks like premature triumphalism.
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