Today is a good illustration of the fundamental difference between Economics and Politics…
There is an important distinction to be made between being a chicken running around, and being a headless chicken. It is the fact that Rachel Reeves believes that actually there is a real chance of the Labour Administration being beheaded at the next election – and with the concerns over the current leadership of Starmer, it might not even last that long…
I wrote previously about the political danger from the country and backbench MPs, on the Chancellor going back on her manifesto commitments. The markets don’t see things this way; the markets see a fiscal problem and then the political intent to fix it. This is more of a mechanistic and arithmetic approach – which, is of course fine. It’s just that Politics doesn’t work like that. Just as Economics cannot ever, finally, rationalise the human, Politics doesn’t follow the arithmetic purity of fiscal balancing, if that balancing requires a very obvious breaking of a manifesto pledge.
Running around like a chicken, in the Chancellor’s assessment, at least allows her to run around. As a headless chicken, this Labour Administration wouldn’t get to run for very long.
So it’s not pretty to look at, but this move represents political street fighting by the fey middle class.
#Chancellor #Politics #Budget #Survival
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