387. Spring Statement Verdict with Economist Paul Johnson (Extract)

This episode is available in FULL to members of TRIP Plus. Sign up now at therestispolitics.com Has Rachel Reeves played it too safe, or is caution exactly what the economy needs right now? Is this the end of austerity, or just a smarter version of it? Who are the real winners and losers? Rory and Alastair are joined by economist Paul Johnson (Director of the Institute for Fiscal Studies) to discuss Rachel Reeves' Spring Statement, and what it all means for the UK economy. The Rest Is Politics is powered by Fuse Energy. Fuse are giving away FREE TRIP+ membership for all of 2025 to new sign ups 🎉 TRIP+ gets you ad-free listening, discounts, and early access to episodes and pre-sale tickets for live shows! To sign up and for terms and conditions, visit GetFuse.com/Politics ⚡ Get our exclusive NordVPN deal here ➼ nordvpn.com/restispolitics It's risk-free with Nord's 30 day money back guarantee ✅ Instagram: @restispolitics Twitter: @restispolitics Email: [email protected] Assistant Producers: Evan Green Producers: Nicole Maslen Senior Producer: Dom Johnson Head of Content: Tom Whiter Exec Producers: Tony Pastor, Jack Davenport Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04Rory Stewart?

  This episode is brought to you by NordVPN.

• 0:06Alastair Campbell?

  And I must thank NordVPN because on my Grand European Tour with Fiona, I was away from the Hawthorns for West Bromwich against Burnley, but I managed to watch it. There you go.

• 0:19Rory Stewart?

  I actually had a NordVPN thank you. I was in the new Starbucks here in Creve and of course the thing flashed up saying this is an unsecured public network. And I was able to go to my VPN and it was a little reminder of something we often forget when we're in all those cafes and things, which is actually genuinely people can do all kinds of weird cyber attacks and spying if you don't have a virtual private network when you're sitting in that Starbucks.

• 0:42Alastair Campbell?

  Well, I think, are you not already sort of proud of me that I managed to do this? Or should I say Fiona managed to do this?

• 0:49Rory Stewart?

  I'm incredibly proud of you. That's a tech transformation. So to get the best discount off your NordVPN plan, go to nordvpn.com/restorspolitics. That's nordvpn.com/restorspolitics. And the link is in the episode description.

• 1:13Alastair Campbell?

  Hi there, Alastair Campbell here. Just wanted to let you know that right now, if you're a member of the Rest is Politics Plus, or indeed if you've become a member of the Rest is Politics Plus, you can enjoy the special episode that Rory and I recorded on Rachel Reeves' spring statement immediately after the event. We sat down for half an hour with a very special guest, a friend and sometime hero of the show, the Director of the Institute for Fiscal Studies, Paul Johnson, a man without whom no budget or spring statement coverage is ever complete. Question Time, as a result, will be with you on Friday this week. By the way, to join Trip Plus, just go to therestispolitics.com. And here's a little taster of our episode with Paul Johnson.

• 2:01Rory Stewart?

  Paul, I'd love to come back to this fiscal rule thing a little bit later. And in particular, the anxiety, which is presumably that she's again set this very small headroom. So there's all the chance in the world that she breaks her fiscal rule yet again and has to fiddle around yet again in the autumn. But before we get on to that, I want to sort of step back and bring listeners into the bigger picture of the British economy. So there's a general sensation of depression. Consumer confidence is pretty low. We see ourselves as a bit of a sick person of Europe. And of course, the current American administration is doing its best to reinforce that by suggesting that we and all other European countries are completely hopeless. Can you give us a vision of what it would mean to create growth in Britain?

• 2:46Rory Stewart?

  And what it is, in your view, is holding back Britain from finding this magical thing that the government's obsessed with?

• 2:51Speaker 02

  There's a big question. I mean, we're not really at the moment the sick person of Europe. Our economy is not growing particularly badly relative to Germany and France and so on at the moment. But Europe as a whole has slowed down over a period. I mean, just to give you a sense of what the lack of growth since 2008 has meant. I mean, there really was a kind of momentous thing, the financial crisis of 2008 to 2010. And we are still suffering the consequences in a big way. Had we grown since then at the kind of rate that we were used to for the previous 50 years, average earnings would be about £10,000 a year higher than they are now. I mean, that is an extraordinary statistic in a sense.

• 3:35Speaker 02

  But that gives you a sense of the consequences of what's getting on now for 20 years of very poor levels of growth. So you can see, looking forward, what the consequences of high growth relative to low growth would be over the next 10 or 20 years. Now, what's holding back growth? Well, clearly, something changed post-financial crisis. Actually, lots of things changed. Access to credit for companies. Actually, we stopped having the sort of turnover of companies as low-productivity companies, when our business and new ones came into business, people stopped moving jobs so much. There was less credit in the economy.

• 4:18Speaker 02

  So those are things that changed around that time. But more broadly, we do have particular issues in the UK economy. I do think the government is right. To identify planning and the issues around being able to build things and build houses and our lack of housing and all those sorts of things. And that's definitely holding back growth. But equally, the government's done some things which are clearly going to make things worse. So a big hike in employer, national insurance contributions, big increases in regulation, including employment regulation and so on, are not going to help in the short run. Brexit clearly hasn't helped, but it mildly. So there are a bunch of things where we have done things that have been bad for growth. The political instability we had

• 5:03Speaker 02

  for a long period after 2016 hasn't helped growth. And again, I think the government's right to focus on stability as a good thing. But what worries me a little bit is that for a lot of what they're saying, it all sounds very good in terms of growth. But you look at some of the things they've done in the short run, particularly on things like increased regulation, not reduced regulation, increased taxes, not reduced taxes, and they're probably damaging it at this moment rather than helping it despite their long-term rhetoric in the right direction.

• 5:34Alastair Campbell?

  Yeah, and so her big sort of thing was, you know, we've got to deliver stability. And I have times felt this clash between this idea that we have to have stability, but basically, we're all accepting that the, you know, that the foundations are pretty weak, that growth isn't there. Second point, Labour elected on a mandate of change, and yet her message about the economic institutions has been, you know, let's just stick with what we've got. And meanwhile, we're now going through this period of pretty weak growth. But also, the other thing that came through the OBR report, which didn't really come through in the, in her speech or the debate, was this relentless focus on our very, very poor productivity.

• 6:18Alastair Campbell?

  What is it about Britain that we, or is this another sort of worldwide, European wide problem? But we do seem to struggle more than other economies with improving productivity. What more can governments do about that and why aren't we doing it?

• 6:32Speaker 02

  Well, without, I mean, let me preface this, that with some worries as ever, actually, about the statistics here, the productivity numbers are extremely uncertain. And, you know, the Office of National Statistics, their numbers suggested extraordinarily poor productivity performance last year, which I'm not actually sure, I believe.

• 6:56Alastair Campbell?

  Okay.

• 6:56Speaker 02

  This makes life really difficult for governments when our statistical infrastructure is badly, badly fraying in all sorts of directions. But that aside, it's nevertheless the case that, I mean, you're right, clearly, over the last 15 years or so, our productivity growth has slowed to a, you know, barely a crawl over that, over that period. And again, I don't, there's no single answer to the question, what's driving that poor productivity performance? It is a, it is a combination of unstable government policy, the very constraining regulations on things like planning and house building and so on, lack of, lack of building houses

• 7:38Speaker 02

  in the appropriate places, and a whole series of things like that. But, but do we know exactly the answer to that question? No, there's no, again, there's no single answer. It's very similar to the answer on growth, that growth and productivity are really two sides of the same coin.

• 7:53Alastair Campbell?

  So if you'd like to hear the full episode, hear everything that Paul and Rory and I had to say about Rachel Reeves and her spring statement, join, become a member of The Rest is Politics Plus, go to restispolitics.com.

• 8:12Speaker 03

  We are getting a statement from Number 10. On that flight, with 350 passengers on board.

• 8:21Speaker 04

  The Great Game. Strategic struggle between Britain and Russia.

• 8:28Speaker 05

  We assess, Prime Minister, with high confidence it was Russian.

• 8:34Speaker 06

  Holding the Russians accountable is World War III.

• 8:36Speaker 07

  They took down a British passenger jet containing 350 people.

• 8:39Speaker 04

  A man in the Kremlin is playing, Alex. Got to ask yourself, do you want to play, or not? You're the Prime Minister. You've done nothing!

• 8:53Speaker 06

  We would need to understand the policy context.

• 8:55Speaker 04

  All the relevant context will be structured as a framework today. Disseminated into an operation order, or FRAGO.

• 9:03Speaker 02

  A FRAGO that says to kill the President of Russia.

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  Yes.

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