‘Military Keynesianism'? Reeves faces British defence dilemma after EU spending surge
Berlin and Brussels – typically capitals of financial orthodoxy – have been convinced that this approach is required once again. Under the plan put forward by Germany's chancellor-in-waiting, Friedrich Merz, Berlin is on the brink of relaxing its 'debt brake' rule to pave the way for spending on defence and infrastructure worth an additional €1tn (£840bn) over the coming decade.
The EU, too, is at a 'watershed moment', having agreed an €800bn plan allowing member states to ramp up borrowing for their defence spending, under an 'escape clause' from its stability and growth pact debt rules. It is being chalked up as one of the most remarkable shifts in European economic policy in decades.
But for Britain, a more old-fashioned approach still prevails, with the chancellor, Rachel Reeves, insisting that her self-imposed fiscal rules remain 'non-negotiable'. Rather than allow for a rise in borrowing, Labour's plan to increase defence expenditure from 2.3% of GDP to 2.5% by 2027 involved a corresponding cut for the overseas aid budget.
Pushing spending higher still would require further 'difficult decisions', Reeves has suggested.
The Treasury accepts the world has changed and that higher defence spending is a necessity, but with a tight fiscal position in advance of an already tough spring statement for the chancellor, paying for it will involve difficult decisions to find savings elsewhere.
There are hopes in Labour circles that Britain will follow Germany's 'military Keynesianism', but the Treasury view has not shifted that much. Reeves still believes in it enough to stick to fiscal rules that, after all, were only announced less than six months ago.
That is, in part, understandable. Fresh in Reeves's mind will be the bond market turbulence at the start of this year, in which the British government was in the eye of a global storm. Mostly that was driven by investor fears over Trump's inflationary policies. But there was also a UK-specific overlay.
Reeves could point to the sharp rise in German yields last week. On Wednesday, the yield – in effect, the interest rate – on Germany's 10-year bonds rose by the largest amount in a single day since March 1990. She could also point to France, where even with newfound EU political cover, Emmanuel Macron could find he is still restricted by a rumbling political and fiscal crisis. In a divided Bundestag, Merz, too, has domestic roadblocks to overcome.
Britain and Germany are at different starting points. Despite its deep economic troubles, Berlin, unlike London, has a recent history of recording budget surpluses before the onset of the Covid pandemic. Its debt-to-GDP ratio is close to 63%, compared with almost 100% for Britain. Even though German borrowing costs have risen sharply, yields remain significantly below those of the US and the UK, at about 2.8% for 10-year borrowing, compared with 4.6% for the UK.
That said, Reeves is being held back by politics more than economics. The government could make the case that higher borrowing today can be a down payment on stronger economic growth. Across the Channel, that is exactly what investors anticipate.
Before this month's spring statement, it is widely thought higher government borrowing costs will break Reeves's fiscal rules, fuelling speculation about cuts to the welfare budget.
But the Institute for Fiscal Studies reckons a small breach could be overlooked: 'There is no meaningful economic difference between a forecast for a small current budget surplus in 2029-30 and a forecast for a small current budget deficit,' the thinktank suggests.
Still, the chancellor is hamstrung after promising before the election not to increase taxes, and having signalled the virtue of balancing the books to draw a neat dividing line with the Tories' Liz Truss experiment.
That position may not be tenable for much longer. Whittling away at government spending threatens to undermine Labour's other promises: of fixing public services, avoiding a return to austerity and growing the economy.
It is a point made clearer by growing disquiet within Labour ranks, and by the government's sliding opinion poll rating. So watch this space: it may not be wise to burrow much further into a fiscal foxhole.
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The Herald Scotland
4 minutes ago
- The Herald Scotland
An evening with Trump's unofficial Greenland envoy
Several hours and rounds later - not the boxing kind - Boassen showed up at Nuuk's largest hotel, where he shook a couple of hands, listened to a lounge singer run through some jazz standards, and shook off a few hostile stares. Former bricklayer. Political influencer. Would-be mining consultant. Man on a mission to help tap Greenland's untapped resources and economic potential. Traitor, some say - especially the guy who slugged him in the face in a Nuuk dive bar in late April. Boassen, 51, says he is versions of all these things. Most of them are a consequence of his championing of President Donald Trump in a place where rare support for an American president who has vowed to take over Greenland "one way or the other" tends to end in eyes rolled, or in Boassen's case, blackened. Boassen is Greenland's de facto MAGA representative. "This is about a fight for the Greenlandic people," Boassen said one evening in June as he sat on a sofa in his cozy home in Greenland's capital. "It's not because I hate Denmark. It's about the Danish power in Greenland." Boassen's mostly stopped wearing them now because of the Trump backlash in Greenland, but he still occasionally dons a MAGA cap and T-shirts with American flags with things like "American badass" emblazoned on them. He's been a fan of Trump since 2019, when the U.S. president first started talking about acquiring Greenland. Trump says the United States needs to "get Greenland" for national security reasons. It's in a strategic location in the Arctic. Due to melting ice, new shipping Arctic routes and military activity are increasing. It is also rich in commodities like oil and gold and rare earth minerals essential for manufacturing smartphones and other advanced technologies. Boassen is part of a very small but vocal minority of Greenlanders who appreciate Trump's interest, polls show. But his support for Trump hasn't always been carefree. Boassen's been teased and mocked and even faced death threats on social media. He professes to have an almost spiritual connection to Trump. He doesn't agree with every word he says. Boassen wants Greenland to be an independent country, but wants it to to have a close security and economic alliance with the United States. A Greenlandic son who's into Trump Born in Qaqortoq, a town in southern Greenland, Boassen was raised by a single mother. Money was tight. Their home was modest. Heat was in short supply. That world is a far cry from the one he now seeks to inhabit as an Arctic political player with the ear of some in Trump's inner circle. "Trump is the one who can save us, though it's hard to support him when we don't know his plan," he said. 'One way or the other': Five ways Trump's Greenland saga could play out Boassen isn't a social media influencer. But he owes some of his nascent influence to social media. He was discovered on Facebook by Thomas Dans, an American advisor to the under secretary of the Treasury for international affairs during Trump's first term. Dans was also a member of the U.S. Arctic Research Commission. Now he promotes closer U.S.-Greenland ties. "I learned of Jorgen from friends in the Greenlandic community," said Dans. "He was being called 'Trump's Greenlandic Son.' I said, 'I need to meet this guy.'" Usha Vance's Greenland adventure: Why it got derailed by a dogsled race across ice and snow Dans eventually tapped Boassen to serve as Greenland director for American Daybreak, a nonprofit organization he founded that works to educate and advance Trump's America First foreign policy, particularly in the Arctic. It was American Daybreak that, in March, sought to arrange a visit to Greenland by Usha Vance, wife of U.S. Vice President JD Vance, for Greenland's national sled dog race. But after reports of planned protests by Greenlandic activists, the visit was revised to a brief stop by the Vances at a remote U.S. military outpost on the island. A Greenlandic pugilist Boassen has an imposing build. He's a boxing enthusiast and used to box and train boxers. He wears his hair swept sharply to one side. Like more than 90% of 57,000 Greenlanders, he identifies as Inuit, the indigenous people who inhabit the Arctic region. But Boassen's father is from Denmark, which he said accounts for his light skin tone and blue eyes. Greenland was colonized by Denmark beginning in the 18th century. That era ended in 1953, when Greenland became a self-governing territory. Boassen is also a fast talker who courts publicity. 'Buy us!': Greenlanders shocked, intrigued, bewildered by Trump zeal for Arctic territory He has not shied away from the relative fame that his association with the Trump cause has brought him Greenland. Most days he fields requests from journalists from around the world who want to see or talk to the guy they see as Trump's unofficial local "Greenland envoy." More than a few journalists have been to his house. "He's a natural leader with a deep love for Greenland and its people, coupled with a bold and gregarious personality and expert communication skills," Dans said of Boassen. "He's also a true fighter, both as a former boxer as well as a modern Inuit man, formed in his people's great Arctic traditions." 'We are different from Denmark' Over the course of an evening spent with a USA TODAY reporter this summer, Boassen's phone constantly pinged. He called Dans and put him on speakerphone. He video-called a friend in Greenland's high North, not far from the Pituffik Space Base the Vances visited, because he wanted to prove there were Greenlandic fellow-travelers when it came to support for Trump. Boassen is considering whether he wants to grant a Danish filmmaker access to his life story for a documentary. 'Crazy beautiful place with dark side': Greenland, but not as you know it Boassen's wife did not want to participate in the interview but she occasionally sighed deeply as her husband spoke and gave him a knowing side-eye. She sometimes tried to shush him from the other end of the sofa if his comments wandered too closely into their personal lives. "We are different from Denmark even if the Danes have been here for 300 years," said Boassen, as he held forth on all the ways he believes that Greenland's Inuit population has suffered under Danish rule: sterilization scandals from colonial times, poor job prospects, elevated rates of suicide and alcoholism. Boassen insisted on sharing a selection of his "greatest hits," preserved in YouTube video clips saved on his TV. There he was at the arrivals door at the airport in Nuuk when Donald Trump Jr. visited Greenland in January, a trip he helped coordinate. It came about after Boassen spent a few weeks canvassing for the former president on the streets of Pittsburgh during the November 2024 U.S. presidential election. Boassen went to an election night party in Palm Beach, Florida, near Trump's Mar-a-Lago residence. He attended Trump's inauguration, along with Kuno Fenker, an opposition lawmaker who is a member of Greenland's nationalist Naleraq party. It too wants closer relations with the United States, though it seeks independence for Greenland. On his cellphone, Boassen had photos of himself with the American musician Kid Rock, MMA fighter Conor McGregor, Canadian psychologist Jordan Peterson, political commentator Ben Shapiro and other MAGA-affiliated personalities. Greenland not for sale: It is welcoming Americans with direct flights "He has a very good feeling for how ordinary people in Greenland are feeling about the issues that impact their lives day-to-day," said Fenker, the lawmaker, who is a close friend of Boassen's. In his home, while sipping a gin and tonic, then a beer, then coffee, Boassen said of himself, "I'm the Che Guevara of Greenland." It was a reference to the Argentine doctor and revolutionary who fought for social change in Latin America before he was killed in a Bolivian jungle with the help of the CIA. That characterization, of course, is a stretch and was made partly in jest, which Boassen admitted, but it still speaks to how serious he takes his dream of one day seeing an independent Greenland. MAGA in Romania A few weeks earlier, Boassen had been in Romania with Dans. Boassen said they were invited to observe Romania's election by George Simion, a far-right candidate in that country's presidential election. Simion, Boassen said, was a big believer in Trump's MAGA ideology. (Simion lost the vote, and later alleged it was due to foreign interference.) When Boassen's wife spied an opportunity, she grabbed the TV remote and switched channels to a rerun of a music festival where some of her favorite bands, such as Green Day, the American punk rockers, and Radiohead, a British alternative rock band, were playing. She came along to the boxing match, too. Reluctantly. On the walk to the sports hall from their house, Boassen said he was trying to form more partnerships with Greenlandic officials to be useful to Trump's White House, but it's been difficult lately to get the attention of the U.S. administration because it is preoccupied with other crises in Ukraine, Iran and the Israel-Hamas war in the Gaza Strip. He said he's convinced his phone is being tapped by the Danish authorities. He admitted that he is not making a living from his work with American Daybreak. He that said people often ask him if he's concerned that maybe Trump is just "using him" in a way that isn't in Greenland's best interests, in ways he doesn't appreciate. "I don't know," was Boassen's answer to that question. "But I'd rather have Trump as the U.S. president right now than Kamala Harris," he said. "And anyway, bricklaying wasn't making me much money. It's too honest. No one will hire me because I support Trump." Kim Hjelmgaard is an international correspondent for USA TODAY. Follow him on Bluesky, Instagram and LinkedIn.
The National
17 minutes ago
- The National
As Labour targets trans rights, Scotland can do better
Some 38 years on and some other questions spring to mind. Firstly, were Labour really that fun in the 1980s? I wish I'd known her. And – more depressingly – was all that progress so fragile, so insubstantial, that nearly four decades later, instead of celebrating a new Labour Government as champions of LGBT+ rights, we must fear them? Fear has been the overriding emotion since the General Election last year, when the least right-wing contender for Prime Minister made flip-flopping on trans rights into an Olympic sport (it must be his biological advantage that allows him to excel in that, I suppose). Since Labour took office, those fears have proven well-founded. READ MORE: Uniformed police pulled from Glasgow Pride over 'impartiality' concerns From pushing full steam ahead with the Tories' efforts to strip back trans healthcare, to Keir Starmer's statements about trans people's right to access services based on their gender identity, it quickly became clear that any dream of a reprieve from regression would remain just that. And now, 25 years after the Labour/LibDem coalition at Holyrood repealed Clause 2A – which barred teachers from 'promoting' homosexuality in schools – and 22 years after Tony Blair's Labour government followed suit for England and Wales, Starmer's Labour have effectively introduced the same approach for transgender identity. In new statutory guidance published last week by the UK Government on sex and relationships education, teachers in England are told that, while they should teach about the legally protected characteristic of gender reassignment, they should avoid using materials which 'encourage pupils to question their gender'. That such a statement can be included in official guidance underlines that the same old unfounded fears about gay people are now being rehashed for our trans siblings. The premise at the heart of this directive is that a child or young person can be encouraged to be transgender, just like Section 28 implied an inherent risk of homosexuality being 'promoted' to children. Welcome to the Gender Agenda, just like the Gay Agenda, except Labour and the Tories are united over it. Let's just be clear: these are not ideas that any progressive political party should be endorsing, never mind mandating. Labour knew this 40 years ago when it came to gay people. They certainly knew it after watching the harm that Margaret Thatcher's government caused to both young people and teachers by introducing a policy predicated on these falsehoods. So how can this same party – insofar as it is the same party – wilfully do the same to trans people now? In the same section, schools are told to avoid materials that 'could be interpreted as being aimed at younger children', and to 'consult parents on the content of external resources on this topic in advance'. As with other aspects of sex and relationships education, parents have the right to withdraw children from lessons. This part is familiar, not because it harks back to decades past – although it might – but because this is also the policy regarding sex education here in Scotland. Of course, Scotland has also introduced LGBT+-inclusive education across the curriculum, so it should not be possible to prevent a child from learning about trans or queer people at all. However, the assumption behind this parental rights approach is worth examining because it has taken centre stage in recent debates – and Scotland is far from immune. Amidst the moral outrage and proliferation in conspiracy theories of recent years about the supposedly shocking materials children are being exposed to in schools, the number of parents in Scotland withdrawing their kids from sex ed has quadrupled in the last five years. When those figures were reported in April, the Tories commented in support of parents' right to pull kids from these lessons, while Alba's deputy leader Neale Hanvey blamed the Scottish Government's 'gender policy difficulties' and its 2021 schools' 'sex survey' for the spike. But why should we accept that parents have an absolute right to control what their children learn? There are many subjects on which we simply wouldn't accept that. For example, if a parent believes the Earth is flat, should they have a right to pull their children out of classes that teach otherwise? It's one thing when a handful of children are withdrawn from lessons for religious reasons – although I would also quibble with that – but when media-confected hysteria is driving these numbers through the roof, it might be time to look again at who we are allowing to dictate the next generation's access to knowledge, and why. Although there's not much chance of that in England, where the Government's own guidance is being written to appease the fearmongers. Within the document, schools are instructed not to 'teach as fact that all people have a gender identity', and to instead be mindful that there is 'significant debate' around this and 'be careful not to endorse any particular view'. Only 15 years from the introduction of the Equality Act – by the last Labour Government – and it's now Labour policy that, unlike the other protected characteristics, there is so much debate around trans people that teachers should present 'for and against' arguments about them to children. Coming just months after the Supreme Court ruling on the meaning of 'sex' in the Equality Act, and the various and bizarre extrapolations which have ensued from that, this shouldn't be surprising. When Starmer wouldn't commit during his election campaign to trans-inclusive policies, or to just about anything, his Government was hardly going to seek to upset the trans-exclusionary crowd now when support for his party is tanking. This is what's most frightening about the Labour leadership. About a lot of political leaders, when push comes to shove. It's not that they're driven by a deeply held belief that any of this is going to make life better for women, girls, children. Nor is it that they're fuelled by a hatred of trans people. Don't get me wrong, some of them are surely transphobic. The ease with which they've transitioned, if you will, from the role of rainbow-splashed allies to vanguards of the assault on trans people's legal rights alludes to underlying prejudices shaken free of pretence. READ MORE: Our youth orchestra shows the power of children's rights in action Above all, though, all of the political posturing – the capitulating and contorting, the derailing and distorting – that has come to define this Labour Government's approach (and one day, its legacy) on this issue can be condensed and explained by one word: power. When the tides turn, this Labour Party will do the only thing that those intent upon power and preserving their own self-interest above all else will ever do – grab a surfboard and ride the fucking wave. And rest assured, if they can do that now, about this issue, they'll do it again about the next thing, and the next thing. But here's the catch: when it comes to vilifying and ostracising marginalised people, there is no sweet spot that unscrupulous politicians can hit to satisfy the agitators. A case in point: so-called 'gender critical' campaigners are still angry about the Labour education guidance because it doesn't go far enough. This should be a lesson to the Scottish Government, present and future, while it contends with considerable pressures from those who'd like to see it turn its back on trans people. It's also a lesson they might reflect on when deciding whether to progress with legislation which is bound to be met with similar backlash. You can't control the fires of hate by adding just enough fuel, or by ignoring it – you can only fight it head-on. Rhoda Meek returns next week
The National
17 minutes ago
- The National
'Vulnerability' left in UK constitution after UKIMA review
The Internal Market Act (UKIMA) faced fierce criticism from devolved administrations when it was introduced in 2020 to regulate trade within the UK following EU withdrawal. They argued it enabled Westminster to override devolved decision-making in areas such as public health and food standards in pursuit of a unified UK market. After winning power in 2024, the Labour Government announced it would be reviewing the legislation. The findings of the UKIMA review were published last Tuesday. The review introduced procedural changes – including a mechanism to fast-track exclusions from the act where the economic impact is less than £10 million per year – and pledged to prioritise the use of common frameworks, post-Brexit agreements intended to manage formerly EU-governed policy areas collaboratively. READ MORE: Lesley Riddoch: I was steered by BBC bosses on how to report. I ignored it However, the review's changes are not legally binding and could easily be reversed, Professor Thomas Horsley, a constitutional law expert at the University of Liverpool, said. 'All they've done is said, 'these legal powers that exist, we commit politically to exercise them in accordance with what we agree in the common frameworks',' Horsley said. 'But that is a political commitment, and we all know that intergovernmental commitments can be – even the strongest ones – can be disregarded by a particular recalcitrant government in London. 'So the constitutional vulnerability, if you want to put it like that, remains.' He also said the £10m threshold below which UKIMA exclusions would be fast-tracked was a 'low bar', noting that it could be met by the turnover of a single company. Following the publication of Labour's review, both the SNP Government in Edinburgh and the Welsh Government in Cardiff welcomed changes to the exclusions process – but called for UKIMA to be fully repealed. Welsh Deputy First Minister Huw Irranca-Davies (Image: Welsh Government) Huw Irranca-Davies, the Deputy First Minister of Wales, said: 'We particularly welcome the commitment to implement any exclusions agreed via common frameworks, which should improve the functioning of the UK internal market. The common frameworks operate on a clear set of principles which fully respect devolution and include dispute resolution mechanisms. 'However, it is our long-standing and consistent view that the act should be repealed and replaced with a system, underpinned by legislation, designed around the common frameworks.' Scottish Constitution Secretary Angus Robertson hit out in stronger terms, saying UKIMA 'introduces radical new uncertainty as to the effect of laws passed by the Scottish Parliament and effectively provides a veto to UK ministers'. 'Nothing set out in the UK Government's response to the review changes this position, which is completely unacceptable,' he went on. READ MORE: Kate Forbes calls for Internal Market Act to be scrapped 'The conclusion of the review falls well short of our stated position of repeal and replace UKIMA, and indeed short of the legislative change required to mitigate the most damaging aspects of the operation of UKIMA.' Horsley said he could understand the argument being made by the devolved governments, that the 'common frameworks can do it all' and UKIMA is unnecessary. 'It is precarious because if things don't get agreed through the common frameworks – or a future UK Government decides, well, these political commitments we made, we're changing our mind – the legal powers are still there,' he said. 'This review doesn't change the legal framework, it just says, wait a minute, we're going to park it in the background and we're going to try and work using more intergovernmental political mechanisms, the common frameworks.' However, Horsley said that although the Labour Government's review has resulted only in political pledges, it was 'definitely a move in the right direction and a move that speaks to the ambition of the UK Government to reset relations'. He went on: 'There are other parts of UKIMA which are just not discussed. [The devolved governments] would like to reopen discussions around the direct payments that can be made from London in devolved areas. So there are things that are not so narrowly related to intratrade that are still rubbing up wounds. 'But in terms of just narrowly looking at UKIMA and the market access principles, there are some positive things there and some clear commitments from the UK Government towards more consensual policy making … which is very different to obviously the more abrasive approach which preceded under previous governments.' READ MORE: John Swinney sets out 3-point plan for fresh independence push In late 2024, Horsley was one of four constitutional legal experts to co-author a report on UKIMA which concluded that reform of the legislation was 'essential to restore intergovernmental trust'. Asked if Labour's review had provided that essential reform, he said: 'What this review shows is that there is more work to be done, but it's around those common frameworks. 'It's now shifting the attention to making the common frameworks work. These are not off-the-shelf things that are super functioning and solve all the problems. 'So the work between the governments now is going to have to be making those common frameworks work.' Douglas Alexander is UK Trade Policy Minister (Image: UK Parliament) After the review was published, UK Trade Policy Minister Douglas Alexander acknowledged there were 'real concerns' about how the laws have operated, and pledged "improvements'. Alexander stressed the importance of having a 'well-functioning UK internal market' as part of the Government's 'ambition to improve economic growth for the benefit of businesses and people in all parts of our country'. He added: 'Latest figures show that trade between the four nations of the UK is valued at £129 billion and that it is particularly important to the economies of Scotland, Wales, and Northern Ireland.'
