Starmer's Britain is just one blunder away from an IMF bailout

Telegraph

4 days ago

A tearful, broken Chancellor; a selfish, buck-passing Prime Minister who cannot even pluck up the courage to sack her; fanatical MPs determined to veto even the most modest of spending cuts: welcome to Labour Britain, a failing, unserious, ungovernable country.
Sir Keir Starmer is our Potemkin PM, a widely despised figurehead. Rachel Reeves remains, for now, our Chancellor in name only, her raison d'etre obliterated, her final mission to serve as Starmer's human shield. Morgan McSweeney, Starmer's chief of staff, is finished.
The real power lies with an economically illiterate, fiscally irresponsible mob on the Labour backbenches, and their Cabinet allies, Angela Rayner and Ed Miliband. The Parliamentary party is now little more than a mismatched coalition at war with itself; factionalism rules, guaranteeing stasis and drift.
It has taken just a year for this farce of a Government to run out of other people's money, as all Left-wing administrations eventually do, yet it is now unclear who has the authority to grasp a situation that threatens to spiral out of control.
Britain in 2025 feels ominously like a gigantic ponzi scheme on the brink of exposure, taking down everything and everybody with it: no wonder many young, ambitious people are dashing for the exits while they still can.
Starmer will eventually sack Reeves, or she will quit in disgust, but whoever replaces her will either be a creature of the party's tax-loving, anti-capitalist, spendthrift Left, or suffer her sorry fate. Her successor won't be allowed to make any cuts, just hike taxes on the rich and successful, further crippling the economy.
The next Chancellor will be under immense pressure to loosen the fiscal rules, and borrow with even more abandon. Labour's experiment with technocratic social-democracy lasted exactly one year: whatever comes next will be much more explicitly socialist and destructive.
Yet this is not merely the latest instalment in a Parliamentary theatre of the absurd, or even the human tragedy of a hubristic, over-promoted politician stabbed in the back by her party and cut adrift by her honourless leader. This is real life, and the situation is grave.
Britain is nearing a point of maximal danger. The budget deficit is too high, and gilt yields have been rising. The economy is barely growing. Tax increases aren't yielding much.
This is the moment when political crises typically metastasise into financial meltdowns, when the markets begin to treat us like a failed state, sell the currency and push up interest rates.
Britain is one political blunder away from a run on the pound, an emergency Budget and a bailout by the IMF. It was striking how sterling slumped when it looked as if Reeves was about to be axed during PMQs: the markets don't love her, but they are terrified that her successor could be even worse.
The tragedy of Reeves is that she has no friends, no defenders, but she actually understands the need to speak the language of business and to give the impression that she is trying to balance the books. I will never forgive her for slapping VAT on school fees, for lying about the Tory black hole, for attacking farmers so pitilessly, for wasting billions on useless pay rises for the public sector, for breaking her manifesto promise on National Insurance, for destroying the economy. But in a desperate world of least-awful options, she was nevertheless the last bulwark against neo-Corbynite madness.
She was right to seek to cut welfare spending.
The obscene increase in the number of people receiving the mobility section of enhanced personal independence payments (PIPs) is laid bare in a TaxPayers' Alliance analysis of the official statistics. The numbers exploded from 734,136 in January 2019 to 1,754,739 in April 2025, a 139 per cent increase driven by widespread, officially sanctioned abuse of our welfare state.
The number of recipients claiming because of autism surged from 26,256 to 114,211, for anxiety and depression from 23,647 to 110,075; for ADHD from 4,233 to 37,339. Successful claims for acne, obesity, drug and alcohol misuse and even writers' cramp all jumped. Some thirteen people receive enhanced PIPs for 'factitious disorders' with deliberately falsified symptoms, including munchausen syndrome.
The Left have no interest in tackling this. They are much more interested in what they see as the obvious solution: higher taxes. When not toasting Reeves's imminent political demise, they have been excitedly sharing 'Just raise tax', the cover article in the New Statesman magazine, in their WhatsApp groups.
The piece argues that Starmer's 'tax lock' – a pledge not to raise National Insurance, income tax and VAT – was an 'act of cowardice'. The magazine's thesis is that Britain's 'malaise' is caused by a state that is too small. It posits that 'middle earners are not being taxed enough for the kind of state we want'. It argues that 'the basic rate of income tax has not risen – not once, not by a penny – for more than 50 years'. It wants to replace employee National Insurance with a 5p hike in income tax designed to hammer savers and pensioners. It calls for a 'land value tax'.
Some of the suggestions to simplify tax on labour income make sense, but the Left will ignore those and simply see a new opportunity: massive rises in income tax at every level, and the confiscation of as much 'unearned' wealth (to use the despicable Marxist term) as possible. They have spent years dreaming of a crippling wealth tax on property, targeting especially Tories in London or the Home Counties; with the Starmer-Reeves project in tatters, now is their opportunity.
Owners of large gardens would be ruined, pensioners would have to sell, the rich would flee and the housing market would crash. If homeowners were levied even one per cent of the value of their home, they would need to pay £5,000 a year for a modest flat in London, and £10,000, £15,000 or much more for a house.
Starmer has behaved disgracefully, and failed to stand up for Reeves. If she really believes in fiscal probity, and realises that full-on socialism isn't the answer, she should stop covering for a Prime Minister who doesn't deserve it. She should resign, and let somebody else clean up his mess.