The level of ignorance about both Britain and the Labour Party shown in these comments is very striking. One hardly knows where to begin to try to remedy it.
Lets focus on the dynamics of the Labour Party. The background in which they are attempting to govern is given in the head post. What isn't there is the UK reliance on funding its debt by issuing index linked bonds. This limits its ability to inflate their way out of rising debt.
Why should debt rise? It comes down to Labour in the end. Labour's traditional approach has always been, and still is, spend and borrow. There is a particular loop which comes from the party's funding. The unions, today the civil service unions, contribute heavily to the party. In exchange the party throws money at them in the form of generous wage and benefit settlements, and this funds the contributions.
Traditionally this led to a cycle in which Conservative governments would come in after a fiscal crisis caused by increased spending and borrowing, clean it all up, get abused for doing something called austerity - prudent financial management - then get replaced by a Labour government which could screw up the economy again.
However two things changed in the last round of this cycle. One is that the Conservative Party moved to the left and engaged in absurd levels of spending - nominally justified by Covid, but many observers regard that as an excuse rather than a reason. The UK now had two political parties making up 80% of the representatives who were both committed to fiscal irresponsibility. The second is that as a result when Labour came to power a year or so ago it did not inherit reasonably sound finances.
But it was still caught in its own loop and behaved as if this were the late 20th century all over again - spend, give to the unions, get back poltiical contributions, borrow, and it would all work out fine, at least for a while. Only, if you do this with huge debt levels and a restive bond market, and with the ghost of Liz Truss peering over your shoulder, it doesn't work like it used to. So you find yourself obliged to raise taxes in the first year of the cycle, and having decided not to raise basic tax rates, income or VAT, are obliged to do so in much more damaging ways. The result is an economic slowdown, but no fall-off in entitlement spending or the government's wage and benefits bill.
The UK and its government therefore finds itself being carried to the Budget in late November this year. The Budget is a charming UK political custom where the government of the day sets out its forecasts and plans for spending and taxation. As they go into this round (which they have had to postpone to the last possible legal date, which tells you something) they are facing a gap. How large? Opinions vary, but in realistic terms its several tens of billions sterling.
They find themselves in an impossible position. Raise basic taxes by huge amounts, and court electoral disaster at the first opportunity (in the May 2026 local elections). Try and cut expenses? They tried on welfare and ran straight into the party activists and had to climb down. Starmer tried to fire Miliband, which would have been a first step to ending the prohibitively expensive Net Zero program. He failed. Do neither, and borrow, and you get into the spiral caused by index linking - and you really wake the bond market up from an increasingly uneasy sleep.
Watch out for late November. There are no good choices for them. The chances of a real financial crisis are very high and rising, and a visit from the IMF is on the cards.
None of this has anything much to do with Brexit. Its structural factors in British politics, and the precipitating factor was the Conservative sharp left turn, and fiscal irresponsibility. This has interacted with similar levels of irresponsibility by the Labour Party to produce what promises to be a perfect storm.
You want to see a real time indicator of this? Just keep checking 10 year Gilt prices and yields. But don't buy them! You thought Liz Truss had produced a crisis? That was nothing to what is coming in November. Starmer and Reeves are rabbits in the headlights. Meanwhile Farage, the ablest UK politician in a couple of generations, is waiting and planning. He and Reform will be the only winners from this.