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Times
a day ago
- Politics
- Times
Keir Starmer's fate lies with strivers and grafters
There are a few people here you really ought to meet. I know we said this about Stevenage Woman, Workington Man and the others — the guy from Basildon with the Ford Mondeo and that nice working mum from Worcester — but give them a chance. Once you've heard about them you might understand a little more of the government's thinking. You might even recognise yourself. The cabinet, special advisers and civil servants met them recently. If they are working the way Downing Street wants, they'll be thinking of these people constantly: two big groups amounting to about 20 per cent of the electorate. Say hello to the Grafting Realists and Striving Moderates: the two most important segments of the government's new polling model. Sir Keir Starmer won't think he is succeeding until they trust the state again. Both groups have had a hard time of late. Their living standards have been stagnant for so long that they've almost lost hope. The Grafting Realists, a little older and likely resident in what was once called the red wall, were impoverished by inflation. They are working class, mostly white, and have the traditional attitudes those words imply. For the Striving Moderates of Middle England's lower middle class, it was spiking interest rates that proved most painful. Theirs are the houses with mortgages a little too big for comfort and a financed car on the drive that's now a burden. (Starmer surely sees something of himself in both.) No wonder they can't quite trust the government. For five years, whoever happens to lead it has let them down. Covid, partygate, Liz Truss, runaway inflation, soaring immigration figures, a broken NHS: prime ministers either seemed indifferent, incapable, or downright dangerous. The government's data doesn't write them off as a lost cause – you might chalk up their trust in the state at anything between four and six out of ten — but those Grafting Realists and Striving Moderates are deeply dissatisfied people. I say 'the government' rather than 'Labour' because this is not a party political enterprise. This is polling of trust in government, not electoral preference. It's informing the choices the Cabinet Office's New Media Unit make as they communicate policy announcements — be that the immigration white paper or the spending review — to different demographics on social media. Of course, renewed trust in the government's ability to get things right is likely to pay dividends for its incumbent management. It's also true that the Grafting Realists and Striving Moderates are the people who make the difference in elections. That, however, is secondary to the point many people in Westminster are still missing. The Conservative Party in particular struggles on under the misapprehension that voters are preoccupied with gradations of left and right. We might say the same of grumblers who'd like the Labour Party to be loud and proud with its progressivism. Really what is at stake is far more profound than whether Robert Jenrick ends up sounding as tough on migration as Rupert Lowe or the tone Starmer takes when he talks about welfare reform. If the public cannot be convinced to trust mainstream governments to deliver, then the show is likely to be over for conventional politics. What one No 10 aide perhaps unfairly calls 'the politics of anger' will take its place. Starmer knows this. He knows, too, that Nigel Farage knows it — hence the prime minister's decision to treat him as the true leader of the opposition and elevate him to heights no leader of five MPs has ever known. Earlier this week I watched Angela Rayner fill in for Starmer at Prime Minister's Questions with Chris Ward, his parliamentary private secretary and longest serving aide, in the Times Radio studio. Ward, liberated in Starmer's absence from his weekly obligation to prep the PM, said something revealing. Parliamentary arithmetic has frozen in aspic a political reality that no longer exists. It makes little sense for Starmer to treat each Wednesday lunchtime as an exercise in beating Kemi Badenoch, or answering her questions at any length. Instead he hopes to 'speak over the chamber's heads, and directly to country'. The Grafting Realists and Striving Moderates will be in his mind's eye. Will they be listening? In No 10, aides are cautiously optimistic. But Farage is speaking to the same people too: simply, directly, and more and more substantially. On Monday, I'm told, he will vow to 'restore the social contract between the rich and poor' in his most expansive speech on economic and social policy yet. (One luxury of opposition is not having to supervise the slide into World War III.) 'It's very Robin Hood,' says one adviser. The logic of that language suggests Reform's internal discussions on a wealth tax could be concluding in a surprising way. How would Labour oppose that? In the meantime, there will be concrete and costed proposals — detailed in a ten-page policy paper whose very existence reflects Farage's new awareness that his sums must add up — to 'put money straight into the pockets of the poorest workers in the society'. Note that language: workers. Farage told me in the weeks before the local elections that he believes his natural constituency is 'the respectable working class', synonyms for which obviously include 'grafters' and 'strivers'. He will lionise them as 'the people who set their alarm clocks in the morning'. On a recent trip to Budapest, Reform officials sought advice from aides to Viktor Orban, the Hungarian prime minister, on welfare policy, and are enthused by one of their suggestions: lifting the two-child benefit cap only for working mothers. For Labour, pigeonholing this stuff is difficult. Many of its MPs struggle to resist the impulse to write it off as fantasy politics from the radical right. What is emerging from Reform is more omnivorous, syncretic and, for all Farage's stridency, full of confounding nuance. When Richard Tice, Reform's deputy leader, told me of his plans to dial back Bank of England independence last week, I saw shades of Peter Shore, the Labour maverick who said the same in the 1990s. A streak of statism coexists with the anti-bureaucratic nationalism of Pierre Poujade, the populist whose movement of overtaxed shopkeepers shook French politics before General de Gaulle returned to save the republic in 1958. Farage's strategists would prefer all this to be sold by outsiders — like Luke Campbell, the Olympic boxer turned Reform mayor of Hull – as their heroes in Italy's Five Star Movement did. It's easy for a government to say none of this would work, or dismiss it as 'nostalgic', as one cabinet minister did when we spoke about last week. But if Starmer's Grafting Realists and Striving Moderates can't believe him, he'll go the way of the other prime ministers who squandered their trust. As his gaze turns to the Middle East, he shouldn't forget the audience that matters most. Farage won't.
The Guardian
2 days ago
- Business
- The Guardian
What could Albanese do to improve productivity? Here is a short, non-exhaustive list
In his address last week at the National Press Club, the prime minister announced a 'productivity roundtable' in concert with the Productivity Commission's latest inquiry into the issue. I won't be at the round table, but I do have a few ideas. First off, remember that productivity is the amount you produce with the hours and equipment you have. Work better with what you have or (usually) get better equipment to do your work faster, and productivity increases. It is not about reducing the cost of producing things. Getting paid $10 less an hour to do the same amount of work does not increase productivity even if your employer is more profitable. Unfortunately, productivity is often confused with profit and so business groups argue the key is lower company tax. They claim this will increase investment in things that increase productivity (such as new equipment or new buildings and structures). The evidence, though, is pretty nonexistent. The massive 2017 Trump company tax cuts, for example, which cut the federal US company tax rate from as high as 35% to a flat rate of 21% did bugger all to spur investment: If the graph does not display click here Hopefully the Productivity Commission will heed the advice of the current productivity commissioner, Danielle Wood, who in 2018, wrote that cutting the company tax rate would 'see national incomes go backwards for six years'. And income is really what productivity is about – specifically workers' income and their living standards. In theory, the real value of how much you earn an hour should rise in line with productivity. In the 1990s this mostly happened, but from 2000 onwards workers have missed out: If the graph does not display click here So, when worrying about productivity, we must remember to ask who benefits. But what could the government do to improve productivity? Here is a short, non-exhaustive list. This year, the government will pay about $10bn in diesel fuel rebates to mining and transport companies and the agriculture sector. By 2028-29 it will be $13bn. Despite growing almost as fast as the NDIS, we never hear the government talk about needing to rein in the expense: If the graph does not display click here But the fuel tax credit not only encourages use of fossil fuels, it creates a disincentive to investment in more efficient, and productive new vehicles – such as electric trucks. Research and development is vital to produce new equipment and technology (such as electric trucks). But the Australian government spends much less on R&D than most other OECD governments: If the graph does not display click here The government in April extended the $20,000 instant asset write-off for small business. This was purely a political rather than economic decision. Rather than encourage investment in productivity enhancing equipment, it is mostly a tax rort to buy big utes. How do we know this? Well, last week the AFR's wealth reporter, in a column about avoiding paying tax, described the instant asset write-off as 'a favourite perk of small businesses and sole traders'. They ain't lying. What else is a bad productivity investment? Residential land. It adds bugger all. But Australians devote far too much capital to property – almost 2.5 times that of the US: If the graph does not display click here Our tax system encourages this with the 50% capital gains tax discount and negative gearing, while also reducing housing affordability. The Parliamentary Budget Office estimated that removing the tax discount and negative gearing on investment properties would raise about $13.35bn in 2025-26. Dental health hurts the economy and reduces productivity because workers avoid going to the dentist because of the cost and end up with chronic issues that reduce output. A public system would be much more productive because it would massively reduce the cost hurdle for workers. The PBO estimated that putting dental into Medicare would cost $13.7bn. Rather conveniently for us, that is essentially the same as removing the CGT discount and negative gearing. By the same token, we know health systems that are dependent on private health insurance, such as in the US, are unproductive because the resources devoted to them deliver worse outcomes than public health: If the graph does not display click here Australia's health system is generally well regarded, but a recent report noted that we faired quite poorly when it came to access to care. Private health insurance is not a productive industry – consider the hours and expense devoted to marketing that yields no extra benefit. The same goes for private schools and the fees people pay fees. A 2022 study found that private education does not improve a student's academic performance. More resources devoted to no better outcomes is the essence of poor productivity. Currently both are exempt from GST, which effectively incentivises people to spend money on them (as does allowing donations to build structures in private schools to be tax deductible). Including both within the GST would deliver revenue that could go to improving productive public schools and hospitals, while repairing the shrinking tax base of the GST. Best of all, because richer households spend more of their income on both private school and private health insurance, the tax would actually be progressive. If the graph does not display click here Controversial? Of course. Which is why a government would also want to announce something huge – like say dental in Medicare. Productivity is an ongoing issue, but the key is to always think about who benefits from changes, and that the solutions are not about increasing profits or offshoring labour or reducing workers' pay, but should always be about making people's lives better. Greg Jericho is a Guardian columnist and policy director at the Centre for Future Work
Zawya
4 days ago
- Business
- Zawya
High GDP doesn't mean rich citizens: These countries rank by real wealth
KUWAIT CITY: GDP per capita is widely used as a proxy for gauging a country's average living standards. In broad terms, a higher GDP per capita indicates greater economic resources available per individual, a common benchmark for national prosperity. However, this measure has its limitations. It does not account for income inequality, the sustainability of economic growth, or broader quality-of-life indicators. Still, when interpreted with these caveats in mind, GDP per capita remains a valuable tool for comparing economic performance across nations. Using the latest 2025 figures from the International Monetary Fund (IMF), we examine the top 50 countries ranked by GDP per capita, presented in current U.S. dollars. It's important to note that these values are not adjusted for inflation, currency fluctuations, or local cost-of-living differences. Among Gulf Cooperation Council (GCC) countries, Qatar leads the region, ranking 10th globally, followed by the United Arab Emirates at 23rd, Saudi Arabia at 43, Kuwait at 45th, Bahrain at 46th, and Oman at 62nd, reflecting the strong influence of energy wealth across the bloc. Tax Havens Top the List Several of the world's wealthiest countries by this measure—including Luxembourg (#1), Ireland (#2), Switzerland (#3), Singapore (#4), the Netherlands (#11), and Hong Kong (#18)—are known for their favorable tax regimes and sophisticated financial sectors. These jurisdictions attract vast flows of multinational corporate profits, which significantly inflate their GDP figures. However, this often distorts the true picture of domestic productivity and living standards. In Ireland's case, such distortions became so pronounced that the government shifted its focus from GDP to Gross National Income (GNI) as a more accurate reflection of economic activity tied to Irish residents. Oil-Fueled Economies Energy-rich nations also make a strong showing. Qatar (#10), the United Arab Emirates (#23), and Saudi Arabia (#43) leverage vast oil and gas revenues to drive public investment and infrastructure development. Norway (#6) represents a standout example in Europe, channeling its petroleum profits into one of the world's largest sovereign wealth funds—sustaining its high per capita income over the long term. Guyana (#41), a relative newcomer to the top 50, has surged up the rankings following major offshore oil discoveries and an uptick in production. The United States: Wealthy and Vast The United States ranks seventh globally in GDP per capita, an impressive position for a country with a population exceeding 330 million. Among nations with populations over 10 million, the U.S. leads by a significant margin, underlining its unmatched economic scale. Unlike many smaller high-income countries, the U.S. combines advanced technology sectors, robust consumer spending, and deep capital markets to sustain its economic strength. In contrast, other major economies such as Germany, Japan, the United Kingdom, and France fall lower in per capita terms, despite their overall economic heft. While GDP per capita is a powerful metric for broad comparisons, it must be viewed in context. Factors such as wealth distribution, economic structure, and long-term sustainability are essential to understanding the real standard of living in any given country.
Yahoo
6 days ago
- Business
- Yahoo
Alarming reason living standards could fall
The World Bank has sounded the alarm predicting global growth is on track for its weakest year since the global financial crisis and worst decade since the 1960s, but Australia could once again prove to be the lucky country. Analysis released this week by the World Bank predicts global growth will slow to 2.3 per cent in 2025, down from 2.8 per cent this time last year. This is a downgrade of 0.4 per cent since the start of the year. If the World Bank's forecasts come true, this would be the weakest period outside of the worldwide recessionary periods of the GFC from 2007-2009 and the Covid pandemic at the beginning of the decade. This follows similar downgrades to growth from the International Monetary Fund, which in April said global growth would slump from 3.3 to 2.8 per cent, while expecting Australia's GDP to drop to just 1.6 per cent. While the OECD also believes growth will slow from 3.3 per cent in 2024 to 2.9 per cent in both the 2025 and 2026 calendar year. The World Bank predicts this could impact everyday people for years to come. 'Without a swift course correction, the harm to living standards could be deep,' the report said. 'International discord – about trade, in particular – has up-ended many of the policy certainties that helped shrink extreme poverty and expand prosperity after the end of World War II. 'This year alone, our forecasts indicate the upheaval will slice nearly half a percentage point off the global GDP growth rate.' WHAT DOES IT MEAN FOR THE AUSTRALIAN ECONOMY? Australia is not immune to any slowdown in global growth, but it is unlikely to drag us into a recession. AMP chief economist Shane Oliver told NewsWire weaker global growth would affect the Australian economy in three main ways. 'Firstly, weaker global growth means less demand for Australia's exports in terms of volume,' he said. 'Secondly, it will potentially mean lower commodity prices which means lower national income. 'Thirdly, a hit to confidence. People in Australia hear what is going on in the rest of the world which means they are less likely to spend whether they are a consumer or a business.' Previously in times of economic stress, the Australian economy has been bailed out by its commodities as other nations stimulate their economy, but this time around Dr Oliver says 'it gets harder' as the world won't stimulate the economy as hard. 'The IMF, OECD and the World Bank have all revised down growth but it's not negative, so it's not a debilitating shock or a global recession in a technical sense,' he said. 'There's no need for the government or the RBA to come to the rescue like it did during the GFC or the pandemic.' Even though the Australian economy as a whole is tipped to slow, with Dr Oliver forecasting growth of around 1.6 per cent for the calendar year, there is a bright spot for homeowners. 'I think it is likely the Reserve Bank will likely cut interest rates more than they would've thought this year and why growth in Australia won't get above 2 per cent,' Dr Oliver said. WHY IS GROWTH SLOWING Without naming names, the World Bank is blaming the fallout from US President Donald Trump's trade policies. As part of his American first initiative, Mr Trump announced a raft of tariff policies across sectors and countries. On April 2 Mr Trump announced 'cheating' countries who ran a significant trade surplus with the United States were hit with 'reciprocal tariffs', while every country including Australia is being slapped with the 'base tariff' of 10 per cent. Through negotiations, these tariff rates have changed, but countries including China are facing total tariffs of around 55 per cent. While the entire 138-page report fails to mention US President Donald Trump's tariff policy, it makes clear trade tensions, global instability and a reversal of current trade policies are the main reasons why they are sounding the alarm. 'The forces behind the great economic miracle over the last 50 years which drove more than one billion people out of extreme poverty have swung into reverse,' it wrote. In order to correct the course, the World Bank says countries need to rebuild trade relations. 'The evidence is clear: economic co-operation is better than any of the alternatives – for all parties,' the World Bank's report said. 'Our analysis suggests that if today's trade disputes were resolved with agreements that halve tariffs relative to their levels in late May, 2025, global growth could be stronger by about 0.2 percentage point on average over the course of 2025 and 2026.' Sign in to access your portfolio
News.com.au
7 days ago
- Business
- News.com.au
‘Harm to living standards': World Bank's chilling economic warning
The World Bank has sounded the alarm predicting global growth is on track for its weakest year since the global financial crisis and worst decade since the 1960s, but Australia could once again prove to be the lucky country. Analysis released this week by the World Bank predicts global growth will slow to 2.3 per cent in 2025, down from 2.8 per cent this time last year. This is a downgrade of 0.4 per cent since the start of the year. If the World Bank's forecasts come true, this would be the weakest period outside of the worldwide recessionary periods of the GFC from 2007-2009 and the Covid pandemic at the beginning of the decade. This follows similar downgrades to growth from the International Monetary Fund, which in April said global growth would slump from 3.3 to 2.8 per cent, while expecting Australia's GDP to drop to just 1.6 per cent. While the OECD also believes growth will slow from 3.3 per cent in 2024 to 2.9 per cent in both the 2025 and 2026 calendar year. The World Bank predicts this could impact everyday people for years to come. 'Without a swift course correction, the harm to living standards could be deep,' the report said. 'International discord – about trade, in particular – has up-ended many of the policy certainties that helped shrink extreme poverty and expand prosperity after the end of World War II. 'This year alone, our forecasts indicate the upheaval will slice nearly half a percentage point off the global GDP growth rate.' WHAT DOES IT MEAN FOR THE AUSTRALIAN ECONOMY? Australia is not immune to any slowdown in global growth, but it is unlikely to drag us into a recession. AMP chief economist Shane Oliver told NewsWire weaker global growth would affect the Australian economy in three main ways. 'Firstly, weaker global growth means less demand for Australia's exports in terms of volume,' he said. 'Secondly, it will potentially mean lower commodity prices which means lower national income. 'Thirdly, a hit to confidence. People in Australia hear what is going on in the rest of the world which means they are less likely to spend whether they are a consumer or a business.' Previously in times of economic stress, the Australian economy has been bailed out by its commodities as other nations stimulate their economy, but this time around Dr Oliver says 'it gets harder' as the world won't stimulate the economy as hard. 'The IMF, OECD and the World Bank have all revised down growth but it's not negative, so it's not a debilitating shock or a global recession in a technical sense,' he said. 'There's no need for the government or the RBA to come to the rescue like it did during the GFC or the pandemic.' Even though the Australian economy as a whole is tipped to slow, with Dr Oliver forecasting growth of around 1.6 per cent for the calendar year, there is a bright spot for homeowners. 'I think it is likely the Reserve Bank will likely cut interest rates more than they would've thought this year and why growth in Australia won't get above 2 per cent,' Dr Oliver said. WHY IS GROWTH SLOWING Without naming names, the World Bank is blaming the fallout from US President Donald Trump's trade policies. As part of his American first initiative, Mr Trump announced a raft of tariff policies across sectors and countries. On April 2 Mr Trump announced 'cheating' countries who ran a significant trade surplus with the United States were hit with 'reciprocal tariffs', while every country including Australia is being slapped with the 'base tariff' of 10 per cent. Through negotiations, these tariff rates have changed, but countries including China are facing total tariffs of around 55 per cent. While the entire 138-page report fails to mention US President Donald Trump's tariff policy, it makes clear trade tensions, global instability and a reversal of current trade policies are the main reasons why they are sounding the alarm. 'The forces behind the great economic miracle over the last 50 years which drove more than one billion people out of extreme poverty have swung into reverse,' it wrote. In order to correct the course, the World Bank says countries need to rebuild trade relations. 'The evidence is clear: economic co-operation is better than any of the alternatives – for all parties,' the World Bank's report said. 'Our analysis suggests that if today's trade disputes were resolved with agreements that halve tariffs relative to their levels in late May, 2025, global growth could be stronger by about 0.2 percentage point on average over the course of 2025 and 2026.'
