The scale of Donald Trump’s victory in America should be taken as a serious challenge to Sir Keir Starmer’s Government not only on matters of diplomatic relations and tariffs, but on matters of core economic policy.
Mr Trump’s victory was rooted at least in part with widespread dissatisfaction across all segments of the electorate in the state of the US economy after four years of President Biden. Inflation had worked to erode the value of wages, while disposable incomes had grown strongly for the median American during Mr Trump’s previous presidency. When asked to choose their leader for the next four years, the electorate voted accordingly.
Handed a mandate to grow the economy, Mr Trump appears set to build upon his strategy from his first term in office. Making his signature Tax Cuts and Jobs Act permanent was at the heart of his campaign, and he has mused on further tax cuts to corporation and capital gains taxes, and to the size of the state, with Elon Musk tipped to lead a Department of Government Efficiency cutting waste and red tape.
Alongside these measures, the president elect appears set to unlock what he has called “the vast stores of liquid gold on America’s public land” by boosting fossil fuel production, and to pursue an agenda of energy abundance as the USA looks to capitalise on breakthroughs in artificial intelligence.
Mr Trump has previously commented that surging demand for data centres will mean that the USA is likely to “need twice the amount of electricity currently supplied for everything”, and alongside boosted oil and gas production he has also backed the use of small modular reactors.
In the words of David Bernhardt, Trump’s former Interior Secretary, the ambition is for “every manufacturing plant, every data center, every semiconductor facility” to “want to be built in America – because America will be the place where the cost of energy is lower than anywhere else on earth”.
It is a potentially potent mix. Nothing in this life is guaranteed to succeed, and it is possible that Mr Trump’s mercurial nature, plans to impose tariffs on imports, or the scale of potential deficits prove too great a headwind to overcome. But it is a coherent plan with a good chance of succeeding its goal of promoting growth.
In this, it stands in stark contrast to the strategy pursued by Sir Keir. For all the talk about growth in the lead up to the election, his record in office so far has been to impose one of the largest tax hikes in history, increase the burden of regulation on employers, and pursue a decarbonisation agenda that appears set to make our energy supply more expensive and less reliable. It would be to the benefit of this country and his party if he were to consider taking a leaf from Mr Trump’s book.