Reeves endorses ‘Bidenomics’ as a Labor government policy

Shadow chancellor Rachel Reeves will on Wednesday embrace “Bidenomics” as a template for a Labor government, saying Britain is in danger of being “left on the sidelines” unless it accepts global economic policy changes.

In his speech in Washington, Reeves will support a “global deal” on the economy, involving a more active world, strong industrial policy, “chilling” and chains away from China and higher labor standards.

But Reeves told the Financial Times that his new “securonomics” policy needs to be implemented “The rock of fiscal responsibility” and that Labour’s economic policy – which calls for a £28bn annual green investment – is compatible with its own economic policy.

The “green growth plan” is Labor’s version of President Joe Biden’s $369bn Inflation Reduction Act – a major program of support and tax breaks – and Reeves said this will be at the heart of “modern industrial processes”.

But Reeves has also pledged to cut public debt as a share of gross domestic product over five years, meaning he could be forced to cut the five-year $140bn green program if the government’s economy shrinks. He said that the laws are very important, adding: “Financial control is very important.”

Reeves said it was important to control the government’s day-to-day spending to make room for “smart investment” in new industries and green energy technology and to strengthen governance. “Your friends will tell you that Rachel knows how to say ‘No’,” he added.

Reeves’ selection of the Washington Peterson Institute to launch his new financial plan – The New British Way of Business – is a deliberate attempt to align the Labor government with the Biden administration.

It is said that Britain has become less important in Washington in recent years and that Conservative opposition to Biden’s economic model – energy secretary Grant Shapps in January warned that US green money could lead to “dangerous” security risks – has exacerbated this.

“The danger is to implement this and find that all the money goes overseas,” he said, arguing that the government should work together with business to develop technology, build strong supply chains and train workers for the new economy.

In contrast, UK Prime Minister Rishi Sunak has rejected corporate policies, instead prioritizing large sectors including the life sciences and manufacturing industries.

Reeves said he was “encouraged” by the recent speech by Janet Yellensecretary of the US Treasury, and Jake Sullivan, Biden’s national security adviser. He also reviewed government incentives in countries such as Germany and Australia.

The three-day trip to the US is an important moment for Reeves: trying to present himself to the world and at home as a minister-in-waiting. At meetings in New York and Washington he repeatedly said that under Labor Britain “will be open for business”.

Reeves’ tour took him to the New York Stock Exchange – the symbolic heart of global capitalism – where he posed for pictures under the exchange bell, cracking jokes that Jeremy Corbyn, the former left-wing Labor leader, would make.

But he criticized the rise of China and the vulnerability of the West to shocks as Covid and the war in Ukraine changed the rules of the game. This is a “once in a generation event,” he said.

Speaking in New York before heading to Washington, Reeves told the FT: “The way globalization and trade has been done is changing.” The new economic model was “more based on cooperation and building on economic security and resilience”.

Over coffee at Hudson Yards in Manhattan, he said that there were real problems in Britain that needed to be solved, confirming that Labor would change the planning rules to allow the construction of more buildings and green projects such as wind turbines.

Reeves also sees the planned 2025 review of Britain’s “disruptive” Brexit trade deal with the EU as an important moment to deal with conflicts in areas such as food and to recognize technical qualifications, but he denied that the UK would return to the single market or bloc traditions. agreement.

Although the Labor government will get more money, Reeves joked that he has no plans to impose a “special tax on FT readers” or target the wealthier than previously announced. The party would be over tax breaks are enjoyed by private businesses and public schools, and eliminate income tax barriers based on non-domestic status.

“Taxes are the highest they’ve been in 70 years,” he said. “I have no plans to be a major tax-raising leader.” Reeves said the alternative would be to encourage economic growth and had no “ideas” for equal income taxes, or tax cuts for pensions for high earners.

Business tax reform focuses on business rates – a big issue on Britain’s high streets – and incentives to encourage companies to invest, rather than changing corporate tax rates, said Reeves. Tax cuts for “working people” were necessary, he added.

The 44-year-old government-educated Reeves is hoping to become Britain’s first female chancellor and her entourage is all-female. A former economist at the Bank of England, she was posted to the UK embassy in Washington in the early 2000s, where she met Nick Joicey, her future husband and civil servant.

Reeves has been targeted by Labor activists for being a “Tory” but said the animosity has subsided as Corbyn supporters leave the party. Proximity to power also helps, he added. “Work is in a place unrecognizable from where we were three years ago.”

Reeves came under fire from social media this week for deleting a tweet in which he was filmed traveling to the US on a BA business class ticket, drawing attention to what he called a “champagne socialist”, but he defended his long-term plan. -haul journey as shadow chancellor.

The trip, which included a dinner with New York journalists, business and political leaders at the Harvard Club, was supported by a “long-term donor”.

“I have a very busy schedule when I’m here,” he said. “I think in order to do the work I want to do, I think it’s important to ask a donor to pay for the trip.”

While in Washington, Reeves is scheduled to meet with members of Biden’s White House finance team and hold talks with the US Treasury and the IMF.

Reeves, the son of a chess prodigy, said Labor had a good chance of winning the next election but his hopes of becoming chancellor depended on the party’s performance next year.

“It’s like we’re going 30,” he added. “But we’re playing an opponent who usually beats us.”

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