We need a serious debate on Britain’s economic problems, but are promised only trivia

Months earlier than seemed wise, the Prime Minister, Rishi Sunak, has pulled up stumps and called an election.

It scarcely seemed an auspicious start: as he solemnly announced his decision on the steps of Downing Street, the skies opened and he struggled to make himself heard over the din of Labour’s 1997 campaigning anthem blaring out from a nearby speaker.

“Things can only get wetter”, read The Telegraph’s headline the next day.

Not since Theresa May was handed a P45 by a protester during a party conference speech marred by bouts of coughing have the portents looked quite so ominous.

Yet for those interested in economic ideas, what’s most striking – and depressing – about the campaign battle lines now being drawn is how little either of the main parties have to offer on what really matters – how to get the country out of its economic funk and back onto a path of sustainable growth.

Instead, both Conservatives and Labour hug a suffocating consensus on tax and spend that substantially ignores the deep structural reforms the economy so badly needs.

On both sides of the fence, the message is instead tailored to give the least possible offence in the key marginals that will decide the election’s outcome. It’s a deeply uninspiring show of status quo politics.

Business leaders tell me that after the chaos of the last eight years, they crave policy certainty above all else. Yet looking at the incumbents, they see only a ruinously divided party split almost beyond repair into multiple warring factions.

Sunak has thus far been unable to unite this seething mass of dissent. Even if by some miracle he does manage to defy the polls and secure a renewed majority, there’s little reason to believe he can restore discipline.

It feels like John Major in 1997 all over again, but without the charismatic and pro-business figure of New Labour’s Tony Blair to provide a reassuring alternative.

Labour’s offer this time around is as anodyne and unconvincing as Sir Keir Starmer himself – a largely vacuous and unknown policy agenda hiding behind the tired old political promise of “change”.

Beyond a crackdown on middle-class tax perks and a ramping up of workers’ rights, it’s hard to see anything that might notably be different under a Labour government.

This threatened assault on higher-income earners, by the way, might in itself give disillusioned Tory voters pause for thought. Labour policies we know about include VAT on school fees and the reimposition of the lifetime limit on pensions saving.

Other initiatives might include an attack on the tax-free lump sum from pension savings, making pension pots subject to inheritance tax, introducing capital gains tax on transferred assets after the death of a spouse, and increased income taxes via the back door of a social care levy.

Labour will need to scrape the bottom of the barrel in staying within the fiscal constraints that Rachel Reeves, the shadow chancellor, has imposed on herself to keep the markets sweet.

There are many such anomalies in the tax system that the Treasury would be only too happy to take aim at given the chance.

Yet sadly for Sunak, Project Fear won’t be enough. The gap in the polls is too wide to be closed by scaremongering alone. “Better the devil you don’t know than the one you do” is for now the prevailing mentality.

As it is, the UK economy is in something of a sweet spot, helping to explain why Sunak has gone to the polls early, rather than risking events moving further against him by waiting until the autumn.

First-quarter growth was much better than expected, and inflation has returned to a semblance of normality, allowing the Prime Minister to claim that his plan is indeed working.

Yet nobody expects the first quarter’s 2.4pc rate of annualised growth to be maintained. Long-running deficiencies in competitiveness and productivity suggest the ongoing rate of growth will be much slower, and barely enough on present trends to keep public debt-to-GDP stable.

One more economic shock similar in size to the pandemic or the energy price spike, and it would bust the bank. The need for root-and-branch economic reform could scarcely be more urgent.

Yet beyond Labour’s promised reforms to the planning system – which I’ll believe only when I see them – neither of the two main political parties offer long-run solutions.

At root, Britain’s problem is that as an economy we consume too much but, with one of the lowest rates of gross capital formation in the OECD, invest too little, living well beyond our means with scant regard for the future.

At some stage, it’s going to rebound badly; it’s a wonder to me that it hasn’t already done so. Each successive crisis is met with another lorry load of debt, with no serious attempt made to reduce the debt burden during intervening periods of relative calm.

Instead, the fiscal rules are deliberately designed to put the problem off to another day, with vague commitments to future spending cuts that everyone knows will never be met.

Neither party offers credible solutions to the rising tide of debt, welfarism and public sector intrusion. Instead, we keep muddling along, hoping like Mr Micawber that something will turn up.

Eventually the markets will say enough; the collision with reality threatens to be nasty, brutish and far from short.

I don’t pretend to have the answers. None I can think of would be popular with voters. To address the imbalances, the Government might, for instance, significantly increase VAT or broaden its scope, with the proceeds devoted to steep cuts in corporation tax, or to making today’s super deductions regime permanent.

The effect would be simultaneously to reduce consumption but incentivise savings and investment. Yet even if done incrementally over time, any such policy would be political suicide. No one dares go there.

Political division finds expression instead in what psychoanalysts call “the narcissism of small differences”, where wilful avoidance of matters of importance creates space for vicious, ad hominem attack and culture-war irrelevance.

All successful political parties are coalitions of often quite diverse opinion and economic interest. Given long enough in power, they will eventually and inevitably tear themselves apart under the weight of their own contradictions.

That’s what’s happened to the Tories, and it’s why voters have turned against them. But don’t make the mistake of believing that Labour offers a better alternative. Beneath the pretence of Blairite moderation lies an equally divided party with no real sense of how to address the pressing challenges of our time.

Labour complains of one of the worst economic inheritances in living memory. If that’s true, then abandon all hope. I can see no evidence of the policies needed to turn things around. Let the shadow-boxing begin.