The key is returning to economic growth. The situation reminds me of my time in Ottawa with the early Chretien Liberals after the 1993 election, when we happily flooded into the ministerial offices intent on turning on the spending taps and making the country a better place the very next day. Once we looked at the books, there was a ‘that cannot be right, holy fuck’ moment, and it gradually became clear that in fact we were there to administer the most draconian austerity program the country had ever seen. For two years, people around Finance and some of PMO were despised, even and especially by other Liberals who saw it all as a betrayal. It was not until year 3 that the Government could actually commit resources to other priorities, but we were in surplus by the next election.
The comparison only goes so far though, and the differences are worth thinking about.
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Our Tories were not your Tories. Partisans will tell you otherwise, but when the Tories came to power in 1984, the books were a mess. Canada was spending more on programs than it was collecting in taxes, so we were borrowing to pay interest and then some. By 1993, they had at least produced a surplus against program spending, though we were still borrowing to pay interest. By contrast, your Tories have made the situation worse year over year for five years…and then the pandemic hit.
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Even though we are all of course prescient geniuses who knew the timing would work out perfectly…we were lucky. The 90s turnaround simply would not have happened without a massive increase in trade with the US (courtesy of the Tories we all hated, natch), and that was due in large measure to very favourable macroeconomic conditions there. We improved our trading relationship with our largest trading partner, which happened to hit a sustained boom right about then. By contrast, the UK (/checks notes) incinerated exactly the kind of open trading relationship that was critical with (/checks notes again) your largest trading partner, which is currently facing macroeconomic challenges.
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As fucked as we were in 1993, we actually had more wiggle room than the UK right now. Tory cuts to spending were not as deep as we all complained they were ( so we cut 'em), and there was about 5% less of the economy already in government hands. The fact that the UK now has about 50% of the economy in government hands yet so many services now seem to be at barebones levels is staggering. From the top level of the government down, it has to produce despair. If you take more resources from the private sector, you squeeze growth. If you take resources from the public sector, well, another hospital ER has a leaky roof.
So, given that it took from 1994 (1993 was the year given over to the denial-anger-bargaining-depression cycle), and 1996 was the first year where there was anything but cuts - all in an environment that was more favourable in hindsight than it felt at the time - I think Starmer’s Labour will do very well to actually see any ability to do what they want in this election cycle. There is a very good chance they will end up doing all the hard and necessary work, and then get punished for it. Some new spendthrift from the right schools will come in for the Tories, and get to look brilliant for another cycle before the shine wears off.
That is a damned depressing place for a government to be - I could only hack it until early 1996.
