Labour Urged to Rethink Growth Strategy as Top Economist Warns of Far-Right Surge

Published: 16 September ‘2025. The English Chronicle Desk

Labour faces an urgent need to overhaul its approach to economic growth if it is to prevent the continued rise of far-right populism, a leading economist has warned. Andy Haldane, former chief economist of the Bank of England, cautioned that the party’s current policies are failing to address the economic and social realities of communities that feel neglected, leaving them vulnerable to extremist narratives.

Speaking in the wake of a summer marked by political unrest, Haldane said the “single most important thing” the Keir Starmer government could do ahead of the autumn budget was to develop a growth strategy that resonates with ordinary people rather than remaining abstractly focused on national indicators and macroeconomic targets. “We need a story of growth that isn’t aridly told from 30,000 feet, but speaks to the lived experience and to the prospects and opportunities of workers in the everyday economy,” Haldane said.

He stressed that voters’ sense of being invested in their own communities is central to curbing disaffection with the incumbent government. “A sense of people progressing in their lives, of being invested in, is the absolute foundation stone of curbing disaffection with the incumbent parties – and therefore doing something to turn the tide of populism,” he explained. Haldane’s remarks underline a growing concern among policymakers that economic growth in Britain has been unevenly distributed, leaving large segments of the population feeling ignored or excluded from prosperity.

In practical terms, Haldane called for the Labour government to devolve greater powers to regional mayors, with a focus on investment in skills, training, transport infrastructure, and affordable housing. He argued that addressing these structural deficiencies was essential for revitalising left-behind areas and giving residents a tangible sense of progress. “It is self-evident that a change in course is required,” he said, highlighting the urgency of targeted intervention to restore confidence in local economies.

Recent political polling reflects the consequences of perceived neglect in these communities. No governing party in Britain since 1983 has experienced such a steep drop in its popularity during its first year in office. Meanwhile, support for Nigel Farage’s populist Reform UK has surged, attracting backing from more than a quarter of voters. Earlier this year, Haldane described Farage as the closest Britain had to a “tribune for the working class,” warning Labour that without decisive investment in struggling areas, disaffected voters would continue to gravitate toward populist alternatives.

Starmer has consistently condemned far-right violence, asserting that Britain “will never surrender” to protesters who exploit national symbols, such as the English flag, as a cover for intimidation. Recent events, including marches in central London, illustrate the scale of unrest and the potential for disillusioned voters to gravitate toward extremist factions when they perceive mainstream parties as unresponsive to their needs.

Haldane’s comments coincided with the release of a report for Claire Ward, Labour’s directly elected mayor of the East Midlands, which outlines concrete steps for boosting regional economic performance. Ward emphasised that public frustration over a lack of tangible change remains high, with many residents “simply fed up with not getting change” a year into Labour’s administration. She argued that empowering local authorities to act decisively could help reverse public dissatisfaction. “They are fed up with not seeing delivery on the ground, of not having opportunity to access skills, good jobs, and the public services they want to see. And I understand that. It is the reason why government and ourselves in the region have to go and make sure we are delivering as quickly as possible,” Ward said.

The report, produced by the Inclusive Growth Commission and chaired by Haldane in collaboration with the Royal Society for Arts thinktank, sets out ten key recommendations for Derby, Nottingham, and surrounding areas. Among its findings, the study concludes that closing the investment gap between the East Midlands and other parts of the UK could generate up to £200 billion in economic benefits by 2035. The report emphasises the need for a coordinated strategy focused on social connections, skills development, transport links, and targeted investment in new industrial sites.

A central feature of the report is the concept of an “opportunity escalator,” designed to provide residents with clear pathways to higher-paying employment. Analysis shows that the top 18 new industrial sites in the East Midlands could boost wages for 30,000 low-income workers by approximately £6,700 annually. Haldane highlighted the broader implications of these findings, noting that meaningful investment in human capital is essential for countering political extremism and fostering social cohesion.

Haldane criticised Labour for its limited progress in skills investment during its first year in government. In the recent cabinet reshuffle following Angela Rayner’s exit, Pat McFadden, the Secretary of State for Work and Pensions, was tasked with overhauling the skills infrastructure. Haldane argued that reform must extend from early education through adulthood, ensuring that all residents feel included in the economy and are not treated as “afterthoughts.” Without such measures, he warned, dissatisfaction is likely to persist, further fueling populist movements.

The economic argument for change is clear. By investing strategically in skills, transport, housing, and local infrastructure, the government can stimulate regional productivity, raise incomes, and enhance the perception that political institutions are responsive to everyday needs. Conversely, failure to act risks reinforcing a narrative of neglect that populist parties exploit. Haldane emphasised that growth strategies should not only focus on macroeconomic indicators but also on the lived experiences of citizens, particularly in areas historically overlooked in national policy decisions.

The East Midlands report also highlights the role of local leadership in translating investment into tangible outcomes. Ward emphasised that local authorities have the capacity to implement targeted initiatives, but that national support is crucial to maximise impact. “We have an opportunity to do that at local level in the region and I expect government to lean into it and give us the support to do so. And that will help people,” she said, underscoring the symbiotic relationship between central and local government in fostering inclusive growth.

Haldane’s analysis aligns with broader trends observed across developed economies, where regions that have been economically marginalized often exhibit higher susceptibility to extremist politics. By focusing on local infrastructure, skills training, and affordable housing, the Labour government can address the structural inequalities that fuel political disaffection. Such policies, he argued, are not only socially responsible but also economically prudent, unlocking latent productivity and long-term fiscal gains.

In conclusion, the warnings from Andy Haldane and the recommendations from the Inclusive Growth Commission provide a roadmap for Labour to counter the rising influence of far-right populism. By rethinking economic strategy to prioritise investment in left-behind communities, empowering regional authorities, and delivering tangible improvements in skills, transport, and housing, the government can restore trust in public institutions and reduce the appeal of extremist narratives. Failure to act risks leaving large segments of the population disengaged and politically volatile, potentially reshaping Britain’s political landscape in ways that could reverberate for decades.

As the autumn budget approaches, the challenge for Starmer’s administration is to translate these insights into actionable policy, ensuring that economic growth is not merely abstract but inclusive, visible, and felt in the lives of citizens across the nation. The stakes are high, with public confidence, electoral stability, and the very cohesion of the democratic process hanging in the balance.