The tinderbox trauma in the Middle East is a chilling display of the limits to any government’s financial power, anywhere in the world. Just as Chancellor Rachel Reeves finally seems to be getting her story straight, the knock-on effects of the Israeli/Iranian conflict could just as easily skew it. As our Political Correspondent Peter Spencer reports, the outcome could hardly be more uncertain.
Of course it could end up as a tit-for-tat exchange, terrifying at the time, but quickly fizzling out. This has happened before, plenty of times.
Or it could blow up, literally in this case, in everyone’s face. The worst-case scenario is that it escalates into a wider conflict, not just hideous for those involved, but also a deep-seated threat to the world economy.
It could choke oil production and distribution, thus causing a globally destabilising energy price spike. A nastily expensive echo of what happened after Putin’s barbarous invasion of Ukraine.
All this just as we’re digesting what Ms Reeves had in mind for us in her Spending Review on Wednesday. It was a biggie in its own right, much more so than a mere common or garden Budget, because it set out how she was going to either splash (or hold back) the cash almost up to the next election.
Goes without saying that the likes of the Daily Telegraph, aka Torygraph, decided it was totally rubbish. It’s their job while their side’s in opposition. Far more interesting, and sometimes surprising, is the broader swathe of analysis from less partisan sources.
Here there’s a sense that, after a by almost all accounts pretty cack-handed first year in office, Labour does seem to be finding its feet. And figuring out its message. The increase in defence spending was no more than bowing to the inevitable, given the menacing alignment between the White House and the Kremlin. And the Chancellor’s big boost to the health service is, while welcome, arguably long overdue.
But what’s striking is the way she’s chosen to funnel funding direct from Whitehall into enormous infrastructure and social and affordable housing projects well away from the prosperous south-east. She signalled that this was sort of the plan in her tax raising budget last year.
But the way she’s not letting town halls in on the act, and maybe diverting the money elsewhere, makes it plausible. And it goes in tandem with her huge, and job-creating, nuclear power plant building scheme. Plus new transport links in the West Midlands and the North.
The government’s talk of a ‘decade of renewal’ might sound like spin, but after looking for so long like she’s just swallowed a wasp, Ms Reeves does seem to be discovering the lost art of actually smiling. Both she and Keir Starmer also give the impression of having figured out who they’re trying to talk to, and what they’re trying to tell them. Albeit via a bigger state, a better deal for everyone.
But, and this is a huge but, alongside the winners there’s an awful lot of losers. Most government departments are facing cuts to their allocations, many of which will hurt badly.
Top cops have been particularly noisy, warning of real-life and disturbing choices about which baddies they’ll be able to collar and which are likely to get off scot-free. The sting in that particular tail is likely to come in the form of big hikes in council tax to make up the money shortfall.
Just for starters, that. Paul Johnson, the respected and dispassionate head of the Institute for Fiscal Studies, has a way with words as well as a handle on how to work a calculator. And his verdict, that Ms Reeves is no more than a ‘gnat’s whisker’ from having to raise overall taxation later this year, certainly made headlines.
It also chimed with the view of a wide spectrum of economists, who point to the wobbly tightrope she’s walking in her attempts to keep the books balanced.
Which is where the volatility of the world as we’d rather we didn’t know it comes into play. Notably the geopolitical upsets that the hostilities between Israel and Iran could cause. Oil prices went up within hours of the initial attack. Meaning it’s quite possible motorists here in UK will be digging deeper in their pockets to fill their tanks in a fortnight or so.
More troubling for the Treasury is that more expensive oil can push up the cost of lots of things. Which in their turn could lead to higher inflation, fewer interest rate cuts and more expensive borrowing.
What’s that about a gnat’s whisker? You get the idea. The rule of thumb with all big set piece announcements from Chancellors is that even if they play well on the day they tend not to by the weekend, when the experts have picked them apart.
Ironically, the conflict that’s threatening Ms Reeves’ plans is also driving them off the front pages. She can but hope that the earlier thumbs ups she was getting will remain the story.
Touch and go, mind. Something else that’s on a knife edge, excuse language, is the new law designed to give terminally ill people the right to end their own lives. The issue’s as fraught and complex as it is far-reaching in its implications. Which is why Friday’s debate on the subject in the commons was, like others leading up to it, so highly charged.
Although it seemed at first to be pretty certain to become law there’s been a lot of soul-searching and a lot of head-scratching over whether the bill in its current form is the way forward. There’ll be more discussion and voting in coming days before we know whether MPs will or won’t sign it off.
If they do then this single act will earn this government a place in the history books. Same as earlier changes covering divorce, homosexuality and that nasty form of assisted dying, the death penalty.
An altogether cheerier but horribly tantalising thought for Ms Reeves comes in the form of emerging evidence that the richest wreck in history has finally been identified. When the Royal Navy fired a salvo at a Spanish battleship three centuries ago it went down with enough money in the hold to finance a war.
Problem was, no one could find the wretched thing. A possible candidate was identified by the Colombian navy ten years ago, but only now thanks to new imaging technology has it been possible to check out the coins it was carrying.
These, alongside other bits and bobs, do seem to confirm that this really is the one. If so, and they get it all to the surface, there’ll be an almighty bunfight between Colombia, Spain, indigenous groups and the salvage company over who gets first dibs.
Such a shame for poor Rachel that our chaps didn’t have the good sense to tow the treasure ship into British waters before sinking it.
After all, a stash worth twenty billion dollars on board would have bailed her out ever so nicely.
Watch Peter’s report at peterspencer.org
Peter Spencer has 40 years experience as a Political Correspondent in Westminster, working with London Broadcasting and Sky News. For more of his fascinating musings on the turbulent political landscape, follow him on Facebook & Twitter.