Rock, paper, scissors

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The Chancellor and Prime Minister seem to be increasingly fond of telling us that nothing will stand in the way of their ambition for growth. According to Reeves, “Growth trumps other things”, including the commitment to a net-zero economy. Leaving aside any questions about whether a commitment to net zero actually hinders growth in any event (there are reasonable arguments to be made that it can change the nature of economic growth rather than inhibit it, but that’s a subject for another time), the government’s own actions make it clear that there are some things which growth does not trump. The most obvious example concerns the UK’s relationship with the EU. One of the easiest things that a UK keen on economic growth could do would be to re-enter the customs union and single market. It's something which could be done without ‘betraying’ Brexit, given that prominent Brexiteers argued at the time that Brexit didn’t mean that we had to leave them in the first place. However, growth might trump net zero, but Brexit trumps growth. If only net zero could trump Brexit, we could play a sort of rock, paper, scissors game. A neat closed circle into which Starmer and Reeves could quietly disappear. But Starmer's much-vaunted 'reset' of relationships with the EU appears to be little more than a Labour version of cakeism, under which the EU gives the UK a better deal without the UK conceding anything.

It is being widely reported that Reeves will announce tomorrow that, in pursuit of that magical growth, the government will give the go-ahead to building a third runway at Heathrow. Or rather, they will give the go-ahead to starting a process which means that the third runway might be in place in about 10 years from now, assuming that the project goes rather more smoothly than any large UK infrastructure project in recent decades. In terms of her self-imposed and arbitrary fiscal rules, the operational ‘benefits’ from Heathrow expansion will start to flow only a decade hence, well outside the 5 year timescale of those rules, and only after at least two general elections have taken place. Since the planning phase is going to take a minimum of 2-3 years, there’s unlikely to be any sort of boost to the economy, even in terms of the relatively short-term construction phase, until after the current government has faced the electorate.

The argument for expansion is usually presented in terms of showing that the UK is open for business. It conjures up images of businessmen jetting off to far-flung places to sell their wares to grateful foreigners, or of rich foreigners jetting in to invest their fortunes in UK businesses (preferably without anyone enquiring too deeply about the source of those fortunes), and encourages us to believe that, if only there were an extra runway, more of both of those things would happen. It isn’t quite the reality though. Estimates of the proportion of business traffic passing through Heathrow vary. This one suggests it’s around a third of all passengers; other estimates put the figure as low as a fifth. Despite its carefully cultivated image, Heathrow is, first and foremost, an airport used for leisure travel. And many of the travellers come from elsewhere in the UK, not exclusively from the London area, even if that’s where the majority come from. There’s another aspect to that last part as well. Whilst it’s obviously true that an airport contributes to GDP in a variety of ways, including shops and restaurants as well as the jobs involved in processing passengers and planes, an airport which sucks in passengers from further afield than the local catchment area also concentrates GDP geographically around itself.

Like so much else of what the current government is doing, a decision to expand Heathrow looks largely performative. Taking – or, rather, being seen to take – tough decisions (a phrase which seems to be a euphemism for decisions which will upset as many potential Labour supporters as possible) has become an end in itself. The belief that doing so will somehow magically lead rich foreigners to pour their zillions into the UK is more an act of blind faith than anything else. But it’s not the sort of faith likely to survive contact with economic reality.