Lib-lab pact would spell disaster for the economy

Wins for Sir Ed Davey this month revived talk of a hung parliament in 2024 – but the party is now packed full of zealous nimbys

T‘A glance at Lib-dem campaign literature indicates opposition to building’

hey have broken through the blue wall. They have hit their highest share of the vote in years. And they have re-established a solid base in local government. Nearly a decade after their catastrophic 2015 general election result, it looks like the Liberal Democrats are back.

Based on last week’s results, they already have enough votes to revive talk of a hung parliament, and a possible Lib-lab coalition.

Here’s the problem, however. The Lib Dems today have few similarities to the centrist party Sir Nick Clegg led into the coalition in 2010. In the intervening period they have displayed an extreme nimbyism. They are determined to make the UK a world leader on net zero no matter how much it damages the economy.

And they would reignite the Brexit wars at precisely the moment when we need to work out how to prosper outside of the EU.

The British economy is in deep trouble already under this Conservative Government, but that doesn’t mean that Sir Ed Davey’s party couldn’t make it even worse.

The local elections were, in the words of one Tory MP, a “terrible night” for the Conservative Party. This came as little surprise to many. But the strong showing of the Lib Dems across once-solidly blue heartlands of the Home Counties was less expected. An analysis by Prof Sir John Curtice found that, on Thursday’s showing, Labour would fall a little short of a majority. With potentially dozens of seats, the Lib Dems could easily form a working coalition.

It is true that we cannot read too much into local election outcomes. When voters go to the polls in 18 months’ time, they will do so in far greater numbers, with perhaps different intentions. Yet neither party is fully ruling out a Lib-lab pact at some point in 2024. Both sides have begun dropping hints that they could be open to working together in government.

Setting aside the implications for devolution, Brexit or our voting system, this could bring disastrous consequences for the British economy. Already, we are set for the highest tax burden in 70 years. Companies are making noises about leaving if corporate taxes are not reduced. Productivity has been stagnant for so long that politicians seem to accept it as an immutable characteristic of our economy. Inflation remains stubbornly above 10pc. Living standards are falling at the fastest rate in two generations, and growth is struggling to top 1pc a year.

Many voters will find themselves wondering how much worse the situation can get. But a Lib-lab coalition would surely accelerate our decline. For a start, the party appears to have embraced nimbyism with such zeal that Michael Gove is beginning to look like Bob the Builder.

A brief glance at local campaigning literature indicated firm opposition towards construction. Often working alongside a Green Party that favours immigration and rent controls but rejects housebuilding, the Lib Dems have exploited opposition to new developments across the suburbs where we need new homes.

Britain needs leaders bold enough to admit that if we keep up current rates of immigration, we need to build more, rather than ones who pretend they can have their cake and eat it, too. Labour in office might be willing to take a more realistic approach. In coalition with the Lib Dems, who have invested so much at the local level, they may find this impossible.

And the Lib Dems could pull Labour towards a more fanatical stance on climate change. While Clegg’s objection to new nuclear plants was seemingly grounded in concerns over how long they would take to build, more recently the party has claimed there is “no environmental case” for them. The Lib Dems are firmly opposed to fracking, even as we emerge from one energy crisis and could soon lurch into the next.

And they are in the vanguard of low-traffic zones, congestion charges and 15-minute cities, despite concerns from small businesses that such policies will turn high streets into ghost towns. Ed Miliband’s climate change and net-zero ministry would sacrifice many things at the altar of decarbonisation, but his ambitions could grow dramatically with Lib Dem juniors by his side.

Lastly, we would be plunged straight back into the Brexit wars. The Lib Dems appear unable to make peace with our departure from the EU. A minimum demand for any coalition with Labour could be negotiating a closer relationship with the bloc, greater regulatory alignment, and perhaps even a promise of a second referendum.

But would a new deal with the EU be any better than the one we’ve spent seven years thrashing out? And what of trade deals including, for instance, our membership of the Comprehensive and Progressive Agreement for Trans-pacific Partnership?

It’s possible the resurgence of the Lib Dems is already harming our economy. Conservative backbenchers have grown so nervous of their rivals’ successes campaigning against building projects that they are refusing to support new investment in houses or energy supplies.

And with the Government already adopting so many Left-wing ideas, from higher taxes to more spending to tougher regulation, their opponents are becoming more and more extreme to try to outflank them.

The blunt truth is this. A government led by Sir Keir Starmer could see further expansion of the state, stifling innovation and productivity. One in coalition with the Lib Dems could be far worse – and would plunge business into total despair.