Nigel Farage’s newfound fiscal prudence is welcome, if unproven

Two politicians tried to present themselves this week as the answer to Britain’s economic malaise. One was Nigel Farage, leader of the populist-right Reform UK party, whose previous economic plans were so unrealistic that they would, The Economist calculated, be more expensive than Liz Truss’s catastrophic mini-budget of 2022. The other was Rachel Reeves, the Labour chancellor, whose party was elected on a promise of bringing sense and competence, and which has struggled to supply much of either.

Both summoned the press to signal their U-turn. Mr Farage told his audience that the economy was in such straits that he could no longer promise to slash taxes. For a man whose pledges have included tax cuts worth an annual £100bn ($131bn), and by our calculations as much as £190bn (5% of GDP), that is a near-perfect reversal.

Ms Reeves hinted that she would raise income tax at her budget on November 26th. This is defensible, but is something her government has sworn it would not do (it also swore not to raise VAT or National Insurance contributions). “Each of us must do our bit,” she said—but she gave no indication of doing certain hard things herself, such as breaking the triple-lock, an expensive escalator for state pensions, which would offset the need to tax working people.

For once, Mr Farage seems to be reckoning with hard truths. “We are being mature, we are being sensible, and we are not over-promising,” he told the audience with his most mature and sensible-looking face. He still wants to cut taxes, but only when the economy is ready. In questions, he even said he did not rule out breaking the triple-lock. Realising that voters are fed up with politicians who keep breaking promises, he promised no more promises.

Ms Reeves, by contrast, is paying a heavy price for failing to do in opposition what Mr Farage is now doing. Instead, as power came within its grasp, Labour promised voters the impossible: jam for almost everyone and no pain for “ordinary working people”. It is an approach to public finances that has taken hold of the party. Only if growth had been unexpectedly strong, or if interest rates had tanked, could she have got away with it.

By contrast, Mr Farage’s change of tone is a welcome signal. There are still plenty of reasons to worry that a Reform government might damage Britain. But if the country is going to be run by populist right-wingers, then it is better to be run by populist right-wingers who are not spoiling for an unwinnable fight with the bond market.

Mr Farage has a long history of opportunism. If he wants voters to believe he is serious about his new role as Captain Sensible, he will now also strike through other daft economic ideas. These include threats by his deputy leader to tear up private contracts with renewable-energy suppliers and talk that Reform would erode the independence of the Bank of England and the Office for Budgetary Responsibility, a fiscal watchdog, as Donald Trump has tried with the Federal Reserve.

The lesson from this week is that Mr Farage is deadly serious about winning power. Asked to choose between fiscal credibility and fiscal populism, he has chosen credibility as the surer route to Downing Street. That shows something important about the electorate: Britons remember Ms Truss and her debacle. The fact that any leader who aspires to office must prove they will not repeat her mistakes says more about voters than about Reform. Given the state of the economy, that is something to be grateful for.■