Keir Starmer and Rachel Reeves failed to leave the British economy in a stronger position than they inherited, according to investment bank Panmure Liberum, which argued that the administration's preoccupation with "luxury beliefs" undermined its central mission of reviving the country's stagnant growth.

In a research note issued on Friday, Panmure Liberum — formed from the 2024 merger of Panmure Gordon and Liberum to create one of the UK's largest independent brokerages — said policy missteps on energy and housing by the former Prime Minister and Chancellor made it "difficult to conclude" that the UK economy had meaningfully improved in the two years following the general election.

"Progress in pockets of the economy have been stifled by new barriers to construction and employment leaving the UK, in our view, no better off than it was in July 2024," wrote chief economist Simon French. He added that "the new UK disease of prioritising luxury beliefs over hard-nosed competitiveness" overshadowed the pair's economic legacy.

The assessment stands in contrast to recent claims from both Starmer and Reeves that Britain's economic position had strengthened during their tenure. In a resignation speech defending his record, Starmer stated he had left "this country in better shape than I found it" and insisted the "economy is stronger."

Speaking at the Mansion House dinner last week, Reeves told City executives she had "restored economic credibility" to Britain and placed public finances on a more secure footing.

Setbacks on Housing and Energy

The outgoing administration had placed housebuilding and clean energy at the core of its strategy to reverse years of sluggish growth and stagnant living standards — a challenge that has frustrated successive UK governments since the 2008 financial crisis, with Britain persistently trailing G7 peers such as the United States, France, and Germany on productivity growth. A pledge to transform Britain into a "clean energy superpower" while cutting household energy bills by £300 per year formed a central plank of Labour's pre-election manifesto. The government also committed to constructing 1.5 million homes over the course of the parliament.

However, French argued that the Starmer government's decision to block new drilling in the North Sea oilfields had discouraged private investment and effectively curtailed a significant domestic energy source.

"There remains little chance of a revival in economic growth whilst this approach creates a wider chilling approach on the deployment of capital into energy assets and auctions lock in higher energy costs for a further generation," he wrote.

French noted that the last government had taken "a backwards step on private housing volumes as luxury beliefs swamp the positive rhetoric," though he acknowledged it had made "more encouraging progress" on accelerating key infrastructure projects.

During their time in office, the economy expanded at approximately 1.2 per cent annually, broadly consistent with the average growth rate since the country emerged from the 2008 financial crisis — a period during which the UK's annual GDP growth has averaged well below its pre-crisis trend of around 2.5 per cent. GDP per capita, which adjusts for population size, grew slightly faster than the post-crisis trend — partly attributed to Starmer's efforts to reduce immigration numbers.