Labour Faces Economic Challenges and Declining Popularity in 2025
Labour's polling support has sharply declined from about 34% to 18% since the 2024 general election. The economy in 2025 shows modest momentum, with growth just over 1% in the past year — not a disaster but weaker than needed. Unemployment stands at 5.1%, roughly 1 percentage point higher than when Labour took power in July 2024, although wage growth has outpaced inflation for those in work.
Despite these economic indicators, Labour remains deeply unpopular. Keir Starmer is described as the most unpopular prime minister on record, with approval ratings worse than those of James Callaghan and Gordon Brown. Reasons for Labour's unpopularity include real-world hardships for many citizens, decades of flatlining living standards, lack of a clear plan, and issues beyond economics such as immigration and asylum.
Looking ahead to 2026, any economic improvement may not guarantee a reassessment of Labour by voters. Potential policy errors by the Bank of England and Treasury threaten to drive sentiment even lower. In 2024, Chancellor Reeves raised employers’ national insurance contributions, increasing the cost of hiring. Meanwhile, the Bank of England's rate cut from 4% to 3.75% has been cited as insufficient action, considered too little, too late.
By the end of 2025, business confidence remains weak, and high street spending fell in October and November, indicating persistent economic distress ahead of elections that may not occur until as late as summer 2029.
