Kier Starmer has a mandate but not a margin for error

Keir Starmer’s Labour Party has stormed to power with a historic majority. But beneath the surface of this landslide victory lies a deeper, more uncomfortable truth: this wasn’t so much a triumph for Labour as it was a rejection of the Conservatives. That distinction matters, because it means Starmer must now prove his party deserves to govern, not just that the Tories deserved to lose.

The 2024 general election was defined by frustration. Years of economic stagnation, inflationary pressure, and scandal had pushed the Conservatives to the edge. When the moment came, voters turned away decisively. But while Labour won a clear parliamentary mandate, it inherited a public mood marked by cynicism, economic anxiety, and a hunger for immediate change. Starmer begins his premiership with political capital — but little public patience.

From the outset, Starmer’s honeymoon period has been unusually short. The two-child benefit cap — a policy Labour chose to maintain — sparked a rebellion from backbench MPs, most notably Zarah Sultana, who is reportedly exploring the creation of a new left-wing movement alongside Jeremy Corbyn. This highlights the pressure Labour faces not just from opposition parties, but from within its own ranks.

Yet the more pressing challenge comes from outside Westminster: the sense among many voters that, since Labour took office, nothing has really improved. The government has yet to deliver noticeable gains in living standards, and several early policy choices, including cuts to disability benefits and the scrapping of the Winter Fuel Allowance, have caused disquiet. These decisions have opened the door for the Reform Party, led by Nigel Farage, to further position itself as the voice of those who feel economically and politically abandoned.

The economic backdrop is sobering. Growth remains stagnant, productivity lags, and inflation, while cooling, has left lasting scars on consumer sentiment. In this environment, Labour’s promise to “kickstart growth” is already being tested. So far, results have been underwhelming.

The question now is: what can Starmer realistically do?

One answer lies in low-cost, high-impact reforms. Planning reform, long seen as politically toxic, may now be politically necessary. The UK’s housing crisis is a structural drag on growth and a major driver of generational inequality. Unlocking new development could help relieve pressure on renters and first-time buyers, stimulate construction, and signal economic dynamism, all without requiring large-scale fiscal spending.

Another option is to prioritise market confidence. Investors remain cautious about the UK’s long-term direction. By demonstrating fiscal discipline, policy consistency, and institutional competence, Labour could begin to reverse years of scepticism. This would not only boost capital inflows but also lay the groundwork for sustained growth.

But there's a strategic dilemma here. Starmer must balance economic credibility with the political expectations of his broad electoral coalition, from centrist swing voters to traditional Labour heartlands. So far, his leadership has leaned heavily on caution. Yet caution alone won’t deliver growth, nor will it satisfy a restless electorate.

The rise of Reform, now polling in double digits, is a warning sign. Populist sentiment is being fuelled not just by cultural issues, but by real economic frustration. If Labour fails to offer a compelling alternative, it risks ceding ground to movements that promise radical, if unrealistic, solutions.

Ultimately, Starmer’s challenge is this: he has five years to prove that Labour can govern with competence, restore economic momentum, and rebuild trust. The size of his majority gives him room to act boldly. The mood of the country suggests he may not get a second chance if he doesn’t.

In politics, as in markets, timing is everything. And for Keir Starmer, the clock is already ticking.