Trump’s superpower could be the key to Rachel Reeves’s success

In the last few days, there has been a change of tone. Suddenly, Sir Keir Starmer and his colleagues are talking about building infrastructure projects and removing the obstacles in their path. Airport expansion, nuclear power stations and new highways are determinedly on; nimbyism and “excessive” legal challenges are off. Simultaneously, Rachel Reeves is to water down her non-dom tax reforms.

It’s a marked shift. Ever since Reeves’s first Budget, which caused howls of protest among the business community, she has refused to relent. That Budget, too, contained precious little mention of major public construction schemes that would galvanise the economy. Instead, it was all about cutting and scrimping.

Partly, it could have something to do with Reeves’s presence at Davos. She’s been at the World Economic Forum, trying to impress upon international financiers and business leaders that Starmer’s government is pro-commerce, that Britain very much desires their investment. Is there another influence behind the switch?

In the same week, Donald Trump was inaugurated as US president. At the formal ceremony, given central billing, were the “tech bros”, the bosses of the mightiest US digital corporations. It was an arresting sight, witnessing Elon Musk, Mark Zuckerberg, Tim Cook, Sundar Pinchai and Jeff Bezos all together, the kings of Tesla, Meta, Apple, Google and Amazon respectively, sitting at the front, with Trump’s new cabinet relegated behind. As a statement of American business muscle, of world-conquering power and intent, it took some beating.

What it signified was that here was a president who was at one with the corporate titans, he was on their side and with them, it followed, the rest of business. Trump, of course, is himself an entrepreneur. It didn’t go unnoticed that his first stop after landing at Washington from his country club in Florida was to attend a fireworks display at his golf course outside the capital – even as he was about to take office there was still time for a spot of marketing.

His address, too, was focused on promoting business, on firing the US economy. Make no mistake, was the message, this is a president who really will brook no opposition to the creation of wealth and the boosting of profits.

The contrast at that moment between Washington and London could not have been more pointed. While Trump was hugging America’s capitalist icons, Starmer was withstanding his own onslaught from their British equivalents. Over there the business community, the markets, were buzzing with newfound optimism and confidence; here, there were hisses of anger and despond. Their chiefs were shouting about forging ahead and doing; ours were complaining about people leaving.

In personality, history and ideology, Trump and Starmer could not be more apart. Trump grew up making money. He’s comfiest and happiest schmoozing with, as he sees them, his fellow billionaires. He’s motivated by bigness, by the tallest, largest and most luxurious. That’s what he did for a living, erecting giant towers, hotels and resorts; that’s where he is still.

Starmer is a human rights lawyer, honed in left-wing politics, someone surrounded by those who treated phrases like “shareholder dividend” and “return on capital” with disdain. The terms that appeal to him and his ilk are service and community. He could never proclaim “drill, baby, drill” as Trump did, telling the oil men, always men, of Texas and elsewhere in the US that their friend and ally was back on his throne and they could relax and look forward to a fossil fuels bonanza. It would never occur to the UK prime minister. Not his style, not his creed.

In the run-up to the general election, Starmer and Reeves went out of their way to woo the City and industry. They were not holding all those copious coffees, lunches and dinners because they wished to show they were pro-business; it was also designed to banish suspicion, to allay fears that this was old Labour in modern clothing. It succeeded. One by one, chairmen and CEOs, heads of trade associations, gave their blessing.

Once they were installed in Downing Street there were rumblings. The removal of the winter fuel allowance for the better-off pensioners was an early sign. That was followed by doubling down of VAT on school fees. That hard-won trust started to evaporate. It went completely with Reeves’s Budget. Her set-piece, Labour’s first for 14 years, was widely seen as targeting the rich, as hammering the private sector. The public purse was empty, the Tories had left a £22bn black hole and businesses and employers were going to fill it.

Tax increases directed at them were introduced. Then, in a double-whammy, the Budget was succeeded by proposed workers’ protection laws. Britain’s companies, big and small, were sent reeling. There was a profound sense of betrayal as that love-in and the entreaties uttered then were recalled.

Non-doms, once encouraged by a previous Labour administration, now repelled by new rules, said they were departing and with them the cash they invested and the jobs they generated. Not only them – other wealthy folk, including entrepreneurs, said they’d seen enough and they were migrating.

It was a shock but not entirely unexpected. Starmer and Reeves were unmoved, they were not going to weaken. Even when international speculators bet heavily against the UK, they remained obdurate. Until now.

They’re not softening completely, not by any stretch. Most of what Reeves introduced in her Budget stays. Similarly, while there is a different emphasis, there is no detail. Practicalities may also rear their head – fellow ministers will require convincing and there could be a backbench rebellion. It’s a step towards flagging to the rest of the world, to use that well-worn, somewhat tired line, beloved of politicians, Britain is “open for business”. Just how open and whether anyone is persuaded, time will tell.