Manifesto Policy Explainer What do the Conservative and Labour manifestos mean for the economy?

This policy explainer takes a look at the economic effects of the manifesto commitments of the two major parties ahead of the election.

Both the Conservatives and Labour have made claims to be the party of the economy and business:

The headline economic commitments


Economic security is the bedrock of any future success, which is why we have a clear plan to take the bold action needed to build a strong economy.

  1. Reducing borrowing and debt
  2. Backing businesses to invest innovate and trade
  3. Cutting taxes and reforming our welfare system
  4. Delivering world-class education
  5. Delivering an affordable transition to domestic, sustainable energy


Sustained economic growth is the only route to improving the prosperity of our country and the living standards of working people. That is why it is Labour’s first mission for government. It means being pro-business and pro-worker. We are the party of wealth creation.

  1. Deliver economic stability with tough spending rules
  2. A new partnership with business to boost growth everywhere
  3. A National Wealth Fund to invest in jobs
  4. Planning reform to build 1.5 million new homes
  5. Devolution of power across England
  6. A New Deal for Working People

Macroeconomic stability

Both parties have made commitments to macroeconomic stability as their first economic commitment. Fiscal rules can help reinforce market stability ensuring borrowing costs remain low and stable

  • The Conservatives plan to have net borrowing below 3% of GDP and to have net debt falling in the fifth year of the forecast, i.e. retain the current fiscal rules.
  • Labour plans to balance the current budget and have debt falling by the fifth year of forecast. Labour’s rules explicitly differentiate between current and capital spending, only allowing borrowing for investment.
    • Labour have made an additional commitment to strengthen the UK’s economic institutions to further reinforce economic stability. They plan to strengthen the role of the OBR, stating that “Every fiscal event making significant changes to taxation or spending will be subject to an independent OBR forecast.”

What they’ve costed in their manifestos

At the headline level, the costed manifesto commitments of both parties are consistent with relatively similar fiscal rules. However, they have been attacked by the IFS for failing to face the stark reality of the UK’s shaky public finances, which imply significant spending cuts for unprotected departments without more significant increases in the tax burden. Both parties’ costed spending and tax commitments are respectively around 1% of public sector spending and tax receipts.

Conservative policy costings 

£ billions
Employee NICs down a further 2p by April 2027
Abolish NICs for the self-employed
Increase personal income tax threshold for pensioners
Stamp duty reform
Change the high-income child benefit charge
Tackling tax avoidance
Total tax changes
Reduction in civil service headcount
Health service
Defence spending to rise to 2.5% of GDP by end of next Parliament
Total spending changes
Net borrowing

Labour policy costings

£ billions
Tackling tax avoidance and reforming the non-doms regime
VAT and business rates on private schools
CGT/carried interest reform
Reform to non-resident stamp duty land tax
Windfall tax (annual average)
Total tax changes
Health service
Green prosperity plan (annual average)
Total spending changes
Net borrowing

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