ANDREW NEIL: Trump in. Reform rising. And humiliation for Macron, Scholz and Trudeau. Why 2025 will see the collapse of the Left… and nowhere greater than Britain

There are, alas, precious few signs that 2025 will be a great year for any of us, which is a pity given 2024 was hardly one to write home about. But there are unmistakeable indications it will be an especially miserable year for the Left everywhere, nowhere more so than here in dear old Blighty.

Our benighted Labour government, barely half a year old, already has a well-established and well-deserved reputation for making everything it touches worse (and much of what it inherited from the Tories wasn’t in great shape in the first place). Expect more of the same in 2025.

Despite Labour’s exaggerated talk of black holes in our finances, the UK was nevertheless the fastest growing economy among the G7 club of major market economies when Keir Starmer took over in July. Since when we’ve been swiftly relegated to the slowest, rather impressively confounding Starmer’s hallmark election promise to preside over the fastest sustained growth in the G7.

But then it has become a rule of thumb in assessing Starmer that, whatever he says, it’s more likely he’ll end up doing the opposite. That has been true of everything from national insurance contributions to university tuition fees to reform of the House of Lords. Things won’t be any different this coming year.

Far from faster growth, it’s more likely we’ll start the new year in recession — or close to it. The economy failed to grow at all in the third quarter of 2024 and the signs are that it was even more comatose in the fourth quarter just ending, after Chancellor Rachel Reeves‘s October Budget went down like a lead balloon with business and consumers.

The public spending splurge she foolishly unveiled is expected to pep up growth a little in 2025. But that will be short-lived. As long as business and consumer confidence remain shot to hell there can be no sustained recovery — and Reeves has nothing in her tool box to revive our economy’s animal spirits.

Indeed there’s every chance she’ll make matters worse by resorting to even more tax rises in 2025, either in her Spring Statement scheduled for March 26 or her second Budget next November.

At the annual conference of the Confederation of British Industry last month she tried to rescue her flailing reputation with business, which she had courted so assiduously before the election, by promising she was done with tax rises.

It’s a promise she has refused to repeat. The words won’t pass Starmer’s lips either. That’s because Reeves is fast approaching the limits of her own fiscal rules, requiring her to raise taxes to sustain public spending (the British state has pretty much reached the limits of what it can borrow at reasonable rates of interest).

If we manage to avoid recession in 2025 the best we can hope for is another year of stagnation, with less than 1 per cent growth, or more likely stagflation (that deadly combination of very low growth and high inflation) since inflation could hit 3% by Spring, 50 per cent above the Bank of England’s 2 per cent target, just when public-sector unions will be demanding further inflation-busting pay rises, which risks baking inflation into the system.

This, in turn, means interest rates will be slower to fall in 2025. The Bank held rates at 4.75 per cent this month. Investors now expect Threadneedle Street to cut rates by small amounts just twice next year, compared with four times before the Reeves Budget. Folks with mortgages can expect little relief next year at a time when other central banks are cutting rates faster and by more.

Negative or very slow growth, rising inflation, higher than necessary interest rates, a continued squeeze on living standards — we face Liz Truss-levels of economic incompetence in 2025 under the Starmer-Reeves ascendancy, whose dead hand will deliver another year of relative economic decline.

Add in the inevitable unravelling of Ed Miliband’s fantastical net zero ambitions and you have the perfect storm of economic stupidity.

There’s an outside chance Reeves could even be gone from the Treasury before 2025 is out. But who on the lacklustre Labour front bench would be any better?

Nigel Farage’s Reform rather than Kemi Badenoch’s Tories will benefit from Labour failure in 2025. Reform has the momentum, the profile, the energy, while Badenoch, who has several sterling qualities, will continue to struggle to cut through, hampered by the fact that, in nearly all the areas Labour is getting wrong (net zero, mass immigration, the economy), the Tories were there first.

She needs a clean break with the past. But her party is unlikely to allow it.

Reform, in comparison, has clean hands in all of the above for the simple reason that it has never been close to power. It will be victorious in the May local elections, further establishing its reputation as a disruptive force to be reckoned with and the natural repository of disillusioned Red Wall voters in the North and Midlands who voted Labour in July but will not do so again.

Labour will take false comfort from a divided Right-wing vote, thinking that will secure it a second term. But before 2025 is out Reform might well have established itself as Labour’s main challenger. Either that or it will have dawned on Labour that it is caught in a vice similar to the one which did down the Tories in 2024: losing to Reform in the North and the Tories in the South (just as the Tories lost this year to Labour and the Liberal Democrats).

Such populist forces are already causing havoc with the mainstream Left abroad — and will cause even more disruption in 2025.

In America, the defeated Democrats will fail to come to terms with the magnitude of what happened to them last month, giving Donald Trump a pretty clear run for the year to come.

In Canada, the former darling of the global liberal elite, Prime Minister Justin Trudeau, faces an electoral thumping, largely for allowing too many immigrants to come to Canada (a familiar story), from pugnacious populist Pierre Poilievre, who’s given Canada’s Conservative Party a new lease of life. That’s if Trudeau makes it to election day in October. There are those in his Liberal Party who want to oust him now and fight the election with a new leader, the better to mitigate their losses.

Germany’s Social Democratic Chancellor, Olaf Scholz, faces a similar fate to Trudeau in February. His centre-Left coalition will lose badly to the Christian Democratic Union in alliance with Bavaria’s Christian Social Union, led by Friedrich Merz, who has moved the CDU well to the Right since Angela Merkel’s days as its leader. He takes a tougher line on everything from immigration to net zero to welfare reform to protect his right flank from the hard-Right Alliance for Deutschland (AfD).

Even so the AfD is polling second and will be further boosted by the recent terrible attack on the Magdeburg Christmas market by a Saudi migrant. Merz will not go into coalition with the AfD no matter how well they do which means that to form a government with a working majority he might have to forge an alliance with the defeated Social Democrats.

It’s happened before but such coalitions usually take ages to form which means that, at a time of mounting troubles for Germany, whose economy has not grown for six years, it would effectively be without a functioning government.

A CDU/CSU-Social Democratic coalition would also rob Germany of a fresh start. We will see yet again in 2025 how elections in Europe often change very little.

The same establishment politicians somehow cling to the reins of power, whatever happens.

Rigor mortis is Berlin’s fate in 2025, made all the worse by the fact rigor mortis already has a grip of Paris.

When President Macron made Michel Barnier (of Brexit negotiations fame) Prime Minister of France in early autumn, I speculated in these pages that he wouldn’t last until Christmas. He didn’t. Now Macron has asked another centrist, Francois Bayrou, to be his PM. He might not make it past Easter. I’d certainly be surprised if he was still in power this time next year.

France is now on its fifth prime minister in four years. Macron is a lame duck president. If, as is likely, Germany is also gripped by political inertia, then the prospects for the European Union in 2025 are likely to be grim.

The Franco-German alliance has always been the motor that drove the EU forward. If that motor is now kaput then so are the EU’s prospects.

The weakness of Paris and Berlin could not come at a worse time for the EU. The Eurozone economy has been stagnant for most of this century. GDP per capita in the EU, which used to be on a par with America’s, is now only 50 per cent of it. US incomes have risen twice as fast as Europe’s in the past quarter-century. A rudderless Europe will have no means of reversing these trends in 2025.

All the great digital developments of the 21st century are being pioneered by America and China. The EU is even driving away start-ups in artificial intelligence by an over-emphasis on regulation, which is often all it has to offer. One prescient commentator has described the EU as a ‘mid-tech backwater in accelerating decline’.

Perhaps in 2025 Labour politicians — and even the BBC — will realise that their rosy view of the EU is nothing but nostalgia.

With Russia close to gaining the upper hand in Ukraine, this is no time for nostalgia. Of course Ukraine’s fate will be more in President Trump’s hands this coming year than Europe’s. Predicting Trump is like nailing jelly to the wall. If recent pronouncements are anything to go by you’d think 2025 will be the year America invades Panama, absorbs Canada and annexes Greenland.

I venture to suggest none of that will happen. Be guided by this maxim: always take what Trump says seriously, but hardly ever literally. I think it safe to say he will drive hard bargains wherever his attention lands, be it with Europe’s need to spend more on defence or President Putin’s growing desire to do a land-for-peace deal in Ukraine.

Next year will certainly be the year of peace talks in the Russian-Ukrainian war, which will be three gruelling years long in February. It is impossible to say what shape these talks will take or what their outcome will be. But, though rightly nervous of what Trump might force on Kyiv, no western leader now talks of Ukraine ‘victory’.

We must hope Trump is a tough enough deal-maker to know the longer talks go on, the more pressure Russia comes under.

Russian forces are making slow, steady gains on Ukraine’s eastern front. But the Russian economy is struggling to sustain the war effort. The Kremlin has created a fleet of ‘shadow’ tankers to get round sanctions and ship oil to India and China. But it is forced to sell to these markets at a heavy discount. Fossil fuel revenues are down 50 per cent on pre-war levels, which leaves a growing shortfall to pay for a war machine which now takes 10 per cent of Russia’s GDP.

Russian interest rates are 21 per cent and likely to rise further. Yet nobody wants to lend to the Kremlin. Even arms manufacturers struggle to make a profit. Over 800,000 young and educated Russians have fled the country while around 500,000 have been killed or maimed on the battlefield. A labour shortage of 5million is hitting key industries, including those essential to the war effort.

The longer Trump leaves Putin to twist in the wind, the better the deal Ukraine will get. Trump likes squeezing his adversaries in negotiations. Putin can be squeezed.

His credibility has already been undermined by the collapse of the Assad regime in Syria, hitherto the Kremlin’s sole Arab client state. It is too soon to discern the shape of a post-Assad Syria and in 2025 we will assuredly find out it will be far from plain sailing. But a huge shift in the Middle East balance of power will unfold in the year to come: Israel, Turkey and the Sunni Arab states are in the ascendant, Iran and its largely Shia terrorist proxies are in retreat.

Trump will encourage the Saudis to join the Abraham Accords with Israel, which started in his first term and to which the UAE and Bahrain are already signatories. He will toughen sanctions against Tehran after President Biden loosened them, which only helped the Iranian regime, which used the extra revenues to arm its proxies.

It might be too soon to talk of regime change in Tehran. But Iran’s power is on the wane and the mullahs’ grip on it increasingly tenuous. Israel’s ability to discombobulate them further in their own capital in 2025 should not be underestimated.

China will use next year to get the measure of Trump’s second term. President Xi is in no rush over Taiwan. He needs to attend to a faltering domestic economy first, which means limiting the adverse impact of any Trump tariffs, which could be as high as 60 per cent. The starting point for a new Chinese-American trade deal, no doubt.

Tariffs risk damaging the global economy. Even so, 2025 will see a dynamic US economy pull further away its from sclerotic counterparts in the EU and UK. Of course, it need not be like that for Britain. The new Trump administration has several key figures keen on a US-UK trade deal, something Biden never considered.

But that would involve the UK moving closer to US-style regulation and away from the EU regulatory ambit. I doubt Starmer would stomach this. He and his cabinet regularly pine to be within the EU’s embrace again. It might seem bizarre to align more closely with the past (Europe) than the future (America). But that is the inbred inclination of Starmer and the UK’s Europhile elite.

In 2025 we risk paying a heavy price — the lost opportunity of the decade — for his outdated European nostalgia.