Introduction
The UK government’s November 2025 Budget supplied ample corroboration of our report published by IREF in October 2025 (‘the report’), showing that the governing Labour Party plans to greatly expand the state’s direction of the UK economy.1
The means-of-control will be a decade-long programme of spending on Net Zero, industry, and infrastructure, partially funded through government borrowing but mainly by the investment schemes themselves taking on expensive third-party debt.
The background to this is the embedded belief within the government and its advisers that the pathway to economic growth and wealth creation is the credo of ‘Securonomics’, also known as ‘modern supply side’. In this credo the state supplies a stable, predictable, and secure base, enabling the private sector to invest with confidence, both into the government’s schemes and into its own schemes.
This contrasts sharply with the Trump ‘mayhem’ approach and with a classic ‘free market’ approach, and it is difficult to see how ‘Securonomics’ can be a success in a country, like the UK, that is dependent upon free international trade.
The extent of the base under the ‘Securonomics’ model
The scope of the Labour Party’s investment plans illuminates what they believe to be the extent of the ‘stable, predictable and secure base’ that the state should provide: energy, water, transportation, education, health, as well as a set of a dozen or so industry segments that should be supported, and others – notably oil and gas – that should be inhibited.
This is a de facto reversal of the privatization of state-owned enterprises started off by Mrs Thatcher, but without renationalization. Instead these enterprises, nominally owned by the private sector, will be compelled to act in accordance with the state’s direction, via a combination of regulation, incentives, and threats of penalties.
The amount to be ‘invested’, at £1.64 trillion over 10 years, equates to 57% of the UK’s 2024 Gross Domestic Product. This amount of intervention will expand the state-directed sector of the economy: if it becomes 15% of the economy, on top of the existing 42% which is the public sector,2 the government will end up directing nearly 60% of the UK economy.
The associated level of borrowing-to-spend could starve the ‘free market’ part of the economy of funds, and cause it to stagnate or shrink in absolute terms.
Impact of the extent of the base on the type of economy that can run on it
While the EU might still try to describe itself as a ‘social market economy’, ‘Securonomics’ can better be described as a ‘social economy’, in which the role of the free market is reduced, and in which the freedoms of that market are circumscribed by extensive state regulation and by high tax. Such an environment inevitably comes with high operating costs for a business, and a consequential limit on the upside profit potential from an investment in that business.
A protectionist response to this might be feasible for the USA but neither for the EU nor the UK.
The ‘Securonomics’ response – upon which the EU is already embarked, for example through the InvestEU programme – has been to formalize on-going state intervention and direction, by inserting the state-directed sector as a recognized, further tranche into the equation.
InvestEU started out as a reflation exercise after the Eurozone sovereign debt crisis, but it has become institutionalized as a permanent and ongoing programme of extension of state control over what were previously ‘free market’ activities. Its ‘investments’ are heavily concentrated into Net Zero and its organizer – the European Investment Bank Group – has renamed itself as the ‘EU’s climate bank’.
The question that remains unanswered is why that model should produce more growth and wealth than a ‘social market economy’, or indeed a ‘free market economy’, in which the size of the public sector might fall to 30% of the whole.
The UK government’s answer to the conundrum appears to be Net Zero, meaning by converting the UK into a ‘clean energy superpower’. This phrase invokes the concept of a light-at-the-end-of-the-tunnel, the immediate results of the government’s other economic policies (increases in taxes and other business costs) having driven the UK into the tunnel.
Job vacancies and private-sector job hiring plans
On 13th January, the Daily Telegraph reported a major drop in the number of job vacancies and a decline in businesses’ plans to hire more staff, under the headline ‘Labour triggers biggest hiring slump since the pandemic’.3
A ‘Treasury spokesperson’ was quoted in response to this as follows: ‘We are delivering stability…six interest rate cuts [are] good for businesses with loans and gives them the confidence to invest. The Budget doubled down on our work to growth the economy and create good jobs by maintaining the cap on corporation tax at 25%’.
It is noteworthy how the spokesperson stressed stability first and foremost, and then held out that a relatively high rate of corporation tax acted as an incentive to invest because it has not gone up (yet). The idea that the rate could go down is anathema, and it’s not going down now or any time soon is projected as stability. The statement demonstrates the degree to which HM Treasury is in the grip of ‘Securonomics’.
Net Zero
The value of Net Zero in the ‘Securonomics’ credo is that energy costs are a potential source of price spikes, as happened as a result of the Russian invasion of Ukraine, and that supplies of oil and gas could be interrupted (noting that the UK’s decision to issue no more exploration licences in the North Sea is not viewed as an interruption of supplies).
Net Zero is projected as a source of uninterruptible supply, insulating the UK from price shocks, and it therefore has value regardless of the price of supply.
As regards the price of supply, the Institute of Economic Affairs issued a report on 13th January claiming that the calculations for the cost of the transition to Net Zero were erroneous.4 A spokesperson for the Department for Energy Security and Net Zero responded by saying: ‘The only way to bring down energy bills and deliver energy security is by making Britain a clean energy superpower, which will get us onto clean, home-grown energy that we control’.5
This is a response straight out of the ‘Securonomics’ playbook: assurance of supply, from domestic sources that are controlled.
What’s the price?
The only problem arises when the cost of the supply turns out to be high.
We recently had an article published, based on the IREF report, about how the financing costs of the UK’s Net Zero transition would cause a locking-in of energy costs from renewables at a high level.6 This would contrast with the immediate prospect for global energy prices from traditional sources.
It is noteworthy, as an example, that the global supply of Liquefied Petroleum Gas is likely to rise in 2026, and the price to fall.7 The price of propane already fell from an average of US$628 per ton to 2024 to US$548 per ton in 2025, or by 13%.
This is indicative of the approach of President Trump to the global supply of oil and gas: to exploit all US-owned sources of supply, and to direct supplies from countries like Venezuela and Guyana (and possibly also Iran) into a single marketplace, in which countries like Cuba and China will not obtain supplies ‘on the cheap’ from countries that are ideologically aligned with them.
The upshot could well be a radical reduction in the energy costs of businesses in certain countries – the ones still using oil and gas – giving them a price advantage that can be used to both undercut foreign businesses trying to penetrate their home markets, and to undercut the same foreign businesses in the latter’s home markets, where the countries are connected by trade agreements that are not trade barriers in disguise.
Summary and conclusions
Countries that both espouse global free trade on generous terms, and have locked in high costs of energy supplies, will be exposed in an environment characterized by the Trump approach of increasing the supply of energy products based on oil and gas, and reducing the price.
The EU espouses global free trade only if the terms are in its favour: arguably this has inhibited – rather than supported – the development of the Single Market. At the same time, the EU is as heavily bought into Net Zero as anywhere, and has already expanded the state-directed sector of the economy to this end. Rather than adopting the painful realignment recommended in the Draghi Report,8 an expedient (if ultimately self-defeating) option would be for the EU to wall itself in behind tariff barriers, and enjoy the resulting long-term stagnation, with restricted access to the markets experiencing high growth.
The UK’s position is that it has no option but to espouse global free trade on generous terms. Adopting the ‘Securonomics’ approach to the economy generally and to Net Zero in particular could therefore be catastrophic: high costs of production, undercut in the markets experiencing high growth, and undercut in its home market as well.
1 https://www.lyddonconsulting.com/the-united-kingdom-as-a-sandbox-for-state-directed-investment-with-a-major-increase-in-shadow-debt-and-in-the-shadow-taxation-required-to-service-that-de/ accessed on 13 January 2026
2 The public sector – the sector of the economy in which there is no private ownership
3 https://www.telegraph.co.uk/business/2026/01/13/labour-triggers-biggest-hiring-slump-since-pandemic/ accessed on 13 January 2026
4 https://iea.org.uk/publications/the-cost-of-net-zero/#Download accessed on 13 January 2026
5 https://www.telegraph.co.uk/politics/2026/01/13/net-zero-costs-will-be-worse-than-feared-report-finds/ accessed on 13 January 2026
6 https://conservativepost.co.uk/labours-2025-budget-confirms-a-massive-increase-in-shadow-debt-that-will-lock-in-sky-high-energy-prices-for-40-years-and-devastate-british-businesses/ accessed on 13 January 2026
7 https://www.sunsirs.com/uk/detail_news-29623.html accessed on 13 January 2026
8 https://commission.europa.eu/topics/competitiveness/draghi-report_en accessed on 13 January 2026
Photo by Jason Mavrommatis
