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A Tumultuous First Year in Power

When Labour swept into government in 2024 after 14 years in opposition, expectations were sky-high. The victory margin signaled a public yearning for change — and Prime Minister Keir Starmer promised bold reform, economic growth, and a return to global credibility.

But one year on, reality has proven more complicated. Starmer’s approval rating dropped from 44% to 23% by May 2025, according to YouGov polling — a historic low for a prime minister in their first year. Though slightly improved to 28% in June, the numbers reflect growing public frustration.

Economic Gains Offset by Structural Strain

The UK economy expanded faster than expected in Q1 2025, delivering one of the few bright spots for the government. However, many analysts caution that this momentum is unlikely to last. High borrowing costs, lingering inflation, and weak business investment continue to weigh on productivity and household finances.

Adding to the strain are policy decisions that, while aimed at long-term recovery, have sparked backlash. The rise in the National Living Wage and increased employer National Insurance contributions have burdened businesses, leading to slower job creation and muted private sector confidence.

Economist Cory Stahle of Indeed Hiring Lab notes: “Job seekers outside government and healthcare may not feel the benefits of current economic gains.”

The Welfare Reform Dilemma

One of Labour’s most ambitious goals — overhauling the UK’s welfare system — has been met with fierce resistance. Chancellor Rachel Reeves, who vowed to stabilize public finances without raising taxes or increasing borrowing, is now caught in a political and fiscal bind.

Her Spring Statement included spending cuts and policy reversals, and speculation is growing about her future in the role. Many analysts believe that tax hikes are likely in the Autumn Budget, as the government struggles to adhere to its self-imposed fiscal rules.

Simon Pittaway, senior economist at the Resolution Foundation, told CNBC:
“Balancing the books without raising taxes or increasing debt is almost impossible given current conditions. Some mix of tax increases and spending restraint is now inevitable.”

Trade Triumphs Abroad, But Limited Domestic Impact

If the domestic landscape has been challenging, Labour’s foreign policy has shown more progress. The UK successfully negotiated three major trade deals in its first year — with India, the United States, and the European Union — marking a return to serious global diplomacy after years of Brexit turbulence.

Former civil servant Philip Rycroft praised Starmer’s efforts in navigating relations with EU leaders and U.S. President Donald Trump, calling it “adroit political management.” Still, he warned that these deals are more about damage control than transformative gains:
“They’ve been branded as ‘historic,’ but in reality, they’re about limiting further harm, not rewriting the rules of trade.”

The Rise of Reform UK and Political Pressure

At home, Starmer faces a rising challenge from the right-wing Reform UK party, led by Nigel Farage. Recent YouGov polling suggests that if an election were held today, Reform could secure a substantial number of seats — a troubling sign for Labour’s long-term strategy.

“The rise of Reform reflects deep dissatisfaction with traditional politics,” said Rycroft. “If Labour and the political mainstream don’t deliver meaningful change, that discontent will grow.”

Critics argue that political leaders often respond to such pressure by watering down necessary reforms — a move that may protect poll numbers in the short term but fails to address deeper structural problems.

Can Labour Still Deliver?

With four years remaining in this parliamentary term, Starmer has time to pivot. The challenge will be to rebuild public trust, maintain fiscal credibility, and make tough decisions that show progress without losing core supporters.

“This is Labour’s window,” Rycroft concluded. “They have the mandate, they have the majority — the real question is whether they have the resolve to push through the hard choices that will set Britain on a new course.”

As Labour enters its second year in office, the pressure is mounting — not only from opposition benches, but from within. The coming Autumn Budget may be a defining moment for the future of Starmer’s leadership and the party’s ability to deliver on its post-election promise of transformation.