UK’s Political Shake-Up: Impact on India’s Economic Relations and Lessons in Governance

In October 2023, during a turbulent period of Conservative leadership in the UK, The Daily Star humorously questioned whether Liz Truss, then Prime Minister, would outlast a lettuce.

This quip highlighted the instability plaguing the Tory government, as Truss struggled amid widespread criticism. Her tenure was short-lived, ending abruptly as she became the first ex-Prime Minister in nearly a century to lose her parliamentary seat in the subsequent general election.

With the Labour Party sweeping into power with over 400 seats, the UK’s political landscape shifted dramatically. This change potentially signals significant implications for India, particularly regarding economic relations.

Under Keir Starmer’s leadership, the new government aims to finalize a crucial free trade agreement (FTA) with India, a deal that has faced obstacles during its 14 rounds of negotiations.

The relationship between India and the UK had been structured around a 2030 roadmap covering various sectors like education, trade, defense, and health. Despite the initial optimism, negotiating an FTA proved challenging due to differing regulatory approaches and historical protectionist policies from India.

These complexities posed substantial hurdles, even as both countries sought to deepen their economic ties amidst shifting global trade dynamics.

India’s withdrawal from the Regional Comprehensive Economic Partnership (RCEP) in 2019 exemplified its cautious approach to FTAs, though recent agreements with the European Free Trade Association (EFTA) offered a glimmer of hope amid evolving global supply chains and economic partnerships.

One of the most contentious issues in FTA negotiations has been immigration, a sensitive topic in UK politics. Labour’s approach to this issue contrasts with the Tories’ stringent stance, focusing instead on attracting highly skilled global talent while limiting low-wage migration—a strategy likely to influence discussions with India.

Economically, India ranks as the UK’s 12th largest trading partner, with significant potential for growth despite recent fluctuations in trade volumes. The incoming Labour government aims to strengthen this partnership, reflecting its broader strategic goals amid a post-Brexit economic landscape.

Politically, the Labour Party’s landslide victory underscored widespread dissatisfaction with the Conservative legacy, marked by economic challenges, a strained healthcare system, and high living costs exacerbated by Brexit. These issues resonated strongly with voters, influencing the outcome of the election and raising questions about long-term governance.

For India, observing these developments in the UK offers valuable insights into managing long-term governance and economic policies. The Conservative party’s tenure serves as a cautionary tale, highlighting the risks of prolonged leadership and its potential impact on societal divisions and economic outcomes.

As India navigates its own political landscape, characterized by recent electoral shifts and ongoing social challenges, the lessons from the UK’s experience may prove instructive. The role of media and public discourse, too, emerges as a critical factor in shaping public opinion and electoral outcomes, suggesting parallels with India’s media landscape and its influence on political narratives.

The fate of Modi’s government in India will be judged against its ability to address pressing economic and social issues over a potentially extended tenure. The UK’s experience with Conservative governance serves as a stark reminder of the complexities and responsibilities inherent in long-term political leadership, resonating across global political landscapes.