In this Institute of Economic Affairs podcast, IEA Head of Media Reem Ibrahim interviews Tom Clougherty, the IEA Executive Director, and Kristian Niemietz, the IEA's Editorial Director. The conversation covers Rachel Reeves' recent speech on financial regulation, examining both the positive moves toward deregulation and concerning developments like government-backed mortgage guarantees. They also analyse the latest labour market statistics showing 178,000 job losses since June 2024 and the alarming rise in economic inactivity, with 21% of working-age adults now economically inactive.

The discussion explores how employer National Insurance contribution increases and tighter employment regulation are creating significant headwinds for job creation and wage growth. Tom and Kristian argue that the UK's historically flexible labour market advantage is being eroded through cumulative regulatory burdens, comparing the situation to slowly boiling a frog. They examine how both Conservative and Labour governments have contributed to this regulatory creep, moving Britain away from the labour market flexibility that once distinguished it from continental Europe.

The interview concludes with an examination of public attitudes toward taxation and spending, drawing on new research showing that when people understand how much tax they actually pay, support for tax cuts increases by 12% while support for spending cuts rises dramatically by 22 percentage points. With public spending approaching 50% of GDP, they discuss the political and economic challenges facing Britain as fiscal pressures mount and the traditional assumption that voters want higher taxes for better public services comes under question.

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