That’s a sharp question. The short answer is: not strictly, but economic growth makes it much easier.

Here’s the reasoning:

1. Fiscal trust comes from credibility, not just growth

Fiscal trust is about whether households, businesses, and financial markets believe the government will manage the public finances responsibly.

A government can build credibility without growth by showing discipline on spending, setting out clear fiscal rules, and being transparent about trade-offs.

For Labour in particular, being historically perceived as “less trusted” on the economy, credibility often comes first from restraint and signals of responsibility.

2. Growth makes the politics easier

If the economy is expanding, tax receipts rise naturally, and borrowing falls as a share of GDP without big tax rises or spending cuts.

That gives Labour fiscal “headroom” to fund priorities without markets fearing reckless borrowing.

Growth also helps shift the debate from “how will you pay for it?” to “how fast can you deliver?”

3. Without growth, credibility requires harder choices

If growth is stagnant, Labour would need to prove fiscal seriousness through tougher trade-offs (e.g. delaying spending pledges, targeting efficiency, keeping a lid on welfare/departmental budgets).

This could reassure markets but risks political backlash if public services are under strain.

4. Sequence matters

Historically, oppositions that win office often prioritise credibility first, then argue that once trust is restored, they can push harder on growth-friendly policies and investment.

So Labour doesn’t need growth before trust, but it does need trust before it can fully use growth to support its agenda.

🔑 Bottom line: Labour doesn’t need growth to build fiscal trust, but in a low-growth environment, it must show even greater discipline and consistency. Growth makes fiscal trust easier to win, but credibility can—and arguably must—be built independently first.

Labour must Establishing fiscal credibility

Goal: Show responsibility and reliability to markets, voters, and institutions.

Lock in fiscal rules: Commit early to rules that anchor borrowing and debt, but leave some flexibility for investment. For example: day-to-day spending funded by taxation, with borrowing only for investment.

Independent oversight: Lean on the OBR, Bank of England, and NAO to reinforce transparency and accountability.

Visible restraint: Delay or scale down expensive pledges until growth returns. Frame this as “stability first.”

Symbolic measures: Cancel or pare back lower-priority programmes to show choices are being made.

Tax fairness, not splurge: If tax rises are needed, aim for targeted, progressive ones that fit the “fairness” narrative, not broad hikes.

👉 Outcome: Markets see Labour as disciplined, households see “grown-up government,” and critics struggle to paint Labour as fiscally reckless.

Phase 2: Years 2–3 — Investing for growth under a fiscal anchor

Goal: Pivot carefully from credibility to delivery on growth.

Prioritised investment: Channel limited fiscal headroom into high-return areas (green energy, infrastructure, skills). Emphasise “productive investment, not day-to-day spending.”

Unlock private capital: Use regulation, incentives, and public guarantees to crowd in private sector investment. This reduces reliance on taxpayer money.

Public service reform narrative: Frame efficiency improvements and digital transformation as modernisation, not austerity.

Trade and industrial policy: Begin laying foundations for medium-term productivity gains (planning reform, industrial clusters, tech adoption).

👉 Outcome: Growth agenda emerges, but without threatening fiscal trust.

Phase 3: Years 4–5 — Consolidating trust with delivery

Goal: Show that fiscal discipline + targeted growth strategy = tangible improvements.

Growth dividend: Rising revenues from stronger growth allow gradual expansion in health, education, and social priorities.

Sustained credibility: Keep showing that new spending is funded—through growth, fair taxes, or reprioritisation—not just borrowing.

Voter reward: Build a narrative of “Labour fixed the roof and invested for the future.”

Election positioning: Go into the next election showing balanced books and improved public services.

👉 Outcome: Fiscal trust is locked in, growth is visible, and Labour fights the next election as the party of both competence and fairness.

🔑 Strategic principle: Trust first, growth second, expansion last. Labour can’t spend its way to trust, but once trust is banked, it can invest for growth — and only then cash in the growth dividend for services and social priorities.