The challenges facing the UK’s new Prime Minister

When Sir Keir Starmer sits down at his new desk in No 10 and he will be confronted with one of the most daunting in-trays of any prime minister in recent history.

War in Europe, global instability, creaking public services and an economy in dire need of a kickstart are just some of the issues the UK’s new leader will have to address.

Here are some of the challenges he faces:

– The public finances

The official forecasts for the public finances over the coming years imply major spending cuts but Labour is gambling on economic growth generating the tax receipts to avoid a return to austerity.

Departments with unprotected budgets – which oversee services such as prisons, courts and councils – are already facing cuts of up to £20 billion a year by the end of the decade under current plans, the Institute for Fiscal Studies (IFS) has warned.

Labour has committed to maintain the “fiscal rule” that debt as a share of national income should be forecast to be falling by the end of the five-year forecast, which means any day-to-day spending would need to be funded through significant tax increases, which Sir Keir has insisted he has “no plans” to do.

IFS director Paul Johnson said Labour’s refusal to say how it would address the difficulties amounts to a “conspiracy of silence”.

– Economy

The economy has been hit hard by the twin shocks of Covid-19 and the war in Ukraine and overall the United Kingdom has experienced low economic growth since the last election.

The last monthly figures from the Office for National Statistics (ONS) indicate the economy flatlined in April, with no growth recorded.

But Sir Keir will benefit from an easing in the cost-of-living crisis, with inflation now back to 2%.

And he could also be handed another economic morale boost if, as expected, the Bank of England cuts the interest rate in August, lowering the cost of borrowing.

– Foreign affairs

Labour backed the Tory government over support for Ukraine, and the Nato summit in Washington starting on Tuesday (July 9) provides an early opportunity for Sir Keir to announce his arrival on the international stage.

But the Western alliance supporting Kyiv could come under strain if Donald Trump returns to the White House.

Sir Keir’s party has already made efforts to engage with Mr Trump’s team because of the prospect of his election in November, but senior Labour figures were scathing about him during his presidency.

David Lammy, the man likely to be foreign secretary, described Mr Trump as “racist” and a “Nazi sympathiser” in 2017, but has recently suggested he would look for areas to make “common cause” with the Republican candidate.

On China, Labour has committed to carry out an “audit” of the UK’s relationship with the Asian economic powerhouse, with a philosophy to “co-operate where we can, compete where we need to, and challenge where we must”.

In the Middle East, Labour is committed to recognising a Palestinian state, but only as part of a renewed peace process which results in a two-state solution – something which appears a distant prospect as Israel continues its offensive against Hamas in Gaza.

Closer to home, Sir Keir wants to “make Brexit work” by tweaking the terms of the UK’s deal with Brussels, although it is far from clear how much flexibility there will be from the European Union in yet another round of negotiations with its troublesome neighbour.

– Defence

Vladimir Putin’s invasion of Ukraine has heightened concerns about the size, readiness and capability of the UK’s armed forces.

Labour’s manifesto committed to a strategic defence review within the first year and promised a path to increasing spending to 2.5% of gross domestic product.

– Health and social care

The latest figures showed an estimated 7.57 million treatments were waiting to be carried out on the NHS in England at the end of April, relating to 6.33 million patients. Tackling that is one of Sir Keir’s top priorities.

But funding is likely to be stretched despite Sir Keir’s promise of cash for weekend operations, dentistry and mental health.

The Nuffield Trust think tank said even with the extra money, the next four years face being the tightest in NHS history.

In social care, fundamental questions about access, how that is paid for, workforce vacancies – running at 152,000 in England 2022/23 – and how well-remunerated staff are remain major concerns.

The Nuffield Trust said the sector has been “left to languish for decades” while the King’s Fund charity said without “significant funding increases” the high level of currently unmet need is unlikely to fall.

– Migration

Net migration – the difference between the number of people legally arriving in the UK and leaving – was 685,000 in 2023, down from 764,000 in 2022 but still high by historical standards. Bringing it down while ensuring businesses and public services have the workers they need will be a tough challenge.

Tackling irregular migration will be a high-profile test of Sir Keir’s administration, with the number of people crossing the English Channel in small boats at a record level for the first half of a calendar year.

Tackling the asylum backlog will also be a key challenge for the new Labour government.

– Industrial relations

The new government will take office amid continuing industrial action following an unprecedented two years of strikes by hundreds of thousands of workers.

Several disputes remain unresolved, including pay rows involving junior doctors and train drivers, with fresh strikes not being ruled out unless they are resolved.

– Trust in politics

Sir Keir acknowledged that “the hope has almost been kicked out” of many people who have been disillusioned by the British political system.

The 2023 British social attitudes survey found 45% of people would “almost never” trust British governments of any party to place the needs of the nation above the interests of their own political party, more than ever before.

And Sir Keir is unlikely to enjoy much of a honeymoon period, with an Ipsos Mori poll last month indicating that his net approval score of minus 19 was the worst it had ever recorded for a Leader of the Opposition entering Number 10.