Securonomics has served as the organising philosophy for the British Labour Party’s economic policy since well before it entered government. Despite the fact that there was no explicit mention of it in Chancellor Rachel Reeves’ speech on economic growth last week, delivered at a facility in Oxfordshire managed by Siemens, the German multinational, the underpinning assumptions of this ideological framework are clearly organising the government’s approach to the economy.

Securonomics was first articulated by Reeves on a visit to the United States back in 2023. Its intellectual roots are American; securonomics effectively represents a British rendering of Bidenomics, the paradigm that defined the Democrats’ economic policy over the past four years.

Bidenomics was conceived as a response to a geopolitically unstable world of fragmented supply chains and intense competition for critical minerals, energy and jobs. It was predicated on high levels of state spending, activist industrial policy, and the use of regulation for green political ends – all in the cause of using government to underwrite the financial security of American workers. It had a decidedly European, social-democratic aspect to it.

‘Just as the Biden administration has done’, Reeves told an audience at the Peterson Institute in Washington DC, ‘we must build the industries of the future in partnership with unions and employers.’ That would require greater ambition about ‘the role an active state can play’ in ‘securing the finances of working people’ via legislation, regulation and public spending. As with Bidenomics, the glue binding securonomics would be a statist environmental agenda, with the state directing the economy via decarbonisation targets.

In her Mais Lecture, delivered last year before the July 2024 election that brought Labour to power, Reeves sought to further develop securonomics – this time as a theory of economic growth. Security, she argued, was the prerequisite for prosperity, the ‘platform’ from which the aggregate performance of the UK economy might be improved. In many ways, securonomics was a convenient political economy. Instead of security and growth being viewed in tension with one another, securonomics appeared to permit the UK to have its cake and eat it. A Labour Government could underwrite greater financial security for British households through enhanced employment rights, state expenditure and subsidies. Far from sapping the risk-taking, enterprising spirit that fuels economic growth, such government activism would foster it.

Securonomics was a convenient political economy in another sense, too; it helped to elide any suggestion that a fundamental choice still needs to be made in post-Brexit Britain between the European social-democratic model of generous welfarism, high taxation and low growth, and the American model of high productivity, high wage, small-state capitalism.

The affinity between securonomics and the Biden economic worldview suggested Britain could muddle along between Europe and the US, and that the UK could have at the same time the supply side dynamism of the US and the extensive social security net of a European economy. It assumed that some ‘new Washington consensus’ was emerging, one which looked approvingly upon governmental activism. Indeed, with the loss of cheap Russian energy as a consequence of the war in Ukraine, the European Union itself has sought to copy elements of Biden-style industrial policy, loosening state-aid rules and setting green targets for the economic area. Such a move sits easily with the traditionally dirigiste philosophy of economies such as France.

Trump’s election victory and return to the White House has brought that fundamental choice between different economic futures back into sharp relief. For the reality is that America’s allies cannot have it both ways.

The Bidenomics economic agenda – including huge stimulus injections and the inappositely named Inflation Reduction Act – was a harbinger of the inflation which played such an important role in condemning the Democrats to electoral defeat. Increased government spending expanded the national debt, widened the deficit, and increased borrowing costs. Trump has been elected with a clear mandate to pursue a radically different economic agenda, and he has gone about prosecuting it with remarkable fervour – stripping out executive orders and issuing new ones. He believes in energy abundance and the centrality of oil and gas to America’s future prosperity. He rejects the artificial scarcity implicit in net zero policy. He is intent on a vast programme of deregulation and public spending reduction. He sees America as a nation of risk-takers – of ‘builders, innovators, entrepreneurs, and pioneers’. He wishes to tilt the balance of the economy towards those characters, and away from the bureaucrats and the managers.

If he succeeds, over the coming years, the already vast gulf between US GDP per capita and that of the European economies is likely to grow. More British and European companies will choose to list on US exchanges. America’s dominant position in the tech sector will become unassailable. And so, the sense that two radically different historical trajectories now lie between the US and Europe will become ever more acute.

The assumptions undergirding securonomics are going to be tested to breaking point. Its inherent tensions were on display during Reeves’ Oxfordshire speech. While she was busy announcing efforts to speed up the planning process, to loosen the supply side of the economy and inject catalysing investment into the ‘Oxford-Cambridge Arc’, a belt of land stretching between the two university cities envisaged as a key area of growth in the UK, the effects of the Autumn Budget, which increased taxes and borrowing to fund public investment and deliver financial security for public sector employees, continue to work their way through the economy. Meanwhile, in the background looms a significant regulatory measure in the Employment Bill that will add an estimated £5 billion in annual costs for UK businesses. Britain continues to simultaneously pursue both supply side reform and an expensive commitment to a highly generous safety net.

Securonomics offered policymakers the useful fiction that there was no trade-off to be made between economic growth and state-guaranteed financial security. But it was fiction nonetheless. The key to Trump’s appeal was his rejection of the Bidenomics/securonomics view of the world. Growth really is the ‘number one mission’ of the US government, which has important consequences for countries within the US-led order. In a Trumpian world of harsh trade-offs, cakeism won’t do for America’s allies.