Intelligence Squared

Is it Game Over for Keir Starmer? Martin Wolf for The Intelligence Squared Economic Outlook 2026 (Part One)

February 15, 2026

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  • Martin Wolf suggests that the current UK Prime Minister's insistence on staying in power signals their likely departure, which could introduce significant fiscal risks if a subsequent Labour government pursues spending without corresponding tax increases. 
  • Donald Trump's guiding principle is self-benefit, making US policy unpredictable, though the short-term economic impact of his protectionist measures was mitigated by a strong domestic demand engine fueled by AI investment and fiscal expansion. 
  • The US dollar's dominance is expected to erode slowly due to geopolitical tensions and diversification efforts by countries like China, but it is unlikely to be replaced soon, especially with the US promoting stablecoins backed by Treasury liabilities. 
  • Populism, on both the left and right, shares an anti-elitist style that demands absolute governmental discretion and often rejects fiscal and monetary constraints, leading to economic nationalism and protectionism. 

Segments

Water and Innovation Partnership
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(00:00:00)
  • Key Takeaway: Water is a deeply linked, often unnoticed foundation for the modern digital world, food production, and innovation.
  • Summary: The segment highlights the critical link between water and modern infrastructure like data centers and food production. Intelligence Squared partnered with WaterAid to focus on how water shapes climate resilience and global development. Investing in water is presented as a powerful way to secure an equitable future.
Planet Visionaries Podcast Promotion
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(00:01:15)
  • Key Takeaway: The Planet Visionaries podcast features conversations with conservation leaders like Mark Ruffalo and Chris Tompkins.
  • Summary: Alex Honnell promotes the new season of the Planet Visionaries podcast, which focuses on bold ideas and solutions in conservation. Guests include climate champion Mark Ruffalo and conservationist Chris Tompkins. The podcast is in partnership with the Rolex Perpetual Planet Initiative.
2026 Global Economic Test
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(00:01:45)
  • Key Takeaway: Geopolitical events in early 2026, including Trump’s actions regarding Venezuela and Greenland, signal another resilience test for the global economy.
  • Summary: Producer Mia Sorrenti introduces Martin Wolf’s return to discuss the economic outlook following aggressive geopolitical moves by the US administration. Key concerns include the implications of American antagonism and the impact of rising populism on incumbent parties’ economic policies.
UK Prime Minister’s Political Future
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(00:04:41)
  • Key Takeaway: Wolf believes the current UK Prime Minister’s insistence on remaining in office suggests their departure is likely inevitable.
  • Summary: Wolf views the current government as small ‘c’ conservative and post-trust, largely following the Treasury’s orthodox fiscal guidance. A potential shift to a more left-leaning Labour government risks creating market disruption due to the UK’s high public debt and chronic current account deficit.
Unpredictability of Trump’s US Policy
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(00:09:28)
  • Key Takeaway: The primary guiding principle for the US administration is what benefits Donald Trump personally, making future policy shifts extremely difficult to predict.
  • Summary: Wolf notes that the US is no longer bound by predictable principles, citing fluctuating stances on trade tariffs and military interventions like the situation with Venezuela and Greenland. Currently, the most stable major power relationship appears to be with China, contrary to expectations from a year prior.
Impact of US Protectionism and AI Boom
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(00:12:18)
  • Key Takeaway: The short-term negative economic impact of US protectionism was modest because the US is a relatively closed economy, and this was offset by a colossal AI-driven investment and fiscal spending boom.
  • Summary: The inflationary effect of recent US tariffs was not colossal due to low import share of GDP, and retaliation was minimal outside of China. The massive demand generated by AI investment and expansionary fiscal policy benefited the rest of the world, though long-term trade overall is expected to shrink.
Future of the US Dollar Dominance
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(00:15:50)
  • Key Takeaway: While the dollar’s role will diminish slightly due to diversification attempts, it is likely to remain the world’s dominant single currency for the next two decades.
  • Summary: China is actively trying to invoice trade in RMB, and the EU is attempting similar diversification, pushing towards a more multi-currency world. However, alternative currencies face huge disadvantages compared to the dollar’s established advantages as the largest economy’s currency. The US strategy involves promoting stablecoins, which are digital fiat currencies backed by US Treasury liabilities.
UK’s Potential Advantages Poll
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(00:26:14)
  • Key Takeaway: The audience views the UK’s greatest potential advantage in an unstable world as its trusted institutions and the rule of law, scoring 37%.
  • Summary: Wolf agrees that trusted institutions are a crucial asset relative to peers, especially compared to the radical institutional changes occurring in the US. However, Wolf personally finds the opportunity in UK leadership in science, technology, and AI most exciting, viewing the US administration’s assault on its own universities as a unique opening for the UK.
UK Growth and Spending Squeeze
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(00:31:43)
  • Key Takeaway: The UK faces a vicious circle where weak underlying GDP growth exacerbates spending pressures from defense and demographics, forcing tax burdens higher and further lowering real household income growth.
  • Summary: The last 20 years represent the slowest growth and living standards rise since the early 19th century. When the economy is stagnant, managing spending pressures becomes much harder as people are not automatically getting better off. This leads to rising social problems, particularly affecting young adults, necessitating higher taxes.
Economic Basis of Populism
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(00:34:25)
  • Key Takeaway: Populism, regardless of left or right alignment, is a political style characterized by anti-elitism and a demand for absolute governmental discretion to bypass fiscal and monetary constraints.
  • Summary: Populist economics rejects constraints imposed by elites, favoring increased spending and, in some cases, printing money, exemplified by Trump’s indifference to fiscal balances. Both right-wing (Trump) and left-wing (Latin American examples) populists are often economic nationalists and protectionists.
Sponsor Messages and Conclusion
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(00:39:01)
  • Key Takeaway: The episode concludes with promotions for Guinness Global Investors, Roku Ads Manager, New York Presbyterian, Quince, Shopify, and Indeed.
  • Summary: The final segment features various advertisements covering investment management, digital advertising, healthcare, apparel, e-commerce platforms, and hiring solutions. The episode officially closes after these promotional messages.