Keynesian Mulitplier

 If a government has its own 'fiat' (independent) currency it can increase or decrease spending to influence the wider economy.

If a government increases spending in ways that stimulate the economy; the increase in the economy's spending will be higher than the government's outlay. This is a kind of economic profit or 'multiplier' and the government takes back some of the multiplier's surplus in tax to repay the initial outlay and stimulate the economy again if needed. Governments can borrow in order to stimulate an economy.

The Keynesian multiplier effect depends on the expenditure one person or business becomes the income of another. The problem with this theory when put in practise is savings. Savings take expenditure out of the economy and reduce the multiplier effect. In fact savings in the form of investing in buying houses may have contributed to the stagflation of the 1970s. More high quality council housing might have staved off stagflation (sorry digressing)

If a government injects £100m into an economy to be spent by individuals whose socio-demographic profile indicates they'll spend all of it; socio-economic groups C2, D &E. The following sequence takes place. It is known from the post war Keynesian golden years that this happens,

The recipients will spend 90% of the income that is £90m on goods and services. The recipients also spend c90% of the £90m income from consumers this is £81m. Experience of the 1950s & 60s indicates this multiplier goes on for ten rounds so the initial £100,m outlay stimulates the economy by around £1billion

The multiplier effect also creates jobs, the increased individual and business spending bring in tax revenue the repay the initial government outlay.

The Tory government belive in the 18th century ideology that the government should do nothing. The bank of England try to stimulate the economy with what they call Quantitative Easing (QE) where they buy government and corporate bonds, this has limited effect.

Labour don't seem to have an economic direct just now but it could be expected to be Keynesian. The big, big problem now is that Britain's got no industry left. So any fiscal stimulus aimed at the consumer would be spent in China, India and similar. These overseas areas that have taken British manufacturing couldn't spend in Britain even if they wanted to. OK, they do buy property, luxury cars and yachts, but not enough to make a Keynesian pinprick.

As Britain has become a 'service' economy that doesn't make much anymore the only solution would be for the government to spend so as to stimulate this sector.

The Tories claim everything in the economy is rosy but this is just not true. Britain is in decline and the consumers who could rescue the economy going to be hit with four massive shocks. Brexit, covid, surging energy prices and backlash from Russian sanctions.

My advice to a Labour leader is, do not win the next election!