I have read comments from a number of business leaders who endorsed Labour at the last General Election expressing ‘buyers’ remorse’ in recent weeks.
The changes to National Insurance and the minimum wage – which kick in next week – alongside the planned reforms to employment law legislation, has left many in the business community feeling a bit battered and bruised.
I do get where they are coming from. I outlined my frustration at the less than auspicious start by the government here.
However, unlike some, I have not been struck by a bout of amnesia – and nor do I think that the new government – and it still is ‘new’ – has got everything wrong.
Keir Starmer, Rachel Reeves and their team were never going to be able to reverse the shambles that they inherited after 14 years of Conservative rule in seven months.
Lest we forget an unnecessarily harsh austerity programme that choked off capital spend and infrastructure improvements, Brexit, and Liz Truss. On top of that, the country was starting to look like a total basket case to investors, as government ministers – indeed prime ministers – were moved in and out of their roles more often than Everton have changed their manager in recent years.
So, on the back of a spring statement that appears to have been panned by both left and right, let me see what the chancellor will be planning and hoping for as we move into the next phase of Labour’s administration.
Despite all the screaming headlines, there is actually a growing optimism around the UK economy. Inflation came down to 2.5% this week, and the Bank of England expect to make further interest cuts before the end of the year.
The pound is currently £1.30 against the Dollar, its strongest for some time.
The OECD, although downgrading the UKs growth forecast to 1.4%, caveat this against a backdrop of global economic uncertainty (Trump and tariffs among the most serious of challenges). For context, in the G7, the UKs growth will beat all-comers other than the States.
De-regulation, closer ties with the EU and the removal of many trade barriers, and increased defence spending (which will benefit our sizeable defence manufacturing industry), are all potential ‘green shoots’ that the chancellor will be looking to in order for her to start to talk more confidently about delivering her growth mission.
In addition, if the government can deliver the long overdue reforms to our antiquated planning system, and get its housebuilding programme on track, then Labour may have a much more positive story to tell when Rachel Reeves delivers her next budget in the autumn.
If’s, but’s, and maybe’s up to a point. But as one of the government’s treasury team said to me recently “We’ve inherited a 14-year shit show. At least give us 14 months to sort it out.”
