PM’s growth rhetoric does not match reality
Stirring words from the Prime Minister in today’s City PM, with Keir Starmer vowing to unleash the “animal spirits” of the private sector. He knows his audience, I’ll give him that; City PM readers know better than anyone just how important businesses large and small are to the country’s prosperity.
It wasn’t very long ago that the Labour party, under different leadership, talked about the private sector with open contempt, so we should be grateful that this Prime Minister and his team are at least saying the right things. In his column, Starmer heaps praise on “entrepreneurs who work day and night to build a business from scratch” and the “family companies that have passed know-how across the generations.”
But talk is cheap.
Those entrepreneurs are currently braced for a spike in the cost of employing people in their fledgling businesses while the family firms that Starmer celebrates have been knocked for six by potentially ruinous changes to the inheritance tax system.
The PM writes that economic growth is “the number one mission of this government” but the evidence suggests this zeal is more a panicked afterthought than a foundational purpose. The truth is that Starmer and his ministers nearly talked the UK into a recession with their doom-and-gloom rhetoric throughout late summer and the autumn of last year, with the policies unveiled in October’s budget looking likely to finish the job.
The Resolution Foundation, a think-tank with close links to this government, has warned that the jobs market “is already in recession territory” as firms adapt to a wave of cost and tax increases coming into effect next month, alongside the imposition of new employment legislation that makes a mockery of Starmer’s claim to be slashing regulations that hold businesses back.
In response to the Prime Minister’s article for us, one seasoned public affairs advisor got in touch to say “this is the least pro-business government I’ve come across during a 25 year career connecting politicians with UK PLC.” And this person, like plenty of other business leaders, was enthusiastic about Labour before the election.
The government’s drive to cut (some) growth-destroying regulation is welcome, but it amounts to little more than good housekeeping. We can lament the fact that bureaucracy grew out of control over the last decade, and welcome the fact that Starmer wants to clip its wings, but it does not add up to a whole-of-government growth strategy of the kind the PM claims to be pursuing.