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Shelagh Fogarty 1pm - 4pm
29 January 2025, 18:25 | Updated: 29 January 2025, 18:29
Regardless of political persuasion, everyone here in ‘Old Blighty’ would want this enthusiastic, but business naïve government, to succeed for their families and the general welfare of the country.
To date, the Government’s policies for delivering growth has been not only incomprehensible, but also misguided.
No one doubts that the previous Conservative administration left the public finances in disrepair, leaving the Chancellor in a bind with little room to manoeuvre in terms of borrowing.
However, did Chancellor Reeves dine out on it! She and her Cabinet colleagues never gave up a single opportunity to vilify the incompetence of the Tories, almost to a point of excruciating boredom.
What has frustrated many political observers is that after 14 years in opposition, cogent economic policies did not appear to have been cobbled together.
We got the ‘change’ and ‘growth’ messages loud and clear. Even though the smoked salmon bagel breakfasts had been well received in the City and by the ‘good and the great’ from business, Messrs Starmer, Reeves and Reynolds failed to capitalise on the massive level of goodwill there was for this new administration.
The much-vaunted ‘£22 billion ‘Black Hole’ was not accepted as a mitigating excuse.
Having to wait three months for the Budget, meant its timing proved to be an error of judgement.
The Budget was plain anti-business. Industry, business commerce, retail and hospitality to man were forlorn at the extra cost imposed on them by the £25 million increase employers' National Insurance contribution, which ‘holed’ them below the Plimsoll line in terms of massive increased costs and the necessity of having to lighten up on the number of employees.
Consequently, GDP for the last six months of the year all but disappeared. Such was the concern over the content of the Budget, Gilt yields rallied sharply, increasing the cost of borrowing by a £100 billion in a year.
The goodwill, the air of stability and confidence in, as well as any semblance of positive sentiment for the Government’s policy went up in a puff of smoke.
It takes years to build up goodwill and support from the investment community.
Losing that support and goodwill can evaporate in a ‘puff of smoke. At this moment in time, the Government was not in a good place as far as investors were concerned.
The situation was exacerbated by the introduction of fresh Inheritance and non-dom status taxes, which have triggered the exodus of 10,300 millionaires in the last few months, eager to take their leave to more sympathetic climes, despite the Chancellor easing up on some IHT legislation.
Yesterday the Chancellor received tacit acceptance for her plans on £160 billion surplus pension funds to be invested in aspiring UK companies, with a proviso there will be some protection for members.
Today, Wednesday, almost to a frenzied fanfare of trumpets, drums and cymbals, Chancellor Reeves rose to her feet to deliver an ebullient impassioned speech, full of zest and verve, on how the Government would throw caution to the wind by throwing the book at unhelpful regulation, with a view to guaranteeing some gargantuan sensible, if unattainable, infrastructure deals.
This was her eagerly expected keynote speech on growth.
In passing I was absolutely appalled that the speech was delivered at the premises of Siemens in Oxfordshire. No offence to the German titan, but what was wrong with Rolls Royce or BAE Systems?
M/S Reeves could not get her words out fast enough.
She almost exploded, telling the gathered throng of enthusiastic business people her bold and ambitious plans for Heathrow, Gatwick and Luton airports, the redevelopment of Old Trafford and probably the most important of all, the expansion of the Oxford & Cambridge Silicon Valley, which could in itself be a gold mine.
M/S Reeves told us of the billions of pounds that had poured into the UK for infrastructure projects. Half of the money had been raised by the Tories in passing, but never mind.
The number of plans the Chancellor had for bolstering the economy would fill a copy of the Encyclopaedia Britannica
The value of the National Wealth Fund and the British Business Bank we were told was key to the success of these projects. You would have thought the Government did not have a care in the world.
There is no doubt that many of these plans have considerable merit. Whether they can be delivered is another matter. The airport runways will take a decade to come to fruition; so to rely too much on growth in the next year or so might be folly. As to cutting negative regulation the Chancellor is spot on.
However, though I greatly admire the Chancellor’s stoicism about deregulation and the nimby culture. The law in this country remains omnipotent!
She will find dismissing objections to runways, airports and factories much harder than she thinks. I venture to suggest her task might be made much easier without membership of ECJ & ECHR!
Many economists don’t rule out the possibility of a mild recession this year. Little fiscal headroom this year and so much debt - £2.7 trillion! This could adversely affect the stimulation of growth?
Also, the prospect of stubborn inflation and increased unemployment remains a worrying concern.
I wish the Chancellor ‘God’s speed with her plans.’
However, as far as I am concerned, there is little encouragement here to attract inward investment for SMES and other aspiring businesses, which could make the UK an attractive alternative to the US for investors.
Time alone will tell.
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