The new Labour government must remain “laser-focused” on seizing the positive signals in the UK economy and delivering growth, influential business groups have said.
At Keir Starmer’s first press conference as prime minister on Saturday, he pledged to chair new “mission delivery boards” to “deliver change” and deliver on Labour’s election promises, including boosting economic growth, investing in clean energy and improving opportunity through a new skills agenda.
Louise Hellem, chief economist at the Confederation of British Industry (CBI), said: “Businesses will see the general election and the clear mandate given to the new government as an opportunity to kick-start the economy.
“That means we need to count on the new administration to get started right away and focus fully on delivering growth. It’s those tough decisions, made early, that will help us attract investment, seize growth opportunities and reinvigorate our pitch to global investors.”
Her comments came after the business lobby group said new data showed financial services activity grew “solidly” in the second quarter of the year, following a strong rebound in the first three months. Financial firms expect volumes to grow even faster in the coming three months, the CBI’s latest survey of banks, insurers and investment firms showed.
The news of more positive economic news that coincided with Starmer’s arrival in Downing Street was echoed by other surveys. According to the British Chambers of Commerce, business confidence rose in the second quarter of this year, with 58% of businesses expecting an increase in turnover in the next 12 months.
The BCC added that its quarterly survey of businesses – the majority of which are small and medium-sized enterprises (SMEs) – showed that business conditions were returning to pre-pandemic levels, as measured by turnover and cash flow.
BCC Director General Shevaun Haviland said: “Our message to the new government is clear. We need a long-term economic plan that puts the green transition at its heart, with a workforce fit for the future, living in thriving local places and powered by global and digitally enabled businesses.
“The business community is ready to work with government to benefit from the positive signals our data shows.”
Another study, the UK Jobs Report, conducted by accountancy firm KPMG and the Recruitment and Employment Confederation (REC), found that the UK saw its fastest rise in permanent salaries in eight months.
REC CEO Neil Carberry said the new government had made it clear that growth and prosperity would be its primary goal. “But only businesses can make this happen for them – a partnership is essential,” he said. “Working with businesses to ensure the new deal for workers is delivered in a way that businesses can embrace, and that supports the agility that workers and employers need, is essential.”
after newsletter promotion
The positive reactions and calls for partnerships with the private sector came after a former governor of the Bank of England was due to report to the Treasury this week on the creation of a national prosperity fund.
Mark Carney, who was the Bank’s governor between 2013 and 2020, is leading a taskforce advising new Treasury Secretary Rachel Reeves on the creation of the new fund. Its findings are expected to be published on Tuesday.
The National Prosperity Fund is one of the biggest parts of Labour’s pledge to boost the economy and step up efforts to tackle the climate crisis, along with Great British Energy, Labour’s planned energy company.
The wealth fund will invest a planned £7.3 billion over the parliamentary term, with £1.8 billion going to ports, £1.5 billion to gigafactories, £2.5 billion to clean steel, £1 billion to carbon capture and £500 million to green hydrogen. The fund has been criticised for being small in size and limited in the scope of investments it can undertake – and will be given a target of attracting three times as much private capital as it invests.
Labour says the fund will create more than 650,000 jobs in sectors including electrical, plumbing and engineering, alongside plans for home insulation.