The new Labour government must stay “laser-focused” on capitalising on the positive signs in the UK economy and delivering growth, influential business groups have said.
In Keir Starmer’s first press conference as prime minister on Saturday, he pledged to chair new “mission delivery boards” to “drive through change” and enact Labour’s manifesto commitments, which include stimulating economic growth, investing in clean energy, and improving opportunity through a new skills agenda.
Louise Hellem, the chief economist at the Confederation of British Industry (CBI), responded: “Businesses will be looking at the general election, and the clear mandate given to the incoming government, as a reset moment for the economy.
“That means looking to the new government to hit the ground running and staying laser-focused on delivering growth. It’s those tough decisions, taken early, that will help us to attract investment, seize growth opportunities and revitalise our pitch to global investors.”
Her comments came as the business lobby group said new data showed financial services business growing “solidly” in the second quarter of the year, after a strong rebound in the first three months. Financial firms expect volumes to increase at an even faster rate over the next three months, the CBI’s latest survey of banks, insurers and investment firms found.
News of more positive economic news coinciding with Starmer’s arrival in Downing Street was reiterated by other surveys. Business confidence rose in the second quarter of this year, according to the British Chambers of Commerce, with 58% of firms expecting an increase in turnover in the next 12 months.
The BCC added that its quarterly survey of firms – the majority of them small- and medium-sized enterprises (SMEs) – showed that business conditions were returning to pre-pandemic levels, when measured by sales and cashflow.
Shevaun Haviland, the BCC director general, said: “Our message to the new government is clear. We need a long-term economic plan that has the green transition at its heart, with a workforce fit for the future, living in thriving local places and powered by businesses that are globally facing and digitally enabled.
“Business stands ready to work in partnership with government to capitalise on the positive signs our data is showing.”
A separate survey, the UK report on jobs conducted by the accountants KPMG and the Recruitment and Employment Confederation (REC), suggested the UK was experiencing its fastest rise in permanent pay for eight months.
Neil Carberry, the REC chief executive, said the incoming government had been clear that growth and prosperity would be its core goal. “But only business can deliver this for them – a partnership is necessary,” he said. “Working with business to make sure the new deal for workers is delivered in a way that businesses can adopt, and which supports the agility workers and employers need, is key.”
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The positive comments and calls for private sector partnerships came as a former Bank of England governor was set to report to the Treasury this week on the creation of a national wealth fund.
Mark Carney, who was the Bank governor between 2013 and 2020, has been leading a taskforce advising the new chancellor, Rachel Reeves, on the creation of the new fund, with his findings expected to be published on Tuesday.
The national wealth fund is one of the biggest single items in Labour’s pledge to stimulate the economy and boost efforts to tackle the climate crisis, alongside Great British Energy, its planned energy generation company.
The wealth fund will invest a planned £7.3bn over the course of the parliament, with £1.8bn going to ports, £1.5bn to gigafactories, £2.5bn to clean steel, £1bn to carbon capture and £500m to green hydrogen. The fund has been criticised for being small in size and narrow 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 that alongside its home insulation plans, the fund will help to create more than 650,000 jobs in sectors such as electricals, plumbing and engineering.