Labour’s business backers have called on Rachel Reeves to spell out her plan for growth after official figures showed the economy was at risk of flatlining.
Data from the Office for National Statistics showed GDP grew by just 0.1 per cent in the three months from July to September, prompting warnings from critics that the Chancellor’s economic plans were failing.
Business leaders who supported Labour prior to the general election have said Reeves must quickly come forward with her proposals to fire growth amid an increasingly gloomy outlook.
It comes two weeks after the Chancellor set out her Budget, which led to criticism that businesses were being forced to carry most of the burden with increased taxes, higher minimum wages and costly regulatory changes.
Senior figures within Labour and business leaders have also backed calls this week from Andrew Bailey, the Governor of the Bank of England, to forge closer ties with the EU, particularly in the wake of Donald Trump’s re-election.
William Bain, head of trade policy at the British Chambers of Commerce, told i: “Our members .. for three-plus years have had to deal with the additional costs of having to get goods to the EU.”
A senior Labour figure argued that a youth mobility deal to allow under-30s migration is a “no brainer” in the wake of Trump’s victory.
But Bailey’s comments provoked a stinging rebuke from senior Tories, with one Conservative source telling i: “Bailey’s Bank of England printed money for fun for years and then took too long to spot the post-Covid inflation spike, and he has the gall to blame Brexit for our low growth?
“Instead of trying to shift responsibility, the Governor should focus on how the Bank is going to deal with the fallout from Labour’s disastrous budget that looks set to ensure prospects for growth remain punishingly low.”
Iain Anderson, chairman of the communications giant H/Advisors Cicero, who carried out a review of business relations for Labour told i: “People want to understand where the growth is coming from. That’s what business people really want to hear. So the long-term strategy, the investment plan for Britain, has be projected more visibly.”
His comments were echoed by Frank McKenna, chief executive of networking and lobbying business Downtown In Business, who was one of 120 business leaders who signed a letter in support of Labour ahead of the election.
“There has been some pushback and criticism from some members we work with – particularly in the hospitality sector,” he said.
“Others in construction and property are more generous in being prepared to take the short-term hit, so long there is a plan to deliver growth. That’s the key – getting growth. The clarity is not quite there.
“The plan isn’t as clear as it needs to be. They say, ‘We will cut rid red tape and we’ll allow people to build, build, build’. That has got to happen as quickly as possible.”
Treasury sources defended the Chancellor’s Budget against criticism that the rise in taxes on businesses had stifled the potential for growth.
They argued stabilising the economy had to be the first step before pushing for faster economic growth – pointing to increase in spending and changes to borrowing rules to allow for bigger investment as examples of how this would be brought forward.
“The Chancellor has been clear that we needed to fix the foundations and restore stability, then we could move forward into growth,” a source told i. “We had to make difficult choices, it was a hard Budget because of the scale of the mess we inherited and one we hope not to repeat.”
They said growth was still “top of the agenda”, as reflected in the Chancellor’s Mansion House speech in which she announced plans to use council pension funds for investment and a pledge to rip up red tape around banker bonuses to boost the financial sector.
“Our measures on planning reform, getting Britain building, investing alongside business in the jobs of the future – this is all aiming towards the long-term growth we want to deliver,” the source added.
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