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New labour government urged to prioritise economic growth, say leading business groups

July 8, 2024

Independent restaurants are being forced to offer hefty sign-on bonuses of £1,000 or more for chefs and other kitchen staff as the shortage of skilled workers tightens in the busy festive season.

The newly established Labour government must remain “laser-focused” on harnessing positive economic indicators and delivering growth, assert prominent business groups.

In his inaugural press conference as Prime Minister on Saturday, Keir Starmer committed to chairing new “mission delivery boards” to “drive through change” and fulfil Labour’s manifesto promises. These include boosting economic growth, investing in clean energy, and enhancing opportunities through a revised skills agenda.

Louise Hellem, Chief Economist at the Confederation of British Industry (CBI), commented: “Businesses view the general election results and the clear mandate given to the new government as a pivotal moment for the economy. The government must hit the ground running and remain steadfast in delivering growth. Early tough decisions are crucial to attracting investment, seizing growth opportunities, and enhancing our appeal to global investors.”

The CBI’s latest survey indicates solid growth in financial services in the second quarter, following a robust rebound in the first three months. Financial firms anticipate even faster growth in the next quarter.

Further positive economic news coinciding with Starmer’s premiership was reflected in other surveys. The British Chambers of Commerce (BCC) reported increased business confidence in the second quarter, with 58% of firms expecting higher turnover in the next 12 months. Their quarterly survey revealed that business conditions are returning to pre-pandemic levels, especially in sales and cashflow.

Shevaun Haviland, BCC Director General, emphasised: “Our message to the new government is clear. We need a long-term economic plan centred on the green transition, a future-ready workforce, thriving local communities, and globally competitive, digitally enabled businesses. The business community is ready to collaborate with the government to capitalise on the positive trends indicated by our data.”

A separate survey, the UK Report on Jobs by KPMG and the Recruitment and Employment Confederation (REC), noted the fastest rise in permanent pay in eight months.

Neil Carberry, REC Chief Executive, stated: “The incoming government has underscored growth and prosperity as core goals. However, achieving these requires a partnership with businesses. Ensuring the new deal for workers is implemented in a business-friendly manner that supports necessary agility for both workers and employers is crucial.”

These supportive statements and calls for private sector partnerships come as former Bank of England Governor, Mark Carney, prepares to report to the Treasury on creating a national wealth fund. Carney, who served as Governor from 2013 to 2020, leads a task force advising Chancellor Rachel Reeves, with findings expected on Tuesday.

The national wealth fund, a significant component of Labour’s economic stimulus and climate crisis strategy, aims to invest £7.3bn over the parliamentary term. This includes £1.8bn for ports, £1.5bn for gigafactories, £2.5bn for clean steel, £1bn for carbon capture, and £500m for green hydrogen. Despite criticism over its size and investment scope, the fund aims to attract three times its investment in private capital.

Labour asserts that, alongside home insulation plans, the wealth fund will help create over 650,000 jobs in sectors such as electricals, plumbing, and engineering.