The latest Office for National Statistics (ONS) statistics paint a bleak picture for Britain’s economic outlook. Growth over the last three months is even slower than expected, with the UK’s GDP rising just 0.1% from July to September, half as much as forecast. That comes hard on the heels of the news on Tuesday that unemployment has hit 5%, the highest it has been in four years. With more young people not in education, employment or training and businesses repeatedly voicing concerns over tax hikes, it is clear that Britain is no longer the welcome home to businesses it once was. With the Budget just two weeks away, the Chancellor still has the power to turn the British economy around. But only if she signals to businesses that she has their interests at heart.
Britain’s economic woes should be ringing alarm bells in the Treasury. Despite claiming that she would lead the most “pro-growth, pro-business” Treasury that Britain has ever seen, the data tells a different story. The Chancellor must recognise what said data is telling her—that her economic plan is not working. Unemployment is rising, opportunity is shrinking and young people are becoming increasingly disengaged from the labour market. At a time like this, the Government ought to lean into what creates jobs, investment and growth, not pile on more burdens and punitive tax hikes.
Such concerns are not solely theoretical. According to the Institute of Chartered Accountants, business confidence has fallen in the UK for the fifth consecutive quarter in a row. This comes on top of business leaders outwardly expressing dissatisfaction with current government policy, with the Jobs Foundation leading a campaign just a few months ago to urge the Government to implement a number of pro-business policies such as a skills tax relief. Even the British Chambers of Commerce has warned the Government about “worrying” statistics, and the need to change tack before it is too late.
Yet the response from the Treasury suggests a complete dismissal of this dire fiscal landscape. Reeves and those close to her have already hinted at tax rises in a number of different areas. Such rises come on top of the burdensome increase to employers’ National Insurance introduced last year. If the Chancellor continues to treat businesses as cash cows rather than engines of growth, they will pull back—as some big names have already done. If entrepreneurs sense the Government is more eager to extract revenue than enable enterprise, creativity and ingenuity will slowly die out.
Right now, the data show we need a Chancellor who is willing to put her foot on the pedal and go for growth. Instead we have a Government that seems unable to even take the handbrake off. The result is an economy that looks increasingly defensive rather than ambitious. An economy that is scared of growth, rather than one willing to encourage it.
Reeves has time to reevaluate before the Budget. Britain suffers from a pervasive anti-business mindset that in recent years has been allowed to run amok. The way to challenge that begins at the top. If the Treasury treats business success as something to tax and subdue rather than reward and partner with, then the wider culture will adopt the same attitudes. Entrepreneurs will think twice before starting up. Investors will look elsewhere.
Neither the British economy nor the British public can afford delay. Unemployment is climbing, young people are being alienated and confidence is plummeting. The Chancellor must shift course in the remaining few days before the Budget. That means fewer raids on business, less red tape and less burdensome regulation. It also means more opportunity, more competition and more economic freedom.
The statistics are clear. The coming days present a moment of choice for the Chancellor, and if she makes the wrong choice, our economy will suffer for years. If she acts now, Britain stands a chance of turning this around.
This article originally appeared at CapX.
The post Red Alert for the British Economy was first published by the Foundation for Economic Education, and is republished here with permission. Please support their efforts.
