As the Prime Minister’s approval rating slumps even further, it’s a 3-way battle to lead the polls as the political landscape shifts. Barclays Bank boss tells No 10 to ‘Talk up Britain’ in a 1986 Margaret Thatcher inspired ‘unleash the animal spirits of Essex men and women’ moment…
Relax the Rules Reboot
This year, 1.8 million households will come to the end of super cheap mortgage rates. On top of that, having a shower will cost you 26% more as water bills surge to fund much needed infrastructure investment, whilst we paid £2m an hour to keep the lights on following the windless cold snap.
4 in 10 first time buyers need help to afford a home deposit – that’s if your house can get built as a looming lorry driver crisis threatens to crash plan for 1.5m homes. To help, the Government has backed a proposal to water down limits on riskier mortgage lending. From memory, Northern Rock were 125% open to looking at ideas that boosted home ownership, which didn’t end too well.
Our other debt, Government borrowing, has gone from around £800bn in 2009 to £2.8tn today. Last year we spent £107bn servicing our national debt. The good ship cheap borrowing has sailed, policy therefore must respond with either a Musk-like review of spending or consider higher taxes. The PM insists he has ‘full confidence’ in his Chancellor, but has refused to repeat Ms Reeves’ promise to ‘not come back for more’ if required.
The Gallagher Growth Wonderwall
The things that Rachel has been pushing for are just not happening quick enough. In a further attempt to get serious about growth, it’s now regulation for growth, not risk. The Competition & Markets Authority published its annual plan last month using the word growth 111 times – the more we say it, the more it will happen!
It’s that classic communication problem. Firstly, actually having some tangible things that will work immediately to announce, and secondly, spinning a positive vibe around UK Plc and the Government’s handling of it. Arguably, the Chancellor’s relations with business are at a low ebb.
Employment growth has stalled, so those firms keen to get employees back into the office (unless you are the Civil Service) may be able to labour the point. Most manufacturers are citing NI employment costs as a key risk to company growth, but remain optimistic about the industrial strategy and see it increasing plans for investment.
OBR wriggle room evaporated, Bank of England growth forecast halved, promises to cut energy bills not delivered. That magic fix doesn’t seem to exist and a 7-2 vote to cut base rate will do little to fan the growth flames. If you thought January was glum, statistically February is the least happy month.
Last year, Taylor Swift’s UK tour did more for the UK economy than the Chancellor – is Rachel pinning her ‘Masterplan’ hopes on an economic ‘champagne supernova’ from Liam & Noel this summer!
The Productivity Paradox
First it was JFK v Khrushchev in a cold war space race, now it’s Trump v Chinese Premier Li Quang in a ‘DeepSeek’ quest to dominate the AI airwaves. China’s stance is ‘we are done following, it’s time to lead’.
Back in blighty, only around 2pc of people are using generative AI on a daily basis at work. Mr Starmer has pledged to make Britian the ‘best state partner’ for AI companies, creating AI growth zones and investing in supercomputing power.
AI is everywhere (clearly generating its own publicity) except in our productivity figures. The International Monetary Fund see the UK as particularly well placed to benefit from productivity enhancing AI, potentially lifting output by over 10%. Just hope we don’t need a loan from them to make it happen.
A Place in the Brexit Sun
The British public backs a Brexit reset, 63% think Brexit has failed, 57% favour a youth mobility scheme. There is far more red tape for businesses that trade with the EU, with small businesses being affected far more by Brexit.
British passport holders are now subject to a single lane being open in the arrivals hall. This year you will need biometric, finger and face recognition, to be followed by a European Travel Information & Authorisation System, alongside your passport to travel to holiday favourite Benidorm.
More disturbing for property search lovers, you now face 100% Spanish property tax on your 90-day bolt hole. Whilst Rachel Reeves is ‘absolutely happy’ to look at joining a tariff-free trading scheme, my vote goes to TV presenter Jasmin Harman (Minister of Sun) to renegotiate our ability to move to the sun permanently.
Channel 4 – six o’clock daily.
Simon Cossey is Dafferns’ Business Development Consultant and part of our Strategic Advisory team.
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