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What’s in there for me? That’s a question that many UK companies legally ask after Rachel Reeves’s spring statement.
For all of the UK Prime Minister’s rhetoric on Kickstart’s economic growth, the domestically focused FTSE 250 index left a barely shift on Wednesday. The most positive response business lobby group was that the Prime Minister did not further raise the burden on the private sector.
Of course, UK defence stocks were hilarious last month after Prime Minister Kiel announced in February that defence spending would rise to 2.5% of GDP. However, many other companies struggle to find a silver lining, particularly in support of employers’ contributions to national insurance and the impending change in national living wages.
Despite this darkness, the Labour Government has another shot of changing the narrative through the promised industrial strategy, which is expected to be published in June along with a review of spending.
The cynician might roll his eyes. After all, government calculations have led to 10 industrial strategies or growth plans over the past 14 years, and growth remains elusive. However, even when public finances are tough, industrial strategies can add value by identifying where the state can fix issues that the private sector cannot address on its own.
So, how about making a better fist this time? A lesson from the corporate world is that brevity often pays. After joining in 2023, Shell CEO Wael Sawan set a handful of well-defined targets that he could judge.
Past industrial strategies are simply cumbersome. Few people forget Teresa May’s 2017 industrial blueprints of over 250. This was later dismissed by former conservative business secretary Kwasi Kwarten as “themeless pudding.” The government consultation issued last year was named eight industries, ranging from advanced manufacturing to specialized services. Already, it’s a risk that’s too broad.
Reeves appears to be encouraging and thus resisting the temptation to tear the efforts of his predecessor. She is pushing hard in many areas already identified as a limited or cost-free way to generate growth, such as encouraging more pension funds to infrastructure. She is also pushing hard to reform the home’s construction and planning that she believes UK fiscal watchdog will add more than £15 billion to the economy.
Perhaps the biggest tool Reeves can act on is the sledgehammer. Past industrial strategies have declined between sector silos as national audit firms could happen again. This would be a cheap way to raise eyebrows for business leaders.
nathalie.thomas@ft.com
