Labour’s shadow chancellor Rachel Reeves is shifting the focus of her policies to favour growth over her party’s previous priorities. Insiders say Reeves has been pushing for ideas to get the economy growing since presenting her Budget in October, when she raised taxes and increased public spending. Reeves is expected to unveil more changes next week, including the expansion of Heathrow airport and easier planning rules for businesses, as she tries to appeal more to the sector. Last week we reported on how a survey from the British Chambers of Commerce had shown small business confidence was tanking, and yesterday we highlighted the manufacturing slowdown. Meanwhile, the government’s latest attempt to stimulate the economy with another Help to Buy scheme was criticised by the Financial Times, which said the policy would do more harm than good by fuelling house price inflation.
Reeves used to be known more for her progressive views on green policy and wealth inequality, but a sudden sense of urgency within the Treasury has altered her priorities. One City source described Labour as having done “a great job of pretending to be pro-business up until [the Budget]. No one would say they are now”. However, the evidence from Labour’s first months in government has been criticised as “meandering”, and they have been accused of losing time because their “preparing for government team wasn’t really preparing for government”.
Labour has raised concerns over the health of the UK’s economy, with sluggish growth and high levels of debt. However, Treasury officials are seeking to remove barriers to business, providing a better environment for entrepreneurs to flourish, creating more jobs, and in turn growing taxable incomes for central government. Reeves’ task will be trying to help the wider public to understand such pro-business legislation, despite the shock-and-awe tactics used by her party to oppose the Conservatives before the election.
More positively, however, UK wages are increasing, even if swathes of voters continue to feel hard done by. Inflation is also within a tolerable range. Reeves will pledge to do whatever it takes to get the economy moving again in her speech next week. However, while business continues to be against Conservative policies, it is unclear whether they will trust Labour, who have long promised progressive and redistributive policies, to be their go-to party.
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