Labour talking down the economy and threatening tax hikes is hurting the UK economy, business chiefs warn _ HIeuuk
Labour‘s love-in with corporate Britain was on the rocks last night as business leaders warned of the damage caused by talking down the economy and threatening tax hikes.
The Prime Minister was urged to ‘offer hope’ instead of a continuous focus on the difficulties of the past, which threatens to put much-needed investment in jeopardy.
The Confederation of British Industry (CBI) and the Institute of Directors (IoD) took aim at Labour as official figures showed growth flatlined in July – Sir Keir Starmer‘s first month in office.
He and Chancellor Rachel Reeves have insisted ‘painful’ decisions will be necessary in the Budget next month, claiming that they have inherited a dire economy.
Labour ‘s love-in with corporate Britain was on the rocks last night as business leaders warned of the damage caused by talking down the economy (pictured: Keir Starmer)
Starmer and Chancellor Rachel Reeves (pictured) have insisted ‘painful’ decisions will be necessary in the Budget next month, claiming that they have inherited a dire economy
But in a speech tonight CBI chief executive Rain Newton-Smith will say that while recent years have been difficult, the continuous negativity threatens to backfire.
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‘The more we focus on that difficult inheritance, the harder it is in global boardrooms to make the pitch to invest in, come to and stay in the UK,’ she will say. ‘We must also have and offer hope.’
And in a letter to the Chancellor, IoD director general Jonathan Geldart said fears of increases in capital gains tax, inheritance tax and a raid on pension savings were already taking their toll.
‘It has led some to pause some of their investment and hiring plans, and others to reconsider the UK as a location for their business,’ Mr Geldart said. He urged Labour not to ignore growth in its effort to repair the public finances.
‘There has been understandably much focus on the necessity to balance the books,’ he said.
‘But there is a risk that short-term budget balancing takes place at the cost of future growth prospects.’
But in a speech tonight CBI chief executive Rain Newton-Smith (above) will say that while recent years have been difficult, the continuous negativity threatens to backfire
Sir Keir and Ms Reeves spent years before the election wooing business leaders in a so-called ‘prawn cocktail offensive’ designed to reassure the City the economy would be safe in their hands.
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To some investors, Labour’s huge parliamentary majority offered the chance to talk up Britain as a haven of stability compared to other fractured political landscapes.
Instead, the Chancellor has insisted that the economic inheritance from the Tories is the worst since World War II.
Experts have ridiculed the claim, pointing out that growth in the first half of this year was the strongest in the G7 group of advanced nations and inflation remains close to 2 per cent, while unemployment is falling.
There are now fears growth could be stunted by Labour’s pessimism, as well as its threats to raid those with the ‘broadest shoulders’ as it seeks to fill a £22billion black hole in the public finances.
Figures from the Office for National Statistics show gross domestic product failed to grow in July thanks to a downturn in manufacturing.
Meanwhile, fears are growing that Labour’s plan to impose a raft of workers’ rights – such as the ‘right to switch off’, the four-day week and a crackdown on zero-hour contracts – is taking its toll on hiring.
