Labour’s new plans for economic growth

Ahead of the UK General Election on the 4th July, it was clear that whichever party won, the main objective would have to be economic growth.

Businesses have faced many challenges in recent years and, despite the improving economic signs over the past few months, conditions are still tough.

We continue to see high rates of insolvencies, with recently released data showing a 33% annual increase in insolvencies in June 2024[1]. Economic growth has been sluggish, to say the least. Notably, the insolvency rates don’t appear to be directly reflected in the asset finance sector where lending against income generating assets can insulate against some of the risks.

The incoming Government was always going to have a challenging task when it came to rebuilding the economy, but the newly elected Labour Party seems to have taken this within its stride. Within days of being elected, they outlined a raft of policies that are designed to grow the UK economy, making it clear this was a priority.

Businesses crave stability, clarity and certainty, particularly when it comes to investment. After a decade of permacrisis, starting from the Scottish independence referendum through to the inflationary aftermath of Covid and the ratcheting up of interest rates to curb it, businesses want clear direction.

The initial signs have been encouraging.

There have been multiple policies introduced that should support the UK economy, such as the National Wealth Fund, which has outlined £7.3 billion of funding in a bid to encourage private sector investment.

The ambition of this fund to encourage private-sector investment through public funding has been a welcome move. This new fund will see us investing in technology and green solutions to transform some of our existing industries.

The planned investment in green energy more generally is a big step forward in keeping us on track for the 2050 net zero target.

This decisive move will look to guarantee energy security for the UK, something that we have struggled with in the past but will ultimately support our economy by providing green, affordable energy to all individuals and businesses. We’ve seen recently how spikes in energy prices can have a detrimental impact across all sectors of business and we must take steps to address this.

These ambitious policies and initiatives will likely take longer to have a direct impact on businesses. However, other policies like the announcement of the reintroduction of mandatory housing targets and planning reforms, which the Government will consult on over the summer, should translate to more activity in the construction industry in the coming months.

Whilst it seems like there is still a long road ahead, the determination to achieve economic growth through these bold policies by the newly elected Government should be commended. We hope this is just the beginning of the UK’s journey of growth and we’re eager to see how these plans come to fruition to support Britain’s businesses.

Note:

[1] Commentary – Individual Insolvency Statistics June 2024 – GOV.UK (www.gov.uk).