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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
What’s in it for me? That’s a question many British businesses will legitimately be asking after Rachel Reeves’ Spring Statement.
For all of the UK chancellor’s rhetoric about kick-starting economic growth, the domestically focused FTSE 250 index barely shifted on Wednesday — signalling a collective resigned shrug. The most positive response business lobby groups managed to conjure was that the chancellor had not raised the burden on the private sector any further.
UK defence stocks have, of course, had a merry time in the past month after Prime Minister Sir Keir Starmer announced in February that defence spending would rise to 2.5 per cent of GDP — a pledge repeated on Wednesday. But many other businesses are struggling to find any silver lining, especially as they brace for impending changes in employers’ national insurance contributions and the national living wage.
Despite this gloom, the Labour government has another shot at changing the narrative through its promised industrial strategy, expected to be published in June alongside a spending review.
Cynics might well roll their eyes. After all, by the government’s reckoning, there have been 10 industrial strategies or growth plans in the past 14 years, and growth remains elusive. But even when public finances are tight, industrial strategies can add value by identifying where the state can fix problems the private sector cannot tackle alone.
So, how to make a better fist of it this time? A lesson from the corporate world is that brevity often pays. After joining in 2023, Shell chief executive Wael Sawan set out a handful of clearly defined targets against which he could be judged.
Past industrial strategies have simply been too unwieldy. Few will forget Theresa May’s 250-plus page industrial blueprint of 2017, rightly dismissed later as a “pudding without a theme” by the former Conservative business secretary Kwasi Kwarteng. A government consultation issued last year named eight industries, from advanced manufacturing to professional services. Already, that risks being too broad.
Reeves, encouragingly, seems to be resisting the temptation to tear up predecessors’ efforts for the sake of it. She is pushing hard in many areas that have already been identified as ways of generating growth for limited or no cost, such as encouraging more pension fund money into infrastructure. She is also pushing hard on housebuilding and planning reforms, which the UK’s fiscal watchdog reckons would add more than £15bn to the economy.
Perhaps the biggest tool Reeves can wield is a sledgehammer. Past industrial strategies have fallen between departmental silos, as the National Audit Office warns could happen again. Fixing that would be a cheap way to turn business leaders’ frowns upside down. Interested in learning more? Visit our website at NOHU today.