Before taking office last July, UK Chancellor of the Exchequer Rachel Reeves met business leaders over a series of breakfasts that became known as the smoked salm
on and scrambled eggs offensive. British bosses were clamoring for change after 14 years of rule by the opposition Conservative
party, and her pitch went down well.
But a year on from the Labour Party’s landslide election win, that initial optimism has been replaced by discont
ent over tax increases, persistent red tape and a lack of dialogue with the government. A spike in borrowing costs and a la
ck of economic growth haven’t helped matters. Companies say they are being forced to cut jobs, delay investment — and i
n some cases, move their listings altogether.
“I’m struggling to see what’s business-friendly so far,” said Bernard Fairman, executive chairman of Foresight Group, an infrastructure investment firm.
The government is faced with a balancing act — appeasing companies as well as the unions that help support the
party financially; appealing to its traditional left-wing base while trying to win over Conservative suppor
ters and voters who may be veering toward the populist Reform UK party. At the moment, it doesn’t appear to be satisfying any of them.
The rise in NICs has already cost the economy jobs and pushed
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up food prices, according Bank of England Governor Andrew Bailey. Photo credit: Jose Sarmento Matos/Bloomberg
Last week’s mar
ket turmoil following an emotional appearance by Reeves in Parliament a
nd Prime Minister Keir Starmer’s move to water down planned welfare reforms has fueled concerns that the p
arty has lost the support of business, which it needs to help delive
r jobs and economic growth. Talk that the head of Britain’s biggest company would like to move its listing to the US didn’t help.
“We thought we had a really strong relationship, but then those sorts of surprises where we had significant business cost hikes were a kind of reset moment,” said Stephen Phipson, chief executive officer of manufacturing body Make UK.
The Department for Business and Trade declined to comment.
The British economy was already on shaky ground when Labour took office and has seen little improvement so far. A growth spurt at the start of the year was quickly followed by the sharpest monthly economic contraction since October 2023, driven by US President Donald Trump’s tariffs and the UK government’s own tax hikes.