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Just two weeks out from the Budget, Rachel Reeves is hovering over the precipice of economic disaster.
And with the Labour Party descending into all-out civil war, City AM Editor-in-Chief Christian May asks: Just how bleak is the road ahead for the UK?
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0:00
Downing Street is in chaos and the
0:02
economy has flatlined. Now with just a
0:04
couple of weeks to go until we find out
0:06
what's really in Rachel Reeves's budget,
0:08
Britain's bosses are getting restless.
0:11
Welcome to the Week in Business with me,
0:12
Christian May.
0:17
It used to be the case that chancellors
0:19
went quiet in the run-up to a budget,
0:21
keeping their powder dry and their
0:23
mouths shut. But now it seems Rachel
0:25
Reeves gives a setpiece weekly update on
0:27
just how bad things are going to be.
0:29
First, there was the bizarre Downing
0:31
Street speech in which she told the
0:32
country that 18 months into office,
0:34
she's discovered everything's a right
0:36
old mess and it's all the fault of
0:38
previous governments and other
0:39
countries. Then earlier this week, she
0:41
sat down with the BBC to explain that
0:43
things are so bad there's a very good
0:45
chance that she's going to have to break
0:46
her manifesto promises not to raise the
0:49
big taxes. I could stick to those
0:50
promises, she said, but then I'd have to
0:52
cut spending. And remember, no Labor
0:55
Chancellor comes into office to cut
0:57
spending. The context for all this for
0:59
the budget is an economy that grew 0.7%
1:02
in Q1, 0.3% in Q2, and 0.1%
1:07
in Q3. The economy actually contracted
1:10
in September. If you find all this
1:12
deeply frustrating and more than a
1:14
little bit worrying, you are not alone.
1:16
Britain's business leaders are speaking
1:18
out. This week, the executive chair of
1:20
Fullers, one of the UK's biggest listed
1:22
pub chains, said the government needed
1:24
new ideas and new thinking if it is to
1:27
live up to its ambition to grow the
1:28
economy. I am frustrated by the lack of
1:31
a clear plan to deliver the growth the
1:32
chancellor claims to be seeking, he
1:34
said. Meanwhile, Mark Carpenter, chief
1:36
executive of car dealership MotorPoint,
1:39
told City Amam that months of leaks and
1:41
trails over which taxes the government
1:43
might hike in the budget is hugely
1:45
unhelpful and putting doubts into the
1:48
minds of consumers. He added that it's
1:50
not great if you're going into a
1:51
Christmas period with everybody not sure
1:53
how much money is going to be in their
1:56
pockets. And Jenny Daly, chief executive
1:58
of the house builder Taylor Wimpy, said
2:00
this week, "Market conditions remain
2:02
challenging, impacted by uncertainty
2:04
ahead of the upcoming budget, and
2:06
continued affordability pressures."
2:07
Graham Bell, the boss of BNQ, told City
2:10
this week that when people feel secure
2:13
about the future, they invest in their
2:14
homes, their skills, their communities,
2:16
and that's when the economy starts to
2:18
move. Clearly, we aren't in that
2:21
position at the moment. Last week,
2:23
Sainsbury's boss, Simon Roberts, warned
2:25
that we don't want to see further
2:27
impacts that may cause further inflation
2:29
from the budget. And in September, BT
2:32
Chief Allison Kirby told City AM, "We're
2:34
already at peak governmentinflicted
2:36
costs." Meanwhile, a slew of banking
2:39
bosses have pleaded with the Chancellor
2:41
not to tinker with their corporate tax
2:43
rates, and it seems not a day goes by
2:45
without another business voice pleading
2:47
with the government not to mess things
2:50
up. I fear that those pleas are falling
2:53
on deaf ears. In addition to a steady
2:55
stream of stories about which taxes the
2:57
chancellor intends to raise. And by the
2:59
way, let's just rattle some of them off.
3:01
Income tax, dividend tax, alcohol duty,
3:04
inheritance tax, property taxes,
3:06
gambling taxes, pension taxes. I mean,
3:10
that's just enough to get us started. We
3:12
now have a similarly unwelcome series of
3:14
leaks about where the chancellor is
3:16
going to turn on the spending tap.
3:18
Starting obviously with the NHS, but
3:20
also of course on increased welfare
3:23
spending. The public is demoralized by
3:25
all this. Now I know this because we
3:27
poll the public every month and here's
3:29
what they're telling us. Just under half
3:31
of Brits say their living standards have
3:33
worsened over the last 12 months
3:35
compared to just 14% who have seen an
3:37
improvement. Lucky them. Almost 60%
3:40
expect living standards will worsen over
3:42
the year ahead. Over threearters of
3:44
Brits say they feel the country is
3:46
heading in the wrong direction. This, by
3:48
the way, has risen consistently every
3:50
month in our polling since May. Perhaps
3:53
most worryingly of all, just 29% of
3:55
people agree with the statement that
3:56
Britain is a country of aspiration where
3:59
people are encouraged to aim high and
4:01
succeed. Just a quarter agree that
4:03
Britain is a country that rewards hard
4:05
work. And instead of offering us any
4:07
hope or business any certainty, we're
4:10
faced with the absurd spectacle just two
4:12
weeks before one of the most
4:13
consequential budgets in living memory
4:16
of Downing Street descending into chaos
4:18
amid leadership speculation, rumors of
4:20
plots and coups, and a confidence
4:22
sapping political pantoime. Karmama
4:25
promised us a politics that treads a
4:27
little more lightly on people's lives.
4:29
Do you remember that? Instead, for many
4:31
people, it feels like we're being warped
4:32
all over. for businesses trying to plan,
4:35
trying to grow, trying to turn a profit,
4:37
trying to invest. It's far from an ideal
4:39
state of affairs. The message from
4:42
business leaders and from me, for what
4:44
it's worth, is simple. Get a grip. And
4:46
now, on a more uplifting note, some
4:48
exciting news that City will be
4:50
broadcasting live on budget day from the
4:53
London Stock Exchange. will be streaming
4:54
that across platforms from 2 p.m.
4:58
analyzing the budget, the fallout from
5:00
the budget for the city, for politics,
5:02
and for all of us. And I'll also point
5:05
out that our app, as you can see from
5:07
this snazzy ad campaign, is flying. Uh
5:11
new partner, thank you very much to
5:13
Invest um sponsoring the app, but we've
5:15
now got over a quarter of a million
5:17
downloads of that. I think it's really
5:19
good. I think you should download it
5:21
yourselves. And in the meantime, I will
5:23
see you next week. Do stay up to date
5:25
and in the know on that city app and via
5:28
cityam.com. I'll see you next week.
5:31
[Music]
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