0:00
We were told this would be the most pro
0:02
business government in the history of
0:03
the country. So why has a gang of top
0:06
chief executives this week fired warning
0:08
shots at the Treasury? And why is one of
0:10
them warned that we're heading into a
0:12
recession? Welcome to the week in
0:14
business with me, Christian May.
0:20
It wasn't supposed to be like this.
0:22
Rachel Reeves and Kia Star charmed
0:24
business leaders in the run-up to the
0:25
election and reassured them, got them on
0:27
side. The grown-ups were back in charge.
0:29
the chaos would be over. The entire
0:31
country and the economy would inevitably
0:34
benefit from a stability dividend. Some
0:36
of us were skeptical and we won't rake
0:39
over history in the confidence
0:40
destroying missteps of Labour's first
0:42
budget. But it's fair to say that the
0:44
promised land of milk and honey for UK
0:46
PLC has not materialized. Despite some
0:50
good decisions discussed on this show
0:51
and recognized in City AM in areas like
0:54
infrastructure and AI, solid future
0:56
focused projects, the here and now is
0:59
pretty bleak. The boss of billion pound
1:01
Footsie listed retail giant AO World
1:04
said yesterday that things are so bad he
1:06
fears the UK is heading into recession.
1:09
John Roberts cited the impact of
1:11
persistent inflation and the
1:12
consequences of higher business costs
1:14
from taxation and regulation. He said
1:17
business leaders he speaks to and we can
1:19
assume he speaks to a fair few are all
1:21
focused on taking out costs from their
1:23
companies. That means people. He also
1:26
said what I really object to is the
1:28
narrative that you can just keep taxing
1:30
wealthy people and wasting the money.
1:33
Now, that's refreshingly frank and it
1:34
echoes the views of his fellow retail
1:36
boss Simon Wolfson of Next, who has
1:39
spoken out over what he sees as
1:41
declining job opportunities, new
1:43
regulation that erodess competitiveness,
1:45
government spending commitments that are
1:47
beyond its means, and a rising tax
1:49
burden that undermines productivity.
1:52
Now, yesterday, our city editor, Simon
1:54
Hunt, interviewed the boss of BT,
1:55
Allison Kirby, who said that her
1:57
business was at peak governmentinflicted
2:00
costs. What a great phrase, government
2:02
inflicted costs. I'm going to start
2:04
using that one. She said, "We pay in
2:07
business rates, energy levies, and other
2:09
costs associated with regulation 10
2:11
times the amount our peers pay in
2:13
countries like Germany and the
2:14
Netherlands." And she said that
2:16
investors need certainty, that they're
2:18
going to get a return on that
2:19
investment, and that they can get
2:20
certainty through stability in
2:22
regulatory and fiscal policy. These
2:25
interventions follow a barrage of
2:27
warnings from pharmaceutical companies,
2:29
several of whom have pulled major
2:31
investment decisions out of the UK as
2:33
they retreat from British markets,
2:35
citing costs and painful regulations.
2:38
It's good to hear these business
2:39
leaders. They know of what they speak.
2:42
But spare a thought for the many, many
2:44
businesses feeling these pressures,
2:46
dealing with these issues, the issues of
2:48
government inflicted costs, but whose
2:50
founders and bosses don't have a
2:51
platform from which to shout. All across
2:54
the country, small and medium-sized
2:56
businesses are suffering from high
2:57
taxes, weak confidence, and national
3:00
nervousness. This week, the latest data
3:02
told the story. The purchasing managers
3:04
index, the measure of business activity
3:06
and expectations, slumped to a
3:09
three-month low. The chief economist at
3:11
the company that collects that data,
3:12
Chris Williamson, said alarm bells are
3:15
ringing, citing a litany of worrying
3:17
news, including weakening growth,
3:19
slumping overseas trade, worsening
3:22
business confidence, and further steep
3:24
job losses. He said the data for the
3:26
three months to September was consistent
3:28
with around 50,000 job losses. So, what
3:32
of that recession warning? Is it a fair
3:34
call? Well, it was a big call. I haven't
3:37
heard anyone else deploy the Rword. Most
3:39
people talk of muddling on and the
3:41
economy is growing, albeit at a barely
3:44
perceptible pace. Stagnation is the word
3:47
we hear more, an equally ugly phrase
3:49
that frankly could refer to much more
3:50
than just the state of our economy. The
3:53
next test would of course be the budget
3:55
at the end of November. If we give
3:56
Reeves the benefit of the doubt and
3:58
assume she has a fair wind, she'll need
4:00
to raise around 15 billion quid of
4:02
additional tax revenue. And it could be
4:04
much, much more. And that really will be
4:06
money sucked out of the productive part
4:08
of the economy to fund the unproductive
4:11
part. It will not be consequencefree.
4:14
Whether she looks to businesses or
4:16
savers or investors to find that money,
4:18
it will come with a high price and it
4:20
certainly won't spur the economy into
4:22
growth. So it's too early to talk of
4:25
recession and God willing we'll avoid
4:27
it. But the fact that we're even talking
4:29
about it is in itself telling and
4:32
alarming. That's it from me this week.
4:34
Stay up tod date and in the know with
4:36
the city app and on cityam.com. And I'll
