Remember how we were told after Labour’s election victory that the grown-ups were back in charge?
And how Keir Starmer promised to ‘fix the foundations’ while his Chancellor crowed that Labour is now the party of business and that ‘economic stability is change’?
That went well, didn’t it? What has changed since is that Britain has sunk further into economic gloom, with confidence falling off a cliff.
Where are those business leaders now who acted as cheerleaders for Rachel Reeves? Remember how they queued up in their hi-vis jackets to meet her and lap up her irresponsible economic plans? What do they have to say?
Well, they are panicking. They are slamming the brakes on recruitment and investment plans as higher business costs percolate through the food-chain.
With the £40billion tax raid due to take effect in April, coupled with higher energy costs, many are also looking to shed thousands of jobs.
Focus: Chancellor Rachel Reeves (pictured) is due deliver her Spring Statement next week
As last week’s poor GDP figures showed, manufacturing has been hit badly. Just how badly has been confirmed again by a survey published yesterday from Make UK, the manufacturing sector’s trade organisation.
For the first time in a decade, manufacturing output has fallen in the three months from January to March, with both domestic and export orders slowing down.
That’s rare and ominous. The first quarter is usually a plump one. Yet the Manufacturing Outlook report reveals the slump in business confidence in the final quarter last year was the fastest rate of decline since the pandemic. Dates don’t lie.
In other words, once it became known that Reeves was going to hike National Insurance for employers, business confidence – and therefore new orders – went into freefall. No surprise there.
Which is why Make UK is now downgrading growth forecasts for the sector over the year to a contraction of 0.5 per cent, nearly double the previous forecast.
Director of policy Verity Davidge describes the mood on the factory floor as ‘wading through treacle’.
She is being polite. Sounds more like mud to me. There are three changes Make UK says would lift the mood: reducing complexity; streamlining trade; and boosting access to capital.
The first two are in government hands so are not going to happen. Nor, unfortunately, is the third.
The reverse is more likely. Those with capital to invest are switching to assets such as gold or holding on to their cash.
On the flip side many of the country’s bright young sparks, the entrepreneurs and super wealthy, are leaving in droves.
Meanwhile, productivity – the only way to achieve higher living standards – remains stubbornly low and nothing is being done to fix it. The result? Stasis.
Make UK is not the only one ringing alarm bells. The Organisation for Economic Co-operation and Development (OECD) has lowered its forecast for UK growth for the next two years, blaming Reeves’s tax raid as well as uncertainties over President Trump’s tariff threats.
Inflation will stay higher than the target, it says, thus delaying interest rate cuts which might have boosted the economy and helped cushion costs for households.
It will be fascinating to see how Reeves handles the gloom when she delivers her Spring Statement next week.
She can’t blame the Tories anymore. The OECD was forecasting higher growth before Labour came to power. And she can’t blame President Trump again.
He didn’t start his sabre-rattling until last month. Who can she blame next?
Trade wars
The OECD estimates that if Trump goes ahead with his plan to slap 25 per cent tariffs on goods coming in from Canada and Mexico from April, the impact will be devastating.
Mexico would be thrown into deep recession while growth in Canada would be nearly halved.
But it forecasts that US growth would also suffer. Is Trump in danger of trumping himself with his potential tariff wars?
Unreliable boyfriend
Oh to have been a fly on the wall when the King hosted former Bank of England governor Mark Carney at Buck House for his first visit as Canadian prime minister.
They have much in common. As well as being greenies, they are both unelected heads of state. The less said about being an ‘unreliable boyfriend’ the better.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading fees
Trading 212
Trading 212
Free dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
This article was originally published by a www.dailymail.co.uk . Read the Original article here. .