The Week in Business: is Reeves right to be an optimist?
This was the week when Barclays became the latest big employer to tighten up its work from home policies, now requiring staff to come into the office at least three days a week, a plucky, some might say suspicious, Chinese AI app scared the chips out of US tech giants, the leftwing Resolution Foundation think-tank warned the government that the chances of sticking to their fiscal rules are still on a knife edge, and the Competition watchdog got to work under its news chairman hosting a brainstorming session on pro-growth ideas with City grandees.
But it’s politicians making the headlines and there was lots of talk of a government reset this week with a bold new focus on growth but it seems someone reset Rachel Reeves too, and the new upgraded version of our Chancellor is relentlessly optimistic and determined to smile.
The effect of all this new smiling and enthusing reminded me a bit of late stage Gordon Brown, who was obviously constantly told to smile but, being unsure of when exactly he should do so he just tried to do it all the time which didn’t really work, but what did we learn from our new tigger-like chancellor?
Well, there was lots to like – no doubt about that.
A genuine effort to strip troublesome regulators of the power to block vital developments; new runways here there and everywhere, new housebuilding, new towns, new rail lines, it was heady stuff and I welcome it, but permit me just one observation.
Where has this zeal come from?
If the Labour manifesto had said we’re going to build a third runway at Heathrow, plus a few more at Gatwick and Luton, and we’re going to build a new town between Oxford and Cambridge, we’re going to rip up environmental legislation and we’re going to launch a massive deregulatory push inspired by Thatcher – well, then, I’d probably have voted for them, but they didn’t say they were going to do any of that which means either it was a secret plan that they didn’t feel they could trust the voters with, or it’s a sudden plan born out of panic because it turns out there was no actual growth lever in Downing Street.
Maybe it doesn’t matter how we got here, maybe we should all just join the growth train, but the contrast – the contradiction, even – between the government’s first 6 months – what they did in those first six months – and their new position is so glaring that it cannot be ignored, not least because we know that the damage of the first 6 months has scarred the economy and the effects of that will continue to be felt long before any of the benefits of their new growth push are felt.
Just imagine how different things could be if the chancellor gave Wednesday’s growth speech in July last year, straight out of the blocks. Why didn’t she?
I spoke this week to the head of small business banking at one of the big high street lenders and two things stood out.
Firstly, they told me that the entrepreneurial spirit is still burning bright in this country; people have ideas, ambition, energy…that’s the good news.
The bad news is that too many businesses are finding it too hard to deal with consequences of the budget – the higher costs, the higher taxes, and they fear the burdens coming down the track fast from employment rights reform.
I heard about people running small pub chains, holiday parks, hotels, all cutting staff, cancelling investment, putting up prices and in some cases throwing in the towel.
That’s the part of the economy that we should keep in mind when a grinning Chancellor tells us to cheer up.
Little wonder that today’s business confidence barometer from Lloyds Bank showed firms at the gloomiest they’ve been in over a year.
Now, snap surveys taken after the Chancellor’s speech, including one by consultants WPI Strategy, show a great deal of support among business leaders for the infrastructure plans announced, and as I said I like much of what was promised – but it seems many of us – many businesses – are now in a strange state; excited about the promise of a distant future but justifiably fearful of the present.
That’s the tension we’re in, heading into the second month of this year and while it’s clear that the government is determined to try a new approach – powered by broad smiles, optimistic buzz words and some welcome plans for the future, winter is far from over.