Business Secretary Peter Kyle has admitted that the UK is grappling with a “growth emergency,” warning that the country’s economy is moving at a “low, slow, uneven pace.”
His comments came as the Office for Budget Responsibility (OBR) prepares to release figures tomorrow that are expected to downgrade growth forecasts for the coming years.
According to economists, the numbers will show that productivity growth—the measure of how efficiently the country creates value—has slowed dramatically.
Lower growth makes it harder for the government to balance public finances, and Chancellor Rachel Reeves may face a £30 billion shortfall that some analysts predict could lead to further tax hikes.
Labour’s Tax Policies Blamed for Slowing Growth
Mr Kyle acknowledged that the Labour Government’s own policies have contributed to the problem.
Wealth creators are reportedly leaving the UK in droves, citing high taxes and a lack of business-friendly incentives.
The Business Secretary admitted that entrepreneurs are moving to the US, Dubai, and Switzerland because they cannot access the funding they need in Britain.
Rupert Soames, chairman of the Confederation of British Industry (CBI), was blunt in his criticism. Speaking at the CBI annual conference, he described last year’s Budget as “ill-judged” and this year’s strategy as “incoherent,” adding that confusing signals and “kite-flying” about upcoming measures have created lasting uncertainty for businesses.
Job Market and Economic Indicators Paint a Bleak Picture
The UK’s economic struggles are showing up in the data.
Unemployment has risen to its highest level in four years, inflation remains the highest in the G7, and growth has slowed to a crawl.
Mr Kyle told business leaders that the nation needs to reverse nearly two decades of weak growth, framing the situation as an emergency that allows for bold interventions.
“We inherited a growth emergency and we are still in it,” he said.
“In an emergency situation, you have licence to do things you don’t have at other times.
We need to debate how to inspire our economy into growth.”
Entrepreneurs Flee and Foreign Investment Wavers
Reports that steel tycoon Lakshmi Mittal has moved to Dubai and registered in Switzerland highlight the wider trend of wealth creators leaving the UK.
Mr Kyle acknowledged that some of this exodus is linked to Labour’s tax policies, saying, “Some of it is because of the tax decisions of this Labour Government.”
Mr Soames added that Labour’s “flaky” majority has left it struggling to pass legislation, which compounds uncertainty.
“It is almost unprecedented that a government with a majority of that size cannot deliver key parts of its programme,” he said.
Confusion Ahead of Tomorrow’s Budget Adds Pressure
Business leaders also criticized the “kite-flying” ahead of the Budget, suggesting it has harmed confidence and decision-making.
Mr Soames told the Daily Mail that confusing signals over potential policy changes have unsettled both consumers and companies.
“It is not good enough to say it happens at every Budget,” he said.
“I have never seen anything as intense as this or over such an extended period.
I think it has done damage, and it is lasting.”
Labour Defends Its Record Amid Criticism
Mr Kyle defended Labour’s approach, arguing that critics take “perverse pleasure” in predicting doom.
But he conceded that it is a real concern that some people feel they must leave the UK to succeed.
His remarks suggest the government is aware of the delicate balance it must strike between raising revenue and supporting growth.
“We need to ask ourselves, what are things we can do that shock our economy into growth?” he said.
“That’s the kind of debate we need to have right now.”
Share on Facebook «||» Share on Twitter «||» Share on Reddit «||» Share on LinkedIn