IT’S been a tumultuous time for everyone - households, companies, institutions ranging from pension funds to the Bank of England and, of course, the new Chancellor.
September saw a new political administration in Downing Street, exceptionally high energy costs, wide-spread inflationary pressures and a ‘mini budget’. It was anything but ‘mini’ and ought to have been accompanied by an OBR assessment.
For all the positives in the announcement on much-needed supply side reforms financial markets have reacted with concern over medium-term debt levels and short-term inflationary risk. Many chief executives have remarked to me that they share these worries.
As we all know, financial markets really do matter, they dictate the price of borrowing for people, businesses and governments. Access to money at a reasonable cost is important to everyone, and the significance of macro-economic stability cannot be overstated when it comes to investor confidence and economic growth.
There is no denying that the challenges the UK Government face are significant – they must intervene in a cost-of-living crisis and simultaneously stimulate growth in an economy which has suffered from anaemic growth for nearly two decades. Success will depend on whether it passes two credibility tests.
First, the onus is on the Chancellor to restore confidence by showing he is in lockstep with the Bank of England on reducing inflation. Creating stability is also essential, so the Government must present a robust plan to reduce debt in the medium-term. Markets need assurances that the Government can balance the books.
Secondly, support for economic growth must be prioritised over political ideology. Growth barriers such as reduced labour supply must be tackled – it is time to provide those necessary work visas and update the Shortage Occupation List to support the many sectors that are struggling to get workers.
Skills and investment in infrastructure are long established routes to delivering growth – so we must make sure that the process of building vital infrastructure is simplified. All opportunities must be seized, and the Government needs to forge ahead on net zero, unlock green investment and support firms and households to become more energy efficient.
To really change our long-term economic growth rate, reforms must be productivity-oriented. But of course, it is not just Government that delivers economic growth – business has a critical role too and it is when the two work in tandem that we really see positive results.
Back in May last year, CBI published our 70-page growth manifesto, Seize the Moment. In it, we presented around £700 billion of economic prizes for UK plc across all sectors and markets.
The opportunities are there: whether leading on net zero and decarbonising our economy, or being at the front of scientific innovation and digital success from artificial intelligence (AI) to fintech. We showed how the private sector can power growth in all nations, by building clusters in everything from cyber security to green tech.
Despite the turbulence, I am confident that the business community will keep their eye on the prize, heads will be down, targets will be set, and Chief Executives will remain focused on business continuity and supporting their employees through these challenging times.
But the UK Government needs to step up – the business community want to see stable macro-economic conditions.
For growth, they need access to skills, and see investment flowing into infrastructure and innovation. Foreign investors that have been attracted to our shores need to see assurances that the UK economy is a safe bet for investment.
:: Angela McGowan is the CBI director for Northern Ireland
