As the Spring Statement looms, it is becoming abundantly clear that the Chancellor has left the Government with no ‘headroom’, and it is the rest of the country who will continue to feel the failings of this Government leaving no growth in sight.
Just this week, the Organisation for Economic Co-operation and Development (OECD) cut its predictions for UK growth to 1.4 per cent in 2025 and 1.2 per cent in 2026, down from 1.7 per cent and 1.3 per cent in its earlier predictions.
Instead of the Government using this as a wake-up call to think innovatively about the economy and enact policies which will attract investment, we are all expecting that taxes will rise further, businesses will continue to be attacked, and the most vulnerable in society will be expected to foot the bill.
I, as well as many others in the business community, could foresee this because of the Chancellor’s first budget, which was simply an attack on businesses. It was obvious that policies such as increasing employers' National Insurance contributions from 13.8 per cent to 15 per cent and the removal of the non-dom status without an alternative would do nothing but make the UK an unattractive place to invest and further damage the ability this country has to achieve growth.
The Government have still yet to take any accountability for its failings on the economy which has led them to use the Spring Statement to raid businesses and the most vulnerable further are now not only blaming the former Government but they are now also looking to blame the rest of the world for their own failings so we can expect that the Government will continue to fail to learn any lessons.
If the expectations around the Spring Statement are true then we can expect that the Government will be expecting the most vulnerable in society to pay for the Government's mismanagement of the economy, just as they did when they removed the Winter Fuel Payments from some of the most vulnerable in society.
The Government could and should think more innovatively, writes Mandhira Kapur Smith
Getty Images
This would have been completely avoidable if the Government had used their 14 years in opposition to listen to entrepreneurs and innovators to think innovatively about the economy rather than continue the doom loop of tax and spending. We should also expect that the Left in the Labour Party will force the Government to row back on these proposals to finally get people back into employment and we should therefore expect taxes to further rise and the economy to worsen as a result and growth will be non-existent continuing stagflation.
Although the Government should be commended on their speculated measures to drain the growing demand on the ballooning welfare state in the UK, what the Government does not realise is that there are no employment opportunities for this vast amount of people to access. Thanks to the budget job vacancies have seen a vast reduction with vacancies, falling by 9,000 to 819,000 in the three months to January 2025.
Whilst businesses continue to be attacked and the Government does not acknowledge the impact the budget continues to have on businesses, it will be impossible to get people who can and should be in employment into work. Their plan will fail as there is currently no incentive for businesses to hire such people.
Ultimately, it would also be no surprise if the Chancellor looks to use the inheritance tax as a vehicle for plugging the gap she created and she is likely to include pensions within any changes to inheritance tax as it has been suggested she could reduce the various ‘gift’ allowances in a bid to raise revenue. Currently, people can give away up to £3,000 a year and Reeves may look to remove or reduce this £3,000 small gift allowance. These policies will not incentivise anyone.
It will not achieve any kind of growth, and it will barely touch the ‘blackhole’ that the Government has worsened.
The Government could and should think more innovatively, increasing taxes and punishing the most vulnerable in society to ease the Government's failings should never be the default choice. The UK is currently in no position to attract any kind of growth, and to my mind, that is largely because those in power have zero credibility, and no background in business or experience when it comes to generating growth in the private sector.
It doesn't have to be this way; it’s time the Government showed how serious they are about growth and got some real advice from business experts on how to grow Britain and put the Great back into Great Britain.
Let’s start incentivising ambition.
