Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
UK chancellor Rachel Reeves will try to counter claims on Monday that she has been talking the economy down, telling the Labour party conference there will be “no return to austerity” and insisting her Budget will have “real ambition”.
Reeves and Prime Minister Sir Keir Starmer have been accused of creating a sense of economic gloom by warning of the dire state of public finances and a “painful” Budget next month, with consumer confidence falling sharply in September.
Last week Andy Haldane, a former Bank of England chief economist, said the government had generated a sense of “fear and foreboding”. One figure at a large bank said: “They’re struggling to dig themselves out of the depression ditch they’ve put themselves in.”
Private sector activity figures released on Monday also showed both manufacturing and services losing momentum. The S&P Global Flash UK PMI survey fell to 52.9 in September, down from 53.8 in August and below the forecast of 53.5.
With more than 500 corporate figures paying £3,000 a head to attend a “business day” at the party conference in Liverpool on Monday, Reeves will try to paint a picture of a brighter future for Britain in her speech to party delegates.
“My optimism for Britain burns as bright as it ever has done,” she will say. “I can see the prize on offer, if we make the right choices now. And stability is the crucial foundation on which all our ambitions will be built.”
Reeves has warned of tax rises in her October 30 Budget, saying that “any plan for growth without stability only leads to ruin”.
But she will tell Labour members: “There will be no return to austerity. Conservative austerity was a destructive choice for our public services — and for investment and growth too.”
Speaking to the BBC’s Today programme on Monday, she promised “real-terms increases to government spending in this parliament” but added that “the only way to sustainably fund public services is through growing the economy”.
Her more upbeat rhetoric is intended to lift spirits at a Labour conference overshadowed by internal rows in Number 10 and a controversy over “freebies” for Starmer and other ministers, along with criticism of the government’s decision to cut winter fuel payments to 10mn pensioners.
Reeves and Starmer will try to reassure Britain’s company bosses on Monday that they are still firmly on their side, despite corporate concerns over their gloomy tone on public finances, new workers’ rights and possible tax rises.
Tickets for the conference’s business day sold out within 24 hours, even though prices rocketed from about £2,100 for the same event when the party was in opposition last year.
Starmer, Reeves and business secretary Jonathan Reynolds, who courted company bosses before the election, are facing increasing scepticism from some company leaders.
Labour’s strategy so far seemed to be “to prioritise growth and at the same time undermine all the levers of growth”, the chair of one of the FTSE’s 10 most valuable companies told the Financial Times.
Criticism has also been made of the decision to hold a global investment summit on October 14 to showcase Britain as an investment destination, while Budget decisions affecting business taxes will be still pending. A new investment minister has yet to be appointed.
Executives hope Labour will bring political and economic stability after a bumpy period with regular changes of prime minister under the Conservatives, but some have grown concerned about the lack of positive action from the government since its election on July 4.
Labour says the business day event, sponsored by companies including HSBC, Mastercard and Intuit, is twice as big as last year’s with more than 100 chief executives and chairs attending, including representatives from Blackstone, Santander UK, Uber and Shell.
But one senior lobbyist said the price of a business day ticket was now so high it was no longer worth attending, while another joked that her organisation had bought only one ticket and the chief executive would have to take their own notes.
Reeves will use her speech on Monday to confirm plans for a new industrial strategy, highlighting to international investors where she sees the most promising areas for growth.
She will start discussions on the policy by publishing a green paper around the time of the Budget. But the chancellor will announce that the final policy will not be completed until next spring.
Reynolds told the FT ahead of Labour’s conference he hoped to name the chair of a new industrial strategy council before the October investment summit.
The business day event will be a moment for bosses to lobby Starmer against what they see as excessive regulation of the labour market and against potential Budget tax rises on business beyond corporation tax, which Labour has said it will not increase.
Many are particularly concerned about the prospect of rises in capital gains tax or the removal of reliefs that can allow owners of private businesses or shares in Aim-listed companies to avoid the charge.
Reeves will also appoint a new “Covid corruption commissioner” to investigate more than £600mn worth of personal protective equipment contracts awarded under the last Conservative government as Labour tries to switch the focus away from a furore over free clothing for senior ministers.
Additional reporting by Valentina Romei
Read the full article here