Bank of England Governor Andrew Bailey’s recent decision to hold interest rates at 4.75%, - citing "heightened uncertainty in the economy" - highlights the compounding damage caused by Labour’s recent budget.
Economic Uncertainty: Growth and Investment Stalled
The UK economy is facing a perfect storm of negative indicators:
- The Office for National Statistics (ONS) recently reported a 0.1% contraction in October, the second consecutive month of negative growth, with pubs, restaurants and retail sectors reporting notable declines. (BBC)
- Private sector hiring has plummeted, with December marking the sharpest decline in employment since January 2021. (FT)
- Rising operating costs, including Labour’s NIC hike, are a significant deterrent for businesses looking to recruit.
A report by the Confederation of British Industry (CBI) reveals that two-thirds of firms have delayed or reduced investment plans due to Labour’s policies. This cautious “wait-and-see” approach, compounded by the government’s failure to inspire confidence, risks stalling economic growth and innovation. The longer businesses remain hesitant, the more pronounced the economic consequences will be for regions like Norfolk.
The Cost to Norfolk’s Economy
Labour’s policies are already having tangible effects on Norfolk:
- SMEs Feeling the Squeeze: Labour’s NIC hike disproportionately affects small businesses, many of which operate on tight margins. The reduction of the Secondary Threshold from £9,100 to £5,000 means higher tax bills even for lower-paid employees. This additional burden discourages hiring and threatens job security in Norfolk’s key sectors, including services, tourism, and agriculture.
- Pressure on Workers and Families: Businesses absorbing higher costs amongst the gloomy narrative Labour is delivering is proving to have real-world impact. According to the British Retail Consortium, consumer confidence remains muted, with retail spending in December falling 3.3% year-on-year. (Reuters)
- Graduates and Young Professionals Affected: For recent graduates in Norfolk, the job market is shrinking. Employers are cautious about onboarding new talent amidst rising taxes and operational uncertainty. This threatens to push more young professionals to leave the region, depriving Norfolk of vital skills and innovation, or potentially increasing the welfare state’s bill through higher unemployment.
Norfolk Conservatives: Championing Workers and Businesses
Norfolk Conservatives are taking action to counter these challenges, focusing on practical, locally-driven solutions to support our economy:
- Business Support and Advocacy: Collaborating with Norfolk’s Chambers of Commerce, we are equipping SMEs with resources to navigate increased tax burdens while lobbying for fairer taxation policies at the national level.
- Apprenticeship Norfolk’s Levy Support Scheme: More than 200 apprentices have been able to start at businesses and organisations across Norfolk thanks to a scheme that has transferred £2.2 million to where it is most needed.
- Skills and Training: Ensuring education for all ages, whether through providing apprenticeship opportunities or adult learning courses on starting a business in varying economic circumstances.
Norfolk Conservatives remain committed to advocating for sensible economic policies that foster growth, protect jobs, and empower local businesses. Through targeted initiatives and unwavering support for our economy, we are determined to ensure that Norfolk emerges stronger and more resilient in the face of these challenges.
