Too little, too late

Damien Phillips has an interesting Centre Write piece on Keir Starmer’s self-inflicted failure to promote economic growth.

Deal with Gulf countries too little, too late to save Starmer

It is a mark of how much the Government is struggling that even when it scores a clear win, the voters do not care, and the news quickly vanishes from the front pages. The recent signing of a major free trade deal with the Gulf Cooperation Council (GCC), comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE is a classic example.

The agreement, four years in the making and the first of its kind signed between the GCC and a G7 country, would be the feather in the cap of any successful British Government. Worth around £3.7 billion (0.1%) in annual GDP gains to the UK economy, the deal is predicted to raise total UK wages by £1.9 billion and generate £15.5 billion in additional trade each year over the long term…

But behind the headline figures for the agreement are the missed opportunities for boosted growth and investment that Britain could have got out of this deal if the UK economy were more competitive and dynamic. The Gulf has vast reserves of surplus capital available for investment in the UK, but Labour has done its best to deter as much of it as possible. Keeping corporation tax at 25% and jacking up employer NICs have been accompanied by rising employment costs through an increasingly unaffordable minimum wage and onerous labour market regulations via Angela Rayner’s Employment Rights Act. Add to this the uncertainty around wealth and capital gains taxation, and the Government has created the sense that Britain is a hostile environment for business and mobile global capital.

The whole piece is well worth reading as we watch an unfolding Labour leadership challenge which seems to be wholly irrelevant to the economic challenges we face. 

Although the Government has had some successes with trade and investment on the international stage, unfortunately for Starmer, the Government’s domestic economic failures and its lack of ambition on free trade have killed any prospect of the voters feeling the benefits in time to save his beleaguered premiership.