A Brief Summary of the UK Economy under the Current Labour Government

To date, the UK economy is showing mixed signals. Real wages have improved, but have been countered by rising unemployment and a softening labour market. There are significant fiscal challenges (some inherited) where government policies, such as rising minimum wages and increased National Insurance (NI) rates, have negatively impacted business investment and future growth. These factors are now jeopardising 50% – 60% of the UK pub industry. The government has received mixed reviews, mainly negative, resulting in politically damaging U-turns, and whilst the economy has experienced modest growth, the country is suffering from weak productivity.

While recent data shows a slight improvement in GDP, growth remains fundamentally weak and hampered by long-term low productivity. Furthermore, negative forecasts have now overtaken previous optimism, suggesting that future growth will be slower than initially projected. On the jobs front, despite some vacancies, the labour market is still showing signs of weakening, together with a cooling in the jobs market.

The impact of government policies has harmed businesses with rises in employer NI, which has increased hiring costs and increased the minimum wage, also raising concerns for business costs. The government is struggling to balance and restore investment, which has declined due to a lack of confidence in its fiscal responsibility and integrity. When combined with persistently low productivity, this weak investment leaves the UK economy facing significant headwinds in the years ahead.