Election must focus on getting UK economy firing, say business leaders

The General Election will need to focus on how to “get the UK economy firing on all cylinders” after a challenging period for firms and households, according to business leaders.

Industry chiefs have also welcomed the General Election as an opportunity to provide greater certainty for UK businesses, workers and investors.

On Wednesday, Prime Minister Rishi Sunak called a General Election for July 4, saying it was “the moment for Britain to choose its future”.

Earlier in the day, he declared UK inflation is “back to normal” after CPI (Consumer Price Index) inflation dropped to 2.3% in April, although this was higher than economists predicted.

Mr Sunak claimed that he had restored “hard-earned economic stability” as he announced the election.

Nevertheless, it comes amid a backdrop of high mortgage and rental costs for millions of Brits, with interest rates currently at a 16-year-high of 5.25%.

The UK economy also entered into a recession over the latter half of 2023 but recovered to 0.6% growth in the first quarter of 2024.

Following the announcement, industry bosses indicated that the economy would be a key battleground for the Conservatives and Labour.

Rain Newton-Smith, chief executive officer of the CBI (Confederation of British Industry), said: “This General Election needs to be about how our political leaders will get the UK economy firing on all cylinders and deliver sustainable growth for the benefit of our society.

“Whoever forms our next government can’t tackle these momentous challenges alone – they will have to partner with business to harness the insights, innovation and optimism needed to deliver real and lasting change.

“Right now, too many businesses and households still face rising costs which delay investment decisions and dampen consumer spending.”

Neil Carberry, chief executive of the REC (Recruitment and Employment Confederation), added: “Economic growth and competitiveness need to be at the heart of this election campaign.

“A vibrant economy is the only way to higher wages, better public services, and lower taxes.”

Meanwhile, other trade group bosses said the General Election could be an opportunity to bring greater certainty and stability for firms.

Michael Kill, CEO of the Night Time Industries Association (NTIA), said: “This marks a pivotal moment for our nation, offering an opportunity to put an end to the prolonged period of uncertainty and turmoil that has gripped our country for the past four years.

“As CEO of the NTIA, I recognise the importance of stability and effective governance in addressing the challenges faced by our sectors.

“The past years have been marked by uncertainty and instability, which have taken a toll on businesses and communities across the country.”

The pound was already higher on Wednesday after the 2.3% inflation reading for April, but increased slightly further after the announcement to sit 0.27% up against the dollar at 1.274.

Economists stressed, however, that the election was likely to have little immediate impact on the financial markets, which have largely priced in a Labour victory, with the current opposition party holding a significant lead in recent polls.

Luke Bartholomew, senior economist at Abrdn, said: “While politics is certainly a major theme for markets this year, the UK election is unlikely to be a huge market mover.

“With Labour consistently recording large polling leads, there is relatively little uncertainty about the result of the election, and investors have had time to familiarise themselves with Labour’s likely agenda.

“One implication of an earlier election though is that many were expecting another tax cutting fiscal event from this Government in the autumn before announcing the election. This will no longer happen.”