For a government that came into office with the laudable if stretching ambition of making Britain the fastest growing economy in the G7, today’s growth figures do not make for pretty reading. I say growth figures, but they’d perhaps more accurately be described as contraction figures – with the economy as a whole shrinking by 0.1% in the month of October, mirroring September’s languid performance.
Of course, far from all of the blame lies with the new Government. They inherited a sluggish economy plagued by decades of cumulative underinvestment in the fundamental building blocks of prosperity. Turning the ship around will take time, and credit should be given to the commitment to shake up areas like planning policy, which we know have an outsized influence on growth.
But nor are the occupants of Numbers 10 and 11 Downing Street entirely without fault. Just this week, a number of stories splashed the concerns bosses continue to have following the most recent Budget. OakNorth founder Rishi Khosla warned that tax changes are already causing wealth creators to leave the country, while at a roundtable between the Chancellor and senior business leaders, reports say almost all were pessimistic about the year to come. If Labour are to hit their growth goal, something needs to give.
Never ones to sit on the sidelines in this debate, on Monday we launched our latest report. In Towards A More Special Relationship, supported by our Patron Steve Rigby, we examine how to strengthen the entrepreneurial ties between Britain and its old ally America (the economy of which, if you needed reminding, is up a healthy 2.8% on the year prior). The report saw us talk directly to entrepreneurs who’ve made the hop across the Atlantic, investors who’ve ploughed money into startups stateside, and other key players involved in the growth journeys of similar companies. As well as mapping out the benefits the US market presents, we were also interested in understanding the barriers that prevent those benefits from being seized – and how to subsequently dismantle them.
One of the common themes we heard from those we interviewed was that for all the preconceptions of America being the land of the free, finding a foothold in the US market can be a bureaucratic nightmare. Whether it’s getting insurance or navigating immigration frameworks, founders told us that the administrative aspect of expansion can be a more costly experience than you might imagine – both financially and time-wise. Efforts to simplify this could prove especially helpful for the growth of companies who spot an opportunity.
In terms of our recommendations to foster greater Anglo-American economic integration, we set our sights high. At the top of our list is an appeal for the Government to prioritise a free trade agreement (FTA) with the new US administration once President-elect Trump is sworn in next January. Though certainly ambitious, it would not be unthinkable – when he was last in the White House, Trump appeared keen to strike a deal, and five rounds of negotiations were undertaken in his final year in office. Rachel Reeves, meanwhile, has made a number of positive noises about one in recent weeks and months.
Rarely does a lever for growth quite like an FTA with the world’s biggest economy present itself, but if the Government can yank it, their objectives will be made all the easier. Here’s to hoping they manage to.
Action Stations
On Tuesday, my colleague Anastasia published her fascinating interview with Station F director Roxanne Varza. Among other things, the two discuss how Station F has become a focal point for the French startup scene, what trends European artificial intelligence legislation is setting in motion, and whether there are any policy lessons Britain can learn from across the Channel to boost its own entrepreneurial ecosystem. Highly recommended – all this and more can be found on our Substack.