A business-led recovery
Reform roundtable seminar introduced by Nadhim Zahawi MP, Member of Parliament, Stratford-on-Avon, and Co-Founder and former CEO, YouGov, on Wednesday 22 February.
By Lauren Thorpe
Business must drive the economic recovery of the UK. Exactly how to “make Britain the best place in the world to start and grow a business” was the subject of a roundtable breakfast Reform held with Nadhim Zahawi MP, Member of Parliament for Stratford-on-Avon, earlier this week. This event was held under the Chatham House Rule.
The key message that emerged from the discussion was that growth is a long term game. There is no silver bullet and a stable economic recovery cannot be achieved in one Parliament. The Government’s approach should include increasing access to finance, improving education and skills, supporting infrastructure and creating a flexible labour market.
Rather than always looking for the next new thing the Government must focus on delivering on policies already announced. Businesses need more certainty. Uncertainty means many businesses are reluctant to hire or make investment decisions. Others are struggling to find sources of finance or fail to appreciate the role that debt and equity can play in growing their business.
The anti-capitalism rhetoric that is damaging business sentiment must end. The debate over rewards for failure and poorly matched incentives is dominating the public debate, yet it is necessary to recognise that at times rewards for success perform a significant function in our economy. Meanwhile, banks are stuck between a rock and a hard place: they are criticised for not lending enough to small and medium sized business, while at the same time new banking legislation over capital requirements constricts the amount that they can lend.
The Government has recognised that the burden of employment regulation needs to be reduced. Yet progress needs to be made more quickly. Businesses are reluctant to hire due to employment laws which burden them with a workforce which they may not be able to scale back if trading conditions worsen. Ideas from the “Beecroft Review” should be looked at again, and lessons can also be learned from abroad. The flexibility of the labour market in the United States is one factor contributing to the turnaround in that economy’s performance. Another issue for businesses is the struggle to find the talent that they need given restrictions over visas and skills shortages, particularly in STEM (Science, Technology, Engineering and Mathematics) subjects.
Domestic businesses need to think beyond UK markets, and it needs to be easier for businesses and individuals to make inward investment to the UK. We must encourage businesses to increase their export potential across the world. UKTI has an important role to play in this and, while there are positive signs about how they are approaching their role, too many small businesses do not know how to access the support they can provide.
Businesses face many challenges and need to think creatively in order to survive in these tough times. But the same is true of Government. Policy makers need to approach the challenges of lifting the long run growth rate in a flexible way and to listen to and work more closely with business.