One year of Labour: BCIS chief economist says government is ‘turning a corner’

BCIS’s chief economist said the government is finally ‘turning a corner’ on its manifesto pledges after a ‘rocky’ first year in power.

12 months on from the first meeting of the new Parliament, Dr David Crosthwaite commended the government’s commitments to growth in the Spending Review and infrastructure and industrial strategies, but said lessons must be learned from early missteps.

‘Labour’s initial mistake was publicly disparaging the economy in its first few months in power. Markets and investors want stability and confidence and undermining the economy led to a lack of confidence in the private sector,’ he said.

Reflecting on the government’s biggest goals, Dr Crosthwaite added that its 1.5 million housebuilding target was too aspirational, and it has taken too long to release the latest iteration of the Infrastructure Pipeline.

‘Regarding infrastructure, it’s an understatement to say the government was slow out of the starting blocks. £725 billion of infrastructure investment is hugely promising and should go a long way, but it’s hard to explain the year-long wait for confirmation of this, and more importantly, the project pipeline. Ideally, this should have been determined in Labour’s first six months.’

Dr Crosthwaite also underlined the ambiguity surrounding some of the government’s actions.

‘When Labour has acted on its manifesto pledges, for instance re-nationalising Britain’s rail services, it’s not entirely clear what benefits public ownership will provide over private ownership.

‘Elsewhere, the government has made a good start on its green agenda by investing in clean energy and energy-efficient homes, but there is still a long way to go. Decarbonisation of the built environment is incredibly important, but to realistically achieve net zero, the economy must be stable, if not growing.’

Looking ahead, Dr Crosthwaite reiterated the importance of attracting private sector interest to boost growth.

‘In June, Labour finally got its chequebook out, but investors still need more clarity on funding models. This, and the project pipeline, are the missing puzzle pieces needed to stimulate demand and investment.

‘There are four years left of this Parliament to see if it can really “get Britain building again”.’

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One year of Labour

More commentary on the government’s first year in power:

One year of Labour: housing figures show work to do

One year of Labour: an infrastructure snapshot