Tonight, the Mansion House will almost certainly be in glittering floodlights, as the Lord Mayor hosts the good and the great to hear Chancellor Reeves extol the virtues of GB PLC.
Those attending will be told that provided they are patient, the sun metaphorically is set to rise above the yardarm and deliver growth for working people.
She will mutter about fiscal spending and probably repeat for the umpteenth time how awful the Tories have been for fourteen years. It is also possible that she will also dodge the obvious questions – How much will taxation be increased by in the Autumn Budget and which taxes – wealth tax, income tax, VAT?
A wealth tax would be very anti-business, when the Government needs to encourage investment. Over 10,000 millionaires have left the UK and more will follow unless attitudes towards the creation of wealth and consequently jobs, changes.
Labour governments have shown little appetite for cutting costs and especially welfare benefits or workers’ rights and it’s hard to see this one changing its spots.
On the positive side, the Chancellor is likely to offer an easing of regulatory requirements for mortgages to stimulate the housing market.
Friday’s GDP number of -0.1% for May, following -0.3% in April made dispiriting reading. In fairness GDP was up 0.5% for the last quarter. Poor manufacturing data was one of the main reason growth was negative last month.
No decent person on God’s earth wants those with disabilities or genuine mental health to suffer. Like many others I was amazed that the Government had to do a ‘U’-turn’ on its recent welfare Bill.
The sum involved, £5 billion, is but a mere bagatelle in the grand scheme of the total cost to the exchequer. The total cost of welfare in the UK for 2025/26 is estimated to be £303.3 billion, up from £228.7 billion in 2019 and from £247.4 billion in 2020/1.
Of course Covid 19 played an active role in increasing costs, but we need a reality check before it’s too late. Many respected economists with established track records, venture to suggest the figure will increase to £375 billion by 2029/30 – unsustainable in my humble opinion.
The direction of travel the UK economy is headed in, offers scant encouragement. With the cost of welfare at eye-wateringly dizzy and unsustainable levels, growth at best will be anaemic for the next decade - 1% plus a bit at best. The prospects for the future look unappetising.
There are no ministers with any business experience on the Government’s front bench. Whilst the Government should be trying to unravel the colossal welfare burden in the years to come, it has failed to grasp the nettle – how to stimulate business and investment activity to create growth.
Maybe the Chancellor’s speech will offer a smidgen of hope! At present, risk appetite is all but at zero.
Brexit should have encourage copious companies to come to London, by being offered aggressive tax incentives. Stamp duty on trading shares should have been abolished. Better tax concessions for start-up businesses should have been implemented.
We shall be waiting with bated breath to hear what the Chancellor has to say tonight. Let’s hope it is not a replica of another ‘Pandora’s Box.’ Encouraging savers to put their pension funds in unquoted companies or any companies that have not been recommended is not the way forward.
I am no economist, but there is one brutal fact staring everyone in the face on top of the cost of welfare, but closely associated with it. That is there are 9.2 million economically inactive people in this country – circa 21% of the working-age population. The cost of that is unsustainable.
There are only two answers to the cost of this parlous state of affairs – increased taxation and or dramatically cut costs. This is not a right-wing rant. This is a reality check.
The Labour is not the only government to blame for this crisis. The Tories, allowing for the fact that Covid 19 cost circa £400 billion, to keep the country in near enough full employment during those dark days of 2020-21, did little to deal with what is euphemistically referred to as a weeping carbuncle, better known as a bloated wasteful public sector. So many people, who rightly get huge benefits from free education for their children and free health from the NHS, still think the country owes them more. This is insanity. We are on the road to penury.
Debt is now approaching £2.9 trillion, or around 100% of GDP, a level not seen since the early 1960s. Specifically, public sector net debt was equivalent to 96.4% of GDP at the end of May 2025. This level has fluctuated, reaching a high of 210.7% after the Second World War in 1948, and a low of 21.6% in 1990.
The Federation of Small Business believe that 27% of their owners fear their operations will be closed, shrink or be sold, such is the lack of confidence in the future, which is at its lowest level since 2008. Only 25% believe their businesses will expand. The concern is such that many believe that 200,000 jobs could be lost.
Though we hope the PM, the Chancellor and the Government will inspire us in the months to come, the larger than life crisis of the welfare, debt and those economically inactive is not going to go away. The problem needs to be addressed now. If not, it may not take too long before the gilt market takes its toll on the government again, which will just exacerbate this acute crisis. The Government must have the drains up to dramatically cut unnecessary waste and profligacy, focusing on those who do not deserve help.
