A new government should go for growth – and pull a rabbit out of the hat
This (sadly) feels a negative election, with a widespread desire for something new, but little real enthusiasm for any party (although Nigel Farage’s decision to stand may now shake things up).
The polls may be volatile in the final weeks, but if Labour wins a decisive victory it is not expected to do anything extraordinary.
That leaves scope for surprises – what about the abolition of stamp duty on equity dealing, for example? (Admittedly, the opposite of what Labour planned in 2019, when they were looking to extend the stamp duty regime, but stranger things have happened in politics).
The Centre for Policy Studies describes the unpopular 0.5pc tax on share dealings as a tax on growth. It is also out of line with our international rivals.
Independent modelling by economics consultancy Oxera suggests a removal would lead to a one-off 4pc increase in UK equity valuations, a permanent increase in GDP of between 0.2pc and 0.7pc and would have little impact on Treasury coffers, with extra tax from higher growth offsetting the loss of immediate tax receipts.
Such a move would quickly establish Labour as a genuine party of business and growth.
An incoming Labour government might actually champion financial services
Shadow chancellor Rachel Reeves has said Labour will “unashamedly champion the financial services sector as one of the UK’s greatest assets”. But the sector is over-regulated, and changes to those regulations are painfully slow (or adding to the burden).
The Conservatives introduced a new growth and competitiveness “secondary objective” for regulators, but there is scant evidence of a rebalancing of risk and reward.
Innovation is essential. A change in approach (and pace) wouldn’t deliver gains overnight but is critical for a revival in Britain’s fortunes as a global financial centre.
Whatever Ms Reeves’s declarations, expectations aren’t high that paring back red tape is a priority – another opportunity for surprise.
Labour must go for growth if it wins – and may be given the benefit of the doubt
“Steady as she goes” was necessary after the Truss/Kwarteng budget, but was never enough to drive economic recovery and a much-needed sense of national optimism.
I am a Conservative peer and far from convinced that Labour has the right ideas, but they will have the advantage of a fresh start to try. Since businesses will want a new government to succeed, there may be a honeymoon period.