With the Bank of England raising interest rates by 25bps to 4.25%, Charles White Thomson, CEO at Saxo UK, says the UK is now in an economic danger zone.
I am an advocate for bold plans which will unlock the UK’s potential and to break the high tax and low growth loop, but the status quo is increasingly painful and uninspiring, and this should not be about celebrating recent monthly GDP growth of an anaemic 0.3% and the avoidance of a technical recession. The UK continues to underperform its key counterparties and have underserved the majority and their aspirations. Change is required.
As opposed to talking of the Chancellor and Government, I prefer to continue referring to the UK as a PLC. Instead of Prime Minister we have a Chief Executive Officer and for the Chancellor, a Chief Financial Officer.
My resounding conclusion from the UK PLC’s recent financial statement – or Budget – is that the management team are in an unenviable position in that there is little wiggle room for large change. The UK PLC is effectively in a financial straitjacket with constraints including: £2.4 trillion public debt and all the servicing costs this entails, tax to GDP levels approaching record highs or 37.5% and corporation tax moving to 25% from 19% for financial year 2023/24.
Financial outlook statements for generations of UK PLC management have concentrated on the status quo as opposed to a more dramatic plan to seriously kick start growth, confidence, and the all-important upside this brings.
We have an advantage in that UK PLC is the sixth largest global company or economy in the world with all the scale and reach that this brings. This is about a bold and large plan to ensure that we deliver on its full potential and unleash the prosperity that a large part of the UK shareholders want.
The alternative to a bold and wide changing economic plan, which is not purely based on industrially low interest rates and quantitative easing, is continued stagnation and underperformance. This will not be easy, but the alternative is to sell out the next generation which should never be a consideration.
