IoD Week in Policy 13 - 17 November 2023
New beginnings are in the air.
It’s very much the wrong season for this, but this week has been somewhat topsy turvy, so it seems fitting. There’s been a let up (or down depending on how you see it) in inflation, a relaxing of East-West relations, and a fresh look at the UK’s internationalisation.
And the reshuffle. Apparently, rejigging the Cabinet is one of the government’s favourite pastimes. Speaking of past times, we’ve got a funny sense of Dave-ja-vu. All over again. We think it has something to do with David Cameron lording over the Foreign Office. And as Suella has flown the nest, James Cleverly has moved into the Home Office, while Steve Barclay has replaced Thèrése Coffey as Environment Secretary.
But aside from the political merry-go-round, here are our policy headlines this week…
Top story, the annual rate of CPI inflation fell from 6.7% in September to 4.6% in October. High inflation has consistently been a top concern for business, so this is an encouraging development. However, core inflation is still relatively high – 5.7%. Basically, what’s changed is how fast prices are rising when comparing those of September 2023 to September 2022. Overall, we should have hope that interest rates are starting to work and that they won’t need to rise further. Find our full analysis here.
Out of the shadows
On Wednesday morning, we attended two events focusing on what the future of UK trade could look like. First, we headed over to Canary Wharf for an address given by the Shadow Business Secretary Jonathan Reynolds, in which he outlined Labour’s strategy for UK trade. The view from the top of skyscraper city was certainly nice, but what is Labour’s view on UK’s international relations? Find the full speech here.
Secondly, we attended an event hosted by the Institute of Exports and International Trade. There were many interesting themes to unpick, including an exploration of the UK’s place in a changing world. How can the UK leverage its global position in such a changing world? Read our blog on these events here.
When the Prime Minister announced the decision to derail the northern leg of High Speed 2, we conducted a survey of our members. The debate that dominated the news at the time back in October found its way into the further comments section of our poll, and some were more chuffed than others:
On one side of the platform, the cost outweighed the worth, connectivity in the North is more significant than a slightly faster journey to London, and hybrid working has rendered the lure of zooming into the city neither here nor there.
However, on the other side, many worry about the financial losses for businesses directly involved, the convenience of a speedier passage to London, and the reputation of our government. The latter point is not necessarily solely attributable to HS2, but it definitely didn’t help. Here’s the full breakdown.
Hire or lower?
The ONS released data that showed largely unchanged unemployment and economic inactivity rates in the three months to September. While vacancies have fallen slightly, the labour market remains tight and skills shortages remain prevalent. Read our full analysis here.
Not quite ship-shape
More statistics? Our final number crunching analysis looks at UK trade levels. Exports are still looking a little shaky, having declined in September. The biggest drop in exports was to the EU, which is consistent with the theme that the trading relationship with the EU is putting the biggest strain on traders, meaning many are exporting less to the EU, and some have stopped altogether.
Boosting exports contributes to economic growth. So, we are pleased the government has recognised their export target of £1 trillion by 2030 is not sufficiently stretching and, following our paper, Setting a Meaningful Export Target, is striving to increase the number of businesses in the UK exporting. Currently, there are 11% of businesses which export, but the Exports Minister claimed they ‘should be doubling that to 20%’.
It never rains in Southern California
The geopolitical sphere has been on uncertain ground for the last few years, and at the centre of that has been relations between China and the US. Those in the periphery have felt the ripples – many of our members have stated they have or are in the process of reorienting supply chains to mitigate risk.
But it seems this week the frost has begun to thaw. President Xi Jinping of China visited Joe Biden in San Francisco to reset relations. The meeting has been described as upbeat, as efforts were made to reduce tensions over Taiwan, and President Xi agreed to reopen military communications. We hope it lasts.
Next week look out for…
The big event next week is of course the much-awaited Autumn Statement. Chancellor Jeremy Hunt will announce his spending plans for the year ahead. There has been plenty of speculation about what’s going in and what might be missing. But if you want a penny for our thoughts… this is what we are really hoping for.
Our top priority is permanent 100% capital expensing. Data from our members has shown the Temporary Full Expensing policy in Budget 2023 had a measurable impact on business: 22% of members told us they have altered their investment plans as a direct result of the policy.