Prime Minister Keir Starmer has written to more than 10 major UK regulators to challenge them to unleash growth in the UK economy.
The Prime Minister has challenged major regulators such as the City watchdog the Financial Conduct Authority (FCA), energy regulator Ofgem and water regulator Ofwat to come up with ways to encourage economic growth as the UK’s economy stagnated toward the end of 2024.
Late last year, the Office for National Statistics (ONS) downgraded UK economic growth for Q3 (July-September). It revised growth from 0.1% to 0%. Meanwhile, GDP growth in September and October both saw falls of -0.1%.
The troubling economic outlook has spurred Starmer to push regulators, which received a letter on 24 December signed by the Prime Minister and his Chancellor Rachel Reeves, to demand ideas that will help reinvigorate the UK economy.
Other regulators which received the letter included Ofcom, which regulates communications, the Competition and Markets Authority (CMA) which oversees business and markets competition, the Environment Agency and healthcare regulators.
Big economic picture
The letter comes at a time when the UK economy is struggling to generate growth and has had to digest a tough Budget from the new Labour Government. The Budget contained tax raising measures which are likely to put new pressures on businesses, particularly when it comes to hiring, thanks to National Insurance hikes and national living wage increases.
It also comes at a time when UK Government debt is at historic highs – above 100% of the nation’s GDP. This makes it harder to borrow and more expensive to pay interest on the debt, especially given the Bank of England base rate is now much higher than the ultra-low rates of the previous decade.
The issue here is that, in order to get on top of the debt, the Government has few pain-free choices. It can spend less, tax more, or grow the economy. The first two are easier to implement in practical terms, but extremely unpopular politically.
Growing the economy is the best possible outcome because it generates more tax revenue while improving people’s living standards and is politically a win-win. However, actually growing the economy is harder said than done. Nor is this Labour’s unique problem – it has been a longstanding issue for the UK since the Great Financial Crisis in 2008/09.
Targeting regulators to unleash growth is not a new idea either. Most had encouraging GDP growth added to their duties in March 2017, on the back of the Deregulation Act. However, some have dragged their heels over cutting red tape, which has at times led to conflicts with central Government.