The new government’s focus on growth, above all other targets, is sensible. In the years prior to the pandemic (which coincided with the implementation of Brexit), the British economy has grown at an average pace of 2 per cent.
Yet despite running high deficits and increasing debt, the UK’s real growth has been next to zero in the past year and a half, even as the rest of the developed world was recovering.
Partly this is due to high inflation and interest rates, which have not only been hitting real incomes but also government finances, a large portion of which is comprised of inflation-linked debt.
Another part is economic convulsions within its major trading partner, the EU. Another was low productivity due to labour inefficiencies.
Whatever the case, overall growth has been noticeably sluggish.
With the previous government focusing on taxation and "getting Brexit done" it is only natural that the new government would put emphasis on increasing the pace of economic output. The strategy is welcome, but details remain sketchy.
Chancellor Rachel Reeves outlined a plan to prioritise energy and infrastructure projects and boost house-building activity.
Assuming that red tape was an issue with the previous government, a first fix can always be to cut it.
Sending a message to investors that "Britain is open for business" is always welcome. But that currency may not buy as much as in the past.
Since the end of the second world war, Britain had been a dependable gateway of dollars into Europe.
For decades, London was the place where Americans and Europeans would meet to close financing deals.
The UK’s departure from the EU sent a clear message to the international investment community that the status quo had changed.
The shock that came when the most reliable and boring (in a very good way) of countries took a sharp turn was immense, and heard throughout the globe.
The years that followed did little to either assuage fears of political instability or delineate a clear direction of travel.
What the UK lost during these turbulent years was unquestioned dependability, the reputation that it will deliver what it proposes without tangible proof.
Words and grand plans are no longer enough. The international crowd wants more than that: it needs a clear and outlined path.
What sort of infrastructure projects will be prioritised? How exactly will labour shortages be addressed? How does the government propose to pay for their plans, through taxes or debt? Stark details could go a long way into luring foreign investors back into sterling investments.
Reeves' first hard task is to monetise her plans and convince the Office for Budgetary Responsibility. Once she has achieved that she can turn her eye to the international investment community.
These first days of the new government are crucial. The attention of the world is once again on London, but the globe is spinning fast these days. The new Labour government will not have one hundred days to make a first impression. It will likely be a lot less.
