Rachel Reeves has to come up with some novel ideas if growth is going to happen | Observer Editorial
Rachel Reeves has to come up with some novel ideas if growth is going to happen | Observer Editorial
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Engaging with councils, universities and developers will be key to bringing the economy back to life. It has been a tough beginning to the year for Rachel Reeves. The chancellor has found herself in the spotlight as debt interest costs spiralled, while consumer and business confidence fell. Manufacturers, hampered by high energy costs and the consequences of Brexit, are struggling, while Donald Trump’s threats against those who dare to trade with the US are unsettling.
It’s not a completely new situation. Since the budget, Reeves has been criticised for the mix of tax rises and higher borrowing needed for what is only a modest rise in government spending over the next couple of years. Businesses are angry that much of the tax burden has fallen on them. Consumers, uncertain about the nation’s prospects, hunker down. If they spend big, it’s on a foreign holiday to escape the gloomy atmosphere at home.
In response, Reeves has delivered an almost daily round of initiatives. Many appear designed to appease business leaders and convince them that higher taxes are a small price to be paid for higher growth. Central to the debate is where growth will come from and what kind of growth will it be.
Reeves was right to focus in her budget on building the platform for green growth by encouraging investment in digital technology and electricity generation and storage. The Conservatives were confused about how quickly to adopt electric cars and what should be done to insulate homes. In both cases, the situation is beginning to become clearer and government support more consistent and progressive.
