Chancellor Rachel Reeves is urging top UK business leaders to project confidence in Britain’s economy ahead of next month’s high-stakes, tax-raising Budget.
Reeves has privately cautioned that persistent economic pessimism could play into the hands of Nigel Farage’s Reform UK, which is now polling ahead of the Conservatives and closing in on Labour among disillusioned voters. In a coordinated push, the Treasury has been highlighting positive remarks from global corporate figures, including Microsoft President Brad Smith, who recently described Britain as a “force for stability in an uncertain world.”
The Financial Times says Reeves and her Treasury team have ramped up attempts to convince CEO’s to speak out in public about their confidence in the UK economy.
Executives were warned at recent roundtables hosted by the Treasury that “talking down” the economy would simply play into Reform UK’s populist narrative.
Treasury officials have reportedly encouraged chief executives to speak positively on social media or in statements about government policies such as planning reform and support for the green industry that might be considered “pro-business and pro-growth.”
An ally of Reeves said her absence at this stage reflected what they described as a gutless approach to statecraft, adding that the government’s tone echoed that of the newspaper and warning that joining the chorus of talking Britain down would “only lead to a bad place.”
The move is part of a broader ”City charm offensive” launched by the Treasury this month, in which senior executives extol Britain’s investment credentials.
Business jitters rise ahead of looming tax hikes
As the government tries to inject optimism, many business leaders remain wary of Reeves’s November Budget, which is expected to include rises in corporate and personal taxes to fill a £22 billion fiscal gap.
Several CEOs charged that the chancellor was sending conflicting signals — first cautioning that Britain’s finances were worse than they thought when Labour came in, and then now demanding confidence from businesses.
Critics also cite previous Reeves proposals to increase employer national insurance contributions by £25bn and toughen workplace protections, which some fear will hike the cost of employment and deter firms from hiring.
However, the Treasury continues to claim Britain’s fundamentals are on the up. Official figures show business investment grew 3-year-on-year in the second quarter, and the OECD predicts the UK will be the second-fastest-growing economy in the G7 by 2025.
However, growth has decelerated sharply this year – with GDP expanding by just 0.2% in the three months to July – and inflation, at 3.8%, is still eroding household incomes.
Labour moves to blunt Farage’s populist surge
At play behind Reeves’s shove is political calculus. The Treasury is concerned that Reform UK could capitalize on economic pessimism to reinforce its message of opposition to the establishment.
Labour strategists warn that a Farage government would hollow out the institutions of Britain, end the Bank of England’s independence, and put a kebab skewer through Keir Starmer’s attempt to reforge post-Brexit trade links with Europe.
In recent months, Reform UK has been courting the business world, with policies that include tax cuts, reduced spending, and increased drilling for North Sea oil.
Farage’s team refused to comment specifically on Reeves’s comments, but party figures said government spin on optimism was bypassing the real-world pain felt by British firms.
Reeves’s positivity drive received a boost last night after Microsoft’s Brad Smith announced a detailed £22 billion investment plan in the UK over four years, including data centres, AI research, and cloud infrastructure.
Britain had become a force for stability in an uncertain world, Smith informed the chancellor — quite a change of tune from 2023, when he went off on UK regulators for thwarting Microsoft’s purchase of Activision Blizzard.
Following a change in position and regulatory approval, the deal was subsequently approved, and Reeves has since cited Smith’s presidential endorsement as evidence of newfound confidence in the UK’s governance and innovation environment.
In January, Reeves also sacked Competition and Markets Authority chair Marcus Bokkerink, citing the need for a “more pragmatic approach” to business regulation — a decision that some at the time interpreted as part of her wider pro-investment agenda.
In related development, the British economy expanded by a lackluster 0.1% in August, according to the latest figures from the Office for National Statistics.
Economists polled by Reuters had expected month-on-month growth of 0.1%. The ONS revised its growth data for July, which initially showed the economy flatlining, stating that it now assessed the economy had shrunk by 0.1%. That followed a 0.4% expansion in June.
The economy grew by a better-than-expected 0.3% in the second quarter, down from 0.7% seen in the first quarter, which was boosted by the front-loading of business activity ahead of U.S. trade tariffs in April.
