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UK economy: Business calls on Boris Johnson to put flesh on bones of post-Brexit vision

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By Alasdair Sandford
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Britain's Prime Minister Boris Johnson gestures as he makes his keynote speech at the Conservative party conference in Manchester, England, Wednesday, Oct. 6, 2021.
Britain's Prime Minister Boris Johnson gestures as he makes his keynote speech at the Conservative party conference in Manchester, England, Wednesday, Oct. 6, 2021.   -   Copyright  AP Photo/Jon Super
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British business groups have welcomed Boris Johnson's ambitions for the UK's economy in his speech to the ruling Conservative Party conference — but they are sceptical as to how his vision can be achieved.

The British prime minister said his government was responsible for a "change of direction that has been long overdue" and that it was working towards a "high wage, high skill, high productivity and low tax economy".

The main employers organisation the Confederation of British Industry (CBI) called it a "compelling vision", while the British Chambers of Commerce (BCC) said Johnson's ambition should be "rightly applauded".

However, their praise was accompanied by warnings that his words need to be backed by action, not least to tackle the immediate crisis — describing the economy as "fragile" and "on shaky ground".

There has been an angry response from some whose business has been damaged by the UK's departure from the EU. One producer called the speech a "populist tirade" that "did not recognise even one admission of his many Brexit failures for UK business".

Answers to problems 'in the here and now'

In an implicit attack on the record of both Tory and Labour governments past, Boris Johnson blasted "the same old broken model" that had brought low wages, growth and productivity, "enabled and assisted by uncontrolled immigration".

There was only a fleeting reference to the supply problems and labour shortages that have plagued the country in recent weeks, which he described as "the present stresses and strains which are mainly a function of growth and economic revival".

"What businesses urgently need are answers to the problems they are facing in the here and now. Firms are dealing with a cumulative crisis in business conditions as supply chains crumple, prices soar, taxes rise and labour shortages hit new heights," said Shevaun Haviland, Director General of the British Chambers of Commerce, in a statement sent to Euronews.

Business leaders and company bosses have called for more visas to be given to overseas workers, to plug the gaps in the labour market left largely by the return home of many Europeans after Brexit and the onslaught of the pandemic.

"Right now, targeted immigration is a sensible way to address critical national skills shortages, give firms the breathing space to invest in skills and productivity and make the high-wage, high-skilled economy a reality," Haviland said.

High-skill economy 'will take time'

Rejecting the business community's calls, Johnson said the answer was not to resort to immigration to keep wages low — though there is scant evidence that this has been the effect — but to invest in people and skills.

"Yes it will take time, and yes it will sometimes be difficult. But that was the change that people voted for in 2016, and that was the change they voted for again powerfully in 2019. And to deliver that change we will get on with our job of uniting and levelling up across the UK," he told Tory delegates in Manchester.

The move to a high wage, high skill economy "will not happen overnight", Haviland added, but needed government to work with business to develop a strategy.

The CBI also called for a partnership, its Director-General saying it was "time to get around the table, roll our sleeves up and get things done" — while calling for flesh to be put on the bones of Johnson's ambitions.

In a statement provided to Euronews, Tony Danker said Johnson's policies could stoke inflation.

"The PM has only stated his ambition on wages. This needs to be backed up by action on skills, on investment and on productivity. Ambition on wages without action on investment and productivity is ultimately just a pathway for higher prices," he said.

'An insult to every food producer'

The prime minister — who reportedly responded to pre-Brexit business concerns with the words "f*** business — said not a word on the crisis faced by exporters and importers whose trade with Europe has been massively complicated by red tape and high costs, the result of the hard Brexit he negotiated.

Johnson's celebration of "that great free trade deal with our friends in the EU that they all said was impossible" brought a dismissive response from British cheese producer Simon Spurrell, whose exports to the EU have been wiped out since Brexit, costing him a quarter of his turnover.

"His speech did not recognise even one admission of his many Brexit failures for UK business, nor did it mention how he intends to rebalance the situation that leaves EU producers with an enormous commercial advantage over UK producers," Spurrell told Euronews.

"Johnson’s speech was a populist tirade of fact-less pomp and ceremony that was an insult to every food producer in this country."

A report from the Food and Drink Federation (FDF) in September blamed "a sharp drop in sales to the EU" for an overall drop of sales £2bn (€2.35bn) compared to pre-Covid levels — even though they were recovering in non-EU markets. It found that sales to Germany, Spain and Italy were "each down around a half" since the first half of 2019.

Also responding to Johnson's speech, the Federation of Small Businesses said the government's policies were directly impeding the sort of investment the prime minister wanted to see.

"The government needs to stop taking working capital out of business before they even make their first pound in goods or services," said the FSB's Chairman Mike Cherry, adding that high costs were holding back investment and growth.

There was some scathing criticism for Boris Johnson's "levelling-up" agenda, to boost resources for poorer areas, from the free-market think tank the Adam Smith Institute.

"Boris' rhetoric was bombastic but vacuous and economically illiterate. This was an agenda for levelling down to a centrally-planned, high-tax, low-productivity economy," said the institute's Head of Research Matthew Lesh.