Good evening everyone!
It’s great to have so many of you here.
First, a huge thank you to Charlie Nunn and Lloyds, for making tonight possible…
…and all your work on our Industrial Strategy Roadshow.
Thanks also to the CBI team.
And most of all – thank you to you, our members.
The CBI is nothing without you…
…you give us our purpose, our evidence and our strength.
Now – we meet at a serious moment.
One that could have real consequences, for years to come.
Not just because of what's happening in Westminster.
Or in Makerfield.
…But because of what's happening in our economy.
That’s what I want to talk about tonight.
Let me start by saying: I am an optimist for the UK economy.
We’ve all heard this idea going round – that we’re in some kind of doom spiral.
That we can’t grow, can’t be governed. That our future – is perma-crisis.
I just don’t buy that.
Not because there aren’t challenges.
But because I see our strengths first-hand – in your businesses.
This country is second in Europe for foreign investment. We are second in the world for investability.
We have deep advantages that money can’t buy – earned over hundreds of years.
An open economy. The rule of law. World-beating universities.
We have a booming net zero sector adding over a million good jobs to our economy. More quantum startups than anywhere in Europe. Professional, creative and financial services that are unmatched.
We have the makings of a true growth story.
But to move forward, we must be honest about where we are now.
This month marks ten years since the Brexit vote.
And we all remember vividly where we were the morning after.
Sold as a step forward for sovereignty and free trade – in reality it has dragged us backwards.
since then, the shocks have kept coming.
The hit from Brexit – reducing our GDP by as much as 8 per cent…
…the pandemic and the lockdowns…
…the energy crisis from Russia’s invasion of Ukraine…
…geopolitical turbulence and tariffs.
The business leaders in this room are some of the most resilient people I know.
Going through all that – and still turning up for our dinners.
Yet here we are, facing another threat.
A conflict in the Middle East – centred on one of the world’s most important energy corridors.
So far, the energy price shock is not as bad as after Ukraine.
The world’s energy system is adjusting better than many expected.
Business leaders have told me there is strong muscle memory.
As one logistics member put it to me… we’ve run this playbook before.
But resilience is not the same as unlimited capacity.
And there are warning lights flashing that we should not ignore.
UK business already had sky-high energy costs before the Iran conflict…
…so even with the support the government has promised to some firms, the pressure is biting.
Not just in energy – but plastics, helium… fertilisers…
…some firms are seeing every input cost climb at once.
That forces up prices – including food…
…to the extent that the Food and Drink Federation expects a 10 per cent rise by the end of this year.
The cost of living and the cost of doing business are rising and will rise further.
What we do not know is how much. Or for how long.
Or how far business can be stretched.
It feels like our whole economy… is holding its breath.
And what a moment like that calls for from government – is political leadership and stability.
Not theatrics. Not more turbulence.
Every day businesses tell me the same thing…
…this political uncertainty is hitting confidence. It’s hitting investment.
The challenges in our economy won’t fix themselves while politicians look inwards.
Big decisions need taking. The world is moving fast – it will not wait.
We need a government – that is getting on with governing.
Business cannot afford a summer of stagnation while the politics play out.
There is a real, material cost to what’s happening in Westminster now.
MPs in government were elected to lead. And leadership means looking outwards not inwards…
To the businesses trying to invest. To the people worried about prices. To the choices that cannot wait.
We’ve said it before and I’ll say it again…
…what business needs from government is stability.
What business needs are decisions.
But I know that right now, there is an argument out there which says…
…“why does it matter… what business needs?”
“Why does it matter… what business is saying?”
Well, to that I say – come and see what I see.
The business leaders I meet are fighting to keep their firms afloat and deliver for their customers.
They may look calm, but they are paddling furiously beneath the surface…
…absorbing costs, protecting jobs and trying to keep investing in uncertain times.
That’s why the narrative of profiteering and price-gouging… is not just wide of the mark – it’s deeply damaging.
Business leaders don’t get out of bed to rip people off.
They get out of bed to roll up their sleeves and make things better.
But there’s a deeper point which all our politicians need to understand.
What business needs matters…
…because business is how growth reaches people.
And profit is what keeps business alive.
As the thinker Peter Drucker put it – “no apology is needed for profit as a necessity of our economy and our society.”
He was right.
Profit is the capacity to innovate and grow. To pay wages and create jobs. To deliver returns for savers and pensioners…
It’s what keeps our businesses from going to the wall.
It’s what generates the tax base that pays for our public services.
Last year, our data shows business paid almost 345 billion pounds in tax.
That’s the Department of Health and the schools budget in England – plus the entire UK defence budget – all put together.
So if you care about public services… you must care about whether business can grow.
If you care about jobs… you must care about whether business can afford to hire.
If you care about the cost of living… you must care about the cost of doing business.
They are inseparable.
Profit – is not a dirty word. It’s essential.
But here’s the thing.
Over the last 12 months, the profitability of UK business has been the lowest since the 2008 crash.
Some of that is global – energy costs driven by forces outside the government’s control.
But some of that is home-grown.
Last year, the government tax take from business was the highest on record.
National Insurance alone rose nearly 28 per cent on the year before – almost £27bn extra, taken from business.
That is not free money. It is not free of consequence.
It’s equivalent to the cost of creating almost 1.3 million jobs for young people on the National Living Wage.
You cannot fix the cost of living without fixing the cost of doing business.
And the cost of doing business – has reached a tipping point.
No-one expects a walkback on those taxes.
In fact, we’ve spent too long living in the shadow of the 2024 Budget.
I want us to stop looking back…
…to remember our strengths, take a breath – and start moving forward.
To do that, government has to get out of politics mode and into action mode.
Right now, business badly needs three things: …
Confidence. Competitiveness. And consistency.
So let me end by saying…
…confidence is the elixir of growth – and right now it’s in short supply.
We can’t control global events. But governments must not add to that pressure.
Either by talking down the UK’s capabilities.
Or pushing up the burden on business.
Business is not a cash tap that can be turned on without consequence.
And adding to the burden now would have serious consequences.
You cannot tax your way to growth – and we must not try.
Second, competitiveness.
We can’t control global energy markets. But we can control how exposed we are to them.
The government has taken good steps on renewables. And businesses like SSE are leaning in – with plans to invest £33bn in strengthening our electricity network and harnessing clean energy.
That means we are less exposed to volatile global energy markets than we were in 2022.
But after a second energy shock in five years, we have to ask the question: why are UK costs still so high.
The reality is, compared to our competitors, we load too many environmental and social levies onto our electricity bills.
We need the investment those programmes fund.
But if we are serious about competitiveness, we should fund them through general taxation – as other countries do.
Finally – consistency.
By that I really don’t mean standing still. I mean picking up the pace.
There is a lot of good in what the Chancellor and this government have done.
Sticking with the fiscal rules is hard, but absolutely right.
So is protecting capital spending. Both must stay.
The good plans business helped design need delivering.
The industrial strategy. The infrastructure strategy. Work to cut regulation. Realignment with the EU.
Those plans are kicking into gear – we just need the results to come much faster.
Business doesn’t want a handbrake turn in policy. Just a foot on the accelerator.
And the opportunity to lean in.
So look, we all know where we are now isn’t good enough.
But that doesn’t mean our future is perma-crisis.
I don’t believe that.
It’s in our hands to change it – if our will is strong enough, if our ideas are bold enough.
Imagine if we got past the ghost of PFI – and delivered new public private partnerships.
Imagine if the government truly backed the private sector and the entrepreneurs who drive it.
Imagine if we went all in.
To this government I say – you came to power promising change.
The moment for that change is now… Not once the politics settles. Now.
We need you to govern like this is your moment.
Because it's our moment too. All of us in this room.
And we won't get another.
Thank you.
