The prospect of a Burnham premiership has left business owners on edge, but a respected economist has offered a rare note of reassurance. Jim O'Neill, a well-known voice in the City, believes the probable next prime minister will not implement a new round of punishing tax rises.
In a recent podcast, O'Neill stated that the biggest risk to confidence would be a new government repeatedly talking down the country's prospects. He emphasized that a change in mindset among consumers and businesses is crucial, and that the incoming government should focus on reassuring them that the next few years will not be as bleak as they have been since the financial crisis.
O'Neill cautioned that the UK cannot continue to avoid making tough decisions on "sacred cows" such as the pension triple lock, welfare reform, and a more equitable tax system. He argued that the country needs a credible long-term framework for infrastructure investment, and that the triple lock, in particular, is unfair to younger generations who are struggling to afford housing and are expected to pay more taxes.
He also criticized Sir Keir Starmer's approach to welfare reform, stating that small adjustments to the welfare bill are not sufficient and that a more comprehensive overhaul is needed. O'Neill's call to replace council tax and stamp duty with a fairer system of land and property taxation echoes the views of economists who have urged Burnham to scrap both taxes in a radical shake-up of the tax system.
The stakes are high, with the bond markets waiting for bold leadership to put the country on a more sustainable path for debt. O'Neill warned that if the UK fails to address its financial challenges, it will face significant repercussions.
For SMEs, the takeaway is clear: focus on the future and be prepared to adapt to changing circumstances. O'Neill argues that markets could support higher borrowing for growth-enhancing projects, provided decisions are independently assessed. He also emphasized the need for greater devolution of skills, education, and employment support, while cautioning that the Greater Manchester model cannot be simply copied elsewhere.
O'Neill's advice to Burnham is direct: figure out his key priorities, communicate them clearly, and stick to them. He also emphasized the importance of choosing the right people to help deliver those priorities.
