UK’s new Chancellor bets on tech to fix the economy

Chancellor John Healey named new technology as the UK’s route to growth at the Labour Party Conference on Monday (28 September).

Healey said that Labour will bring back hope through a “new age of industrialisation”, announcing the government will commit £6 billion for British shipyards, and new docks for new submarines will be built in Britain, by British workers.

However, he warned that the money New Labour had in the 1990s is “simply not there now”, and criticised the fiscal situation left to them by the Conservatives.

Investment manager Quilter Cheviot noted that Healey used his first conference speech as Chancellor to reinforce his push for fiscal responsibility, a month before he delivers his Budget.

Healey described a new phase of reindustrialisation and growth as the only answer to the UK’s problems.

He set out plans to make it easier for young people to get into new technologies and to put the UK at the forefront of 21st century industry. The Chancellor also made some small funding announcements to support these activities.

Richard Carter, Head of Fixed Interest Research at Quilter Cheviot, said high energy costs and a growing regulatory burden on employers will make this difficult, even though the UK is home to many leading names in the space.

“Without it, economic growth will remain subdued until the time the public finances allow the government to be more ambitious,” said Carter.

Carter said borrowing figures remain incredibly challenged, while energy costs will stay high as events in the Middle East show no sign of calming.

“Markets are crying out for fiscal responsibility from the UK, particularly given its exposure to inflation linked shocks, but we await if it is something that can still be delivered by this new government,” said Carter.

He added that Andy Burnham’s plans for a new social care service and a welfare reform bill that Labour backbenchers are resisting could leave the drive for fiscal discipline wanting unless growth prospects change.

Carter said Healey aimed Tuesday’s speech at the Labour audience, with No. 10 and the Treasury now reportedly in lockstep.

“Healey’s job is to keep the narrative of fiscal discipline front and centre, meaning what he delivers at the despatch box at next month’s Budget will be of much more importance than today’s speech,” said Carter.

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