Prime Minister Rachel Reeves attended the World Economic Forum in Davos as the UK faced its largest employment decline since the pandemic, with a loss of 47,000 jobs last month and an unemployment rate of 4.4%. Critics, including business leaders, accused Reeves of failing to promote the UK’s economic strengths and lacking a coherent strategy amid rising concerns over a potential “debt death spiral.” While some business executives like Barclays’ CEO emphasized the need for measured policy implementation, others expressed dissatisfaction with the government’s direction, fearing a loss of entrepreneurial talent due to recent tax changes and regulatory burdens.
Embattled Prime Minister Rachel Reeves flew to Davos last night as the UK recorded its biggest employment slump since the coronavirus outbreak.
Mr Reeves headed to a Swiss mountain resort for the World Economic Forum’s annual meeting amid claims the UK is also headed for a “debt death spiral”.
And the boss of one of Britain’s biggest banks said the chancellor had not had a good grasp of the economy so far.
This is Reeves’ second trip abroad due to the economic downturn, following a visit to China earlier this month when the bond market’s decline took hold.
Official figures yesterday suggested that the policy is starting to have a negative impact on British employment. According to the Office for National Statistics, the number of paid employees fell by 47,000 people last month, the biggest decline since November 2020 and the second largest drop after the 32,000 drop in the previous month.
It was also revealed that the unemployment rate rose to 4.4% in the three months to November, the highest level in six months.
But while the aim of Davos is to give Britain the thumbs up, the prime minister was yesterday accused of doing too little to promote the country’s strengths to the world.
This is the second time Rachel Reeves (pictured outside Downing Street) has left the country due to the economic downturn.
The WEF annual general meeting will be held this week in Davos, Switzerland.
She will attend a series of meetings with top executives and investors and a series of media activities, but will not participate in events related to the forum’s main topics.
Sir Martin Sorrell, chief executive of marketing firm S4 Capital and senior city cabinet member, told the Mail: “I think this is unfortunate. I think she should showcase Britain’s strengths in public sessions.” spoke. I don’t think doing things behind closed doors is helpful in and of itself. ”
The UK economy stagnated in the second half of last year, and business confidence remains uncertain in the coming months following Mr Reeves’ £25bn raid on employees’ National Insurance (NI) and Labour’s introduction of a raft of new worker rights. It collapsed.
Leading business body the Institute of Directors (IoD) said the latest figures “should ring alarm bells”.
IoD chief economist Anna Leach said: “Demand for workers continues to be depressed due to significant increases in employer NI, upcoming minimum wage increases and concerns about employment rights costs.”
Conservative business spokesman Andrew Griffiths said the figures showed a “worrying trend”.
“The idle talk of business confidence, the tightening of bureaucracy against job creators, and the Budget’s ’employment tax’ mean that jobs are now declining just as the sun rises in the east. It means.”
Meanwhile, Ray Dalio, one of the world’s most prominent investors, has sounded the alarm over recent turmoil in the UK bond (known as gilt) market, which has sharply driven up government borrowing costs.
Sir Martin Sorrell, chief executive of marketing firm S4 Capital, told the Mail: “I think this is a shame. I think she should showcase her British strengths in public sessions.”
Mr Dalio, founder of the hedge fund Bridgewater, told the Financial Times that “a debt death spiral is underway” because it would require either more borrowing, lower spending or higher taxes. I can see it,” he said.
Sir Martin Sorrell said Mr Dalio’s views were shared by those gathered at Davos.
He said business leaders’ sentiment towards Labor had “deteriorated quite seriously”.
“The irony of this situation is that before the election, they were trying to win corporate trust by serving breakfasts of smoked salmon and scrambled eggs to garner public support,” he said.
“Since they came to power, they’ve found it even more difficult.” People were a little perplexed by the budget proposal.
“We’ve achieved half of our plan. We had to take the unpleasant pill of increased taxes. Now, where are our growth plans?”
Lord Martin said the UK was now in the same position as Germany and France, which are struggling. This is in stark contrast to the so-called “animal spirit,” or increased desire to trade, that has taken hold since Donald Trump became president of the United States.
Meanwhile, at yesterday’s Davos meeting, British bank executives failed to express clear support for the government despite trying to give a positive impression.
Bill Winters, chief executive of Standard Chartered, said: “They struggled a little bit in the early days to take the lead, but I’m confident they will.”
Among the business leaders Reeves plans to meet are two of the world’s most powerful bankers: JPMorgan president Jamie Dimon (left) and Goldman Sachs chief David Solomon. (right) is included.
Charlie Nunn, chief executive of Lloyds Banking Group, told CNBC: “Sentiment has definitely slowed in recent months, and that trend is spreading from some large organizations to small businesses. I can see it,” he said. [small and medium enterprises]. ”
Mr Nunn said the government had “set out a clear plan” and must now “accelerate that plan” with a focus on industrial strategy, planning and regulation.
He added: “The upcoming changes to National Insurance in April will be difficult for some organizations in some sectors.” This will incur significant additional costs. ”
Barclays chief executive CS Venkatakrishnan said the government “just needs to take its time to put policies in place”.
And using a cricket analogy, he told the Mail: “I am a Test match player, not a T20 player.”
The comment seemed to suggest that he intended to wait until the situation improved, but it also seemed to suggest that his patience may eventually run out.
OakNorth Bank chief executive Rishi Khosla told the Mail: “The way Labor campaigned was very pro-business and really positive.
“So, as a business and as an entrepreneur, you thought this was going to work. It was good for the first few weeks, but then the atmosphere changed pretty dramatically.”
The purpose of Davos is to give Britain a stamp of approval, but the prime minister has been accused of being too lax in promoting the country’s strengths to the world.
He pointed to the doom and gloom that preceded the Budget as Labor discussed the state of the economy they inherited and the subsequent measures announced in the Budget itself.
Mr Khosla, a former Conservative Party donor, said: “A lot of it has just eroded confidence again.” There were few measures to stimulate growth.
“They rushed into business without any slack in it or a clear direction of where that slack would come from.”
Meanwhile, changes to inheritance tax and changes to the rules for non-residents (individuals not domiciled in the UK for tax purposes) have led to an exodus of wealth creators, with many fleeing to places like Milan and Dubai. He said there are.
“The UK will lose a lot of the talent that drives growth, essentially entrepreneurial talent,” Mr Khosla said.
