With Sir Keir Starmer leading Labour into Downing Street after a landslide victory, businesses are poised to navigate a new political landscape.
The honeymoon period might be short-lived, however, as Labour inherits deep-seated economic issues and faces immediate industrial crises.
Thames Water
Labour’s previous commitment to renationalising the water industry, a sector in dire need of £270 billion investment by 2050, places Thames Water at the centre of attention. With Ofwat’s decision on Thames Water’s business plan imminent, a tough outcome could force the government to intervene, potentially overseeing a debt-for-equity swap or appointing special administrators.
Royal Mail
The proposed £3.6 billion takeover of Royal Mail by Czech billionaire Daniel Kretinsky will be scrutinised under Labour. With promises to protect workers and explore new governance models, Labour faces opposition from unions and the right-wing media. The takeover is also subject to a review under the National Security and Investment Act.
Port Talbot
The future of Tata Steel’s Port Talbot plant is another pressing issue. Tata’s decision to close blast furnaces and install electric arc furnaces has faced backlash from unions and MPs. The new government needs to craft an industrial strategy to support the sector, though Tata’s commitment remains uncertain.
China & EU Trade
Labour aims to stabilise and improve trading relations with the EU and navigate the complex dynamics with China. The party will seek to negotiate a better partnership with Brussels without rejoining the single market or customs union. An audit of UK-China relations will be launched to better understand and respond to challenges and opportunities.
Business Rates
Reforming the commercial property tax is high on Labour’s agenda, with business rates being a top concern for employers. While Labour promises to level the playing field for high street retailers, specifics on how this will be achieved remain unclear. Potential reforms could include taxing out-of-town warehouses, though these measures might not fully alleviate the burden on traditional retailers.
Labour’s approach to these challenges will be critical in shaping its relationship with the business community and determining the UK’s economic future.
