The City’s top investment bank has issued an unequivocal verdict on Sir Keir Starmer and Rachel Reeves: for all the talk of reviving the country, they have left the economy no better than they found it. For Britain’s smaller companies, the bill is rising as higher energy costs and new barriers to hiring and building.
In a research paper published on Friday, Panmure Liberum said the former Prime Minister’s and Chancellor’s mistakes on energy and housing meant it was “difficult to conclude” that the economy had improved in the two years since the general election.
“Progress in economic pockets has been hampered by new barriers to construction and employment leaving the UK, in our view, no better off than it was in July 2024,” wrote chief economist Simon French. He blamed “the UK’s new disease of prioritizing luxury over tough competition” for putting a shadow over the couple’s economic legacy.
The decision ends the story the two said when they came out. In a resignation speech defending his record, Starmer said he left “this country in better shape than I found it” and that “the economy is strong”. At last week’s Mansion House dinner, Reeves told City officials he had “restored economic credibility” and put public finances on solid footing, echoing his earlier claim that the economy isn’t broken, just stagnant.
For business owners, details are more important than words. Housing and energy were intended to be the two engines of recovery. Labour’s manifesto promised to make Britain a “clean energy superpower” and reduce household debt by £300 a year, as well as a pledge to build 1.5m homes over parliament, a target that has yet to be met.
The French argued that refusing to open the North Sea to new drilling prevented private investment and limited an important source of energy. “There is little chance of renewed economic growth while this approach creates a tepid distribution of energy assets and auctions that lock in high energy costs for another generation,” he wrote.
This is a direct warning to energy-efficient SMEs, from manufacturers to tour operators, who have spent years getting loans they can’t easily transfer. The high cost “locked in” to the generation is not the domain that most owners plan their investment for all time.
On housing, France said the government had taken “a step back in private housing as luxury beliefs are full of good talk”, a blow to builders, traders and suppliers whose order books depend on shovels on the ground. He was warm on infrastructure, praising “encouraging progress” in speeding up major projects.
The numbers tell a familiar story. Over the two years, the economy grew by about 1.2 percent annually, in line with the average since the 2008 financial crisis. GDP per capita, which includes population size, grew faster than it did post-crisis, helped in part by Starmer’s success in reducing immigration numbers.
None of them will console the owners who were promised a decade of renewal and, when Panmure Liberum was read, they found two years standing still. The broader growth picture never helped. The message of the next administration is unreserved: competition, not the beliefs of luxury, is what moves the dial of companies that create growth.
