Andrew Bridgen is MP for North West Leicestershire.
When the current Government came to office, economic recovery was the cornerstone of the programme for Government. This economic recovery had to be the right sort of recovery as we aim to get away from the housing and debt fuelled boom which proped up the previous Labour Government, and allowed a bloated public sector to crowd out private sector investment. The signs are that this economic recovery is sustainable and real. The CBI recently issued a press notice saying as much with Business Investment Growth forecast to rise from -3.7 per cent in 2013 to 6.6 per cent this year and 8.3 per cent in 2015. In addition to this, our net trade position will improve as export growth is expected to rise from 1 per cent in 2013 to 3.6 per cent in 2014 and 4.7 per cent in 2015. The forward guidance through to 2020 given by Bank of England Governor Mark Carney regarding interest rates recently will also underpin this confidence by business to invest.
This confidence is reflected in the optimism index produced by BDO which has reached its highest level since the index began in 1992. Its employment index which measures UK businesses’ hiring intentions over the next six months also reached its highest level since 2008.
In short, this is further proof that the Government’s plan to rebalance the economy and encourage private sector investment is working. As unemployment and net immigration reduces, companies will be under more pressure to get the best out of their workforce as the pool of available labour reduces. This will result in the reversing of the fly in the ointment at present which is the productivity levels in the UK. These are the real cause of the slow growth in earnings since the great recession. With a properly functioning banking system and a better skilled workforce, the resulting business investment will start to increase our productivity so we can afford sustainable real terms wage increases.
This is what the Labour Party need to understand. When they talk about a cost of living crisis, they fail to recognise their role in creating a bloated public sector which sucked the life and investment out of the private sector. With the reduction in the share of the economy taken by the public sector, we have seen the private sector take up the slack and lay the foundations for business led growth. The Government can only do so much and now it is the time for business to invest and drive forward growth in the economy.