On Friday, the first day of the newly elected Labor government, the domestic-focused FTSE 250 index rose 0.86 percent and the country's 10-year bond yield fell 0.8 percentage points, the agency reports. Xinhua News.
This year's first quarter GDP rose 0.6 percent and the annual consumer price index rose 2 percent in May, in line with the Bank of England's planned interest rate cut.
The Labor government inherited a comparatively strong economy. However, it also faced an economy with significant inertia. There remains a large gap between the current productivity rate and pre-pandemic levels, and investment rates are low compared to other developed countries. The Labor government faces substantial challenges in revitalizing the economy.
Low investment
Data from the Economic Observatory showed that the overall investment rate in Britain fell from a peak of around 23 per cent of GDP in the late 1980s, to around 17 per cent from 2000 onwards. In contrast, investment rates among peers in G7 countries largely remained between 20 and 25 percent.
The main focus of the new Labor government should be investment, Tim Besley, professor of economics and political science at the London School of Economics and Political Science (LSE), told Xinhua.
"When you talk to business people or economic heavyweights, they will tell you that it is very difficult to see the strategic direction of the UK economy and the institutional framework that will allow economic objectives to be achieved," Besley said.
However, Labor may need time to formulate a coherent industrial strategy and plan.
Steve Nolan, senior lecturer in economics at Liverpool John Moores University, said Labor ran a cautious campaign and its future economic plans are quite limited.
Infrastructure could be a key area to attract investment. The Labor Government is set to establish a National Infrastructure and Services Transformation Authority, which will focus on infrastructure delivery and play a key role in setting the path for development.
“If structured correctly, the UK has the potential to address underinvestment,” Besley said.
Tax rate
Tax policy has been a contentious issue during Britain's general election campaign, with former Prime Minister Rishi Sunak repeatedly pressing then Labor leader Keir Starmer to clarify his stance.
In response, Labor pledged not to increase income tax, national insurance and value added taxes.
Iain Begg, a research professor at the LSE, told Xinhua that Labor has "tied its hands by refraining from raising taxes."
"If taxes are not raised, then the level of debt will become a constraint," Begg said.
Begg noted that the level of public debt in Britain is almost 100 percent of GDP, in addition to a significant fiscal deficit. The Labor government should be very careful with the public finances to avoid the pitfalls of former Prime Minister Liz Truss, whose policies, including substantial borrowing while maintaining low tax rates, shook financial markets.
"Labour's solution is to try to increase growth. Higher growth means that the same level of debt translates into a lower debt-to-GDP ratio, and Labor hopes it can achieve this through regulatory interventions rather than public spending," said. Supplicate.
international trade
The Financial Times reported last year that the Department of Business and Trade revealed a 27 per cent decline in foreign direct investment projects in Britain for the year ending March 2023, compared with the period from 2016 to 2017. .
Besley believes it is important to provide a framework and conditions that carefully guide plans and strategic government support to investors.
John Bryson, professor of Business and Economic Geography at the University of Birmingham, told Xinhua: "What the Labor government must do over the next five years is ensure that relations with China, the United States and the EU are appropriate, positive and and constructive."
"These relationships must be constructive if we want the UK economy to grow," Bryson said.
This year's first quarter GDP rose 0.6 percent and the annual consumer price index rose 2 percent in May, in line with the Bank of England's planned interest rate cut.
The Labor government inherited a comparatively strong economy. However, it also faced an economy with significant inertia. There remains a large gap between the current productivity rate and pre-pandemic levels, and investment rates are low compared to other developed countries. The Labor government faces substantial challenges in revitalizing the economy.
Low investment
Data from the Economic Observatory showed that the overall investment rate in Britain fell from a peak of around 23 per cent of GDP in the late 1980s, to around 17 per cent from 2000 onwards. In contrast, investment rates among peers in G7 countries largely remained between 20 and 25 percent.
The main focus of the new Labor government should be investment, Tim Besley, professor of economics and political science at the London School of Economics and Political Science (LSE), told Xinhua.
"When you talk to business people or economic heavyweights, they will tell you that it is very difficult to see the strategic direction of the UK economy and the institutional framework that will allow economic objectives to be achieved," Besley said.
However, Labor may need time to formulate a coherent industrial strategy and plan.
Steve Nolan, senior lecturer in economics at Liverpool John Moores University, said Labor ran a cautious campaign and its future economic plans are quite limited.
Infrastructure could be a key area to attract investment. The Labor Government is set to establish a National Infrastructure and Services Transformation Authority, which will focus on infrastructure delivery and play a key role in setting the path for development.
“If structured correctly, the UK has the potential to address underinvestment,” Besley said.
Tax rate
Tax policy has been a contentious issue during Britain's general election campaign, with former Prime Minister Rishi Sunak repeatedly pressing then Labor leader Keir Starmer to clarify his stance.
In response, Labor pledged not to increase income tax, national insurance and value added taxes.
Iain Begg, a research professor at the LSE, told Xinhua that Labor has "tied its hands by refraining from raising taxes."
"If taxes are not raised, then the level of debt will become a constraint," Begg said.
Begg noted that the level of public debt in Britain is almost 100 percent of GDP, in addition to a significant fiscal deficit. The Labor government should be very careful with the public finances to avoid the pitfalls of former Prime Minister Liz Truss, whose policies, including substantial borrowing while maintaining low tax rates, shook financial markets.
"Labour's solution is to try to increase growth. Higher growth means that the same level of debt translates into a lower debt-to-GDP ratio, and Labor hopes it can achieve this through regulatory interventions rather than public spending," said. Supplicate.
international trade
The Financial Times reported last year that the Department of Business and Trade revealed a 27 per cent decline in foreign direct investment projects in Britain for the year ending March 2023, compared with the period from 2016 to 2017. .
Besley believes it is important to provide a framework and conditions that carefully guide plans and strategic government support to investors.
John Bryson, professor of Business and Economic Geography at the University of Birmingham, told Xinhua: "What the Labor government must do over the next five years is ensure that relations with China, the United States and the EU are appropriate, positive and and constructive."
"These relationships must be constructive if we want the UK economy to grow," Bryson said.
