Labour must do more to win back confidence of business

If the government was hoping for some good cheer just in time for the festive season, those hopes have been comprehensively dashed by the latest survey from the CBI. The growth indicator, from the organisation regarded as the voice of UK business, cannot have been what the government prepared for, nor even, as the climate has grown gloomier, what it necessarily expected after almost six months in power. One was to agree on generous pay settlements with several branches of the public sector and with the rail unions, which not only cost a lot more than the much-peddled savings from, among others, the means-testing of pensioners’ winter fuel allowance, but, in the case of the train drivers led to what even the transport minister admits is a worse service. The attraction of such a solution to the “black hole” was noted at the time, but so were the potential downsides: cuts, or stagnation, in employee numbers, in pay increases and bonuses, as well as in investment, and an overall effect that could militate against, rather than for, the growth that had been Labour’s stated priority. The figures also support accusations that the chancellor, backed by the prime minister, failed to join the dots and understand that requiring employers to bear the brunt of the suffering would inevitably affect “working people” in the end.