Michael Moore's Outlook on the tough world of politics

Politics is a tough sport. Who knew? But it can be nearly as tough for those who stand nearby, whether the issues are international or domestic.

In geopolitics, the re-entry of President Trump to the fray makes that point clear. Greenland, Canada and Mexico would take metaphorical steps back if they could, but, well, that’s not really an option. And while many countries in Europe, banded together in the EU or NATO, might have anticipated what was coming, it does not make the political conflict any less painful in prospect.

Closer to home, there’s plenty about the new Trump administration to grapple with. There’s been a slew of Executive Orders, a raft of cabinet picks with radical prescriptions, and a range of legislative plans with uncertain consequences for long established partners like the UK.

Just as well it is all straightforward on the home front then. Hmm. OK, maybe not. But one thing you cannot accuse the Labour government of is suggesting that things would be easy.

Setting aside the debate about whether or not the narrative from senior figures has contributed to a lack of confidence about the economy, we have recently begun to see a more concerted effort to address the growth mission. 

Whether out of necessity or choice, there is now more urgency to the messaging. The bond market volatility at the start of the year, poor borrowing and unemployment figures, ok inflation, but unexciting growth numbers – these all underline the necessity. 

But the continued roll out of the different elements of the economic programme highlight the choices being made, too.

Of course, the impact of the Budget is still playing out. And, unfortunately for the government and business, not completely in the way intended.

However, details are now being filled out in the Industrial Strategy, such as on AI. There have been bold announcements on clearing planning obstacles for major projects. Pension reform is cranking up and growing murmurs suggest that the plans to reform England’s local government are gathering momentum.

Will it be enough? The marquee moments of the Spring fiscal statement and the three-year Spending Review (a bit later in the year) will now carry heavier expectations than before. Together they will (finally) reveal the government’s full hand as the announcements provide parameters, and then detail, on spending priorities.

Meantime, if people have missed the government’s determination to get the economy going, the pointed attention on regulators should grab it. Their ‘secondary objective’ on growth is not exactly new, but the Labour government has, if anything, doubled down on it. 

There has been some scepticism, it’s fair to say, about how you graft this priority onto the side of a primary responsibility to make markets function properly, protect consumers and/or maintain financial stability. And if it is possible, is there the right culture or prioritisation at each regulator to make a difference?

Perhaps the moves at the UK competition regulator will answer that question. A week before the new Growth and Investment Council of the CMA was scheduled to convene for the first time, and while Davos was in session, the board chair departed. That certainly got attention. And brought to life the point about politics being tough not just for the protagonists, but for those standing nearby as well.

So, the economy may not have reached ‘escape velocity’ to break free of the recent flatlining, but the efforts to reach it are increasing. 

At the same time, in the world of private capital, most of the attention is focused on working the increased employment costs through portfolios and adjusting plans. And looking for tangible signs of the fuel being provided to power the economy back to sustained growth.

Separately, the ongoing work to deliver a workable solution on the taxation of the industry is a key priority, too. Our response to the consultation, on the future of carried interest taxation from 2026 onwards, headlines on the need to retain international competitiveness for UK private capital so that the industry can continue to power growth.

That means that the declared government intent to continue to recognise the ‘unique characteristics’ of carry, and the UK’s position as a globally significant private capital hub, will require careful consideration of the detail of the new arrangements and no new burdens.

After all, the industry has a proven track record of developing high growth and high productivity businesses, so it offers the UK ongoing competitive advantage. There has rarely been a more important moment to lock that in.
 

Michael Moore
Chief Executive, BVCA

This article was originally published on 20 February 2025 on the Private Equity News website here.