During the King’s Speech in July, Sir Keir Starmer articulated Labour’s aim to “take the brakes off Britain.” The monarch introduced 40 pieces of legislation—the largest number featured in such an address since the last Labour government in 2005—covering a range of issues from housing development to workers’ rights. These proposals outlined the aspirations of the new government. However, the atmosphere from Downing Street has since shifted to a more somber tone.

This change in tone can be attributed in part to the severe unrest that erupted last month following the tragic deaths of three girls in Southport. It also appears to be a deliberate strategy from Labour to highlight the Conservative government’s numerous shortcomings—technology that proved effective for David Cameron and George Osborne after 2010. The aim is to prepare the electorate for likely tax increases. Chancellor Rachel Reeves has identified a £22 billion “black hole” in public finances, a statement that the Conservatives contest amid contentious public-sector pay decisions.

The electorate is acutely aware of the chaotic governance by the Conservatives from 2016 to this year, characterized by five different prime ministers and fiscal mismanagement that has adversely affected the UK’s international reputation, leading to a significant slowdown in economic growth. Voters expressed a clear desire to remove the Tories, believing that continuing on the current path was untenable.

However, Starmer and his close advisors may be risking an excessive focus on negativity. With inflation nearing the Bank of England’s 2% target, decreasing interest rates, and rising household disposable income—according to Asda’s consumer tracker, the highest since the onset of the cost of living crisis—there are signs of recovery. The Office for Budget Responsibility forecasts a growth rate of 0.8% this year, expected to rise to approximately 2% annually until 2028. The economic landscape was improving prior to the election, partially due to the stabilizing influences of Rishi Sunak and Jeremy Hunt.

Labour has also inherited goodwill from the business community, a crucial asset that should not be squandered. An economy requires a positive narrative to attract investment. There are significant opportunities to present an optimistic vision of Britain to international investors.

A more pressing concern lies in the Labour party’s grasp of economic growth strategies. While the party has expressed a commitment to fostering wealth creation in collaboration with the private sector, it is now imperative for them to demonstrate genuine intent.

Ed Miliband, the energy secretary, has implemented a ban on new licenses for North Sea oil and gas exploration and aims to decarbonize the electricity grid by 2030, which may be deemed unrealistic and potentially detrimental. Proposed reforms to workers’ rights put forth by the deputy prime minister, Angela Rayner, could impose unnecessary red tape on businesses, particularly if they reverse anti-strike laws and narrow the use of zero-hours contracts. There is a prevailing concern that these changes will roll out in phases, and it is crucial that the government engages in thorough consultations. Small businesses and startups should be afforded generous exemptions. The UK’s current 884,000 job vacancies and low unemployment rates suggest that employers do not hold all the cards.

Public sentiment indicates an acceptance that Reeves’s upcoming budget will entail tax increases. Although the chancellor has ruled out hikes in the main taxes—income tax, VAT, national insurance, and corporation tax—caution is advised in areas such as capital gains and carried interest taxes. Modifications here could generate revenue but may disproportionately affect the mobility of wealthy individuals and their businesses. Research indicates that millionaires are increasingly likely to change their domicile, and cities like London and Manchester may not remain as attractive destinations for entrepreneurs and investors, who are vital contributors to tax revenues.

The most effective approach for a government to enhance wealth creation typically involves creating an appealing and stable business climate before allowing the market to flourish independently. Labour’s proactive strategy to relax planning regulations is a commendable step towards improving the business environment, and similar initiatives should be encouraged. If the goal is to accelerate growth, the focus should be on facilitating the efforts of diligent individuals, as highlighted in our How I Made It feature each week, rather than hindering them. Currently, it appears that Downing Street is attempting to apply the accelerator and brakes simultaneously.