Growth at risk from damaging policies in the King’s Speech amidst Labour leadership crisis

Growth Commission member Douglas McWilliams has issued the following response to the GDP figures for the three months to February 2026 that have been issued this morning:

“Today’s figures showing GDP growth of 0.6% in the first quarter of 2026 and GDP per capita up by 0.9% compared with a year ago are good news and confirm the view that the UK economy had started to strengthen earlier this year after the shenanigans of last year’s Budget.

“However, the world has changed with the Middle East war. Business and consumer confidence have collapsed. According to the CBI, business confidence is now the lowest since Covid, while according to ICAEW, it has fallen sharply; consumer confidence has fallen to two-year lows according to GfK and YouGov/Cebr. One consumer confidence measure (the British Retail Consortium’s) has it falling to a 53-year low.

“Yesterday’s King’s Speech regrettably saw confirmation that the Government is pressing ahead with policies that will damage growth. The proposed Energy Independence Bill will ban development of North Sea oil and gas while the UK continues to import fossil fuels from elsewhere (ironically including the Norwegian sector of the North Sea). This cannot make economic sense.

“Meanwhile the so-called European ‘Reset’ risks wrecking the growth of the UK’s still successful tech sector which has provided 35% of the 4.2% growth in the turnover of the service sector in the year to Q1. The EU’s own tech sector has been badly damaged since Brexit by the imposition of the Digital Services Act, the Digital Markets Act and the AI Act, thereby helping to boost the UK tech sector, which has received more venture capital investment in the past year than the same sector in France, Germany and Switzerland combined. The King’s Speech indicated that the UK could accept EU rules without even looking for parliamentary approval.

“The fact that Sir Keir Starmer has lost the confidence of a quarter of his own MPs already has the bond market looking on with horror. The prospect of policies being pushed by his putative successors which would lead to even more borrowing and less growth has caused UK gilt yields to shoot up to the highest level in the G7. Unless the contenders for the Labour leadership reject policies of high borrowing and low growth, the UK risks a major financial crisis.”