Despite their self-professed focus on growth, the government has consistently delivered policies that hinder it.
Despite their self-professed focus on growth, the government has consistently delivered policies that hinder it, writes James Hanson. Picture: LBC 
By James Hanson
Almost everything wrong with Britain in 2025 can be traced back to one fact: our economy isn’t growing.
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According to the Resolution Foundation, in the 16 years before the 2008 financial crash, per-person GDP grew by about 2.2% per year. Since then, it’s averaged just 0.5% annually.
As dry as quoting GDP statistics may sound, these numbers are the difference between a country that feels richer over time and one that feels poorer. Hence why so many Brits are feeling cash-strapped like never before.
From young people priced out of home ownership and forced to pay exorbitant rents, to pensioners struggling to cover their heating bills - it is hard to find any section of society that didn’t feel better off 20 years ago.
When Labour came to power, Starmer and Reeves proclaimed their number one economic mission was growth. They were right to do so. Without it, tax receipts won’t rise, leaving the Treasury with three unpalatable options: spending cuts, increased borrowing or further tax hikes.
Yet despite their self-professed focus on growth, the government has consistently delivered policies that hinder it. First, Rachel Reeves put up national insurance contributions for employees, making it more expensive for businesses to hire. Then Labour passed the Workers' Rights Bill, providing further disincentives to take on new staff. Is it any wonder unemployment has risen to five per cent?
And now, as the most important budget for a generation approaches, the Chancellor is preparing to penalise those already in work. According to reports, she has u-turned on plans to increase the headline rate of income tax, but will instead do so by default through freezing thresholds. Among the justifications? To fund the scrapping of the two-child benefit cap.
It isn’t rocket science - if you tax people who work and pay people who don’t, productivity will fall. British workers are already among the least productive in the Western world. The UK’s rate of labour productivity is 80 per cent of the US’ - meaning it takes the average Brit five days to deliver what an American does in four. We lag significantly behind France and Germany, too.
Part of the explanation is that, for many Brits, work isn’t worth it anymore. If Rachel Reeves goes ahead with her stealth tax (by freezing thresholds), a further 800,000 people will be dragged into paying the higher income tax rate. Indeed, over the course of this decade, the total number of higher-rate taxpayers will have risen from 4 million to 10 million!
Further up the income scale, the disincentives to produce more only increase. Many who earn more than £100,000 a year face a marginal tax rate of 60 per cent (after the personal allowance is removed). No wonder people of all incomes are deciding to work from home, quiet quit, or just coast along doing the bare minimum. What is the point of working harder if it simply isn’t worth it?
Taxes aren’t the only obstacle to a growing economy. Our Byzantine planning laws make housebuilding and infrastructure projects unnecessarily costly and time-consuming. We’ve under-invested in skills and new technologies, too. But the fundamental problem is simple: we’ve made work too expensive and worklessness too affordable.
So as the budget approaches, Rachel Reeves should return to where she started: by putting economic growth at the heart of her agenda. Don’t make work less attractive by putting up taxes; cut welfare spending instead. Don’t add further burdens to business; give them incentives to hire people. And don’t send the message that Britain hates wealth creators. Let’s open our arms to anyone and everyone who wants to invest here. In short, it’s time to Make Britain Rich Again.
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The views expressed are those of the authors and do not necessarily reflect the official LBC position.
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