Labour’s Balancing Act, Trump's Second Term, and Badenoch’s Conservatism: 2025 and Beyond
By Ben Stetson, Vice President, Client Experience, Weber Shandwick UK
British investors and industry have had a lot of change to digest recently: the Budget, the prospect of a second Trump presidency, Starmer engaging with China. Any certainty about the future that businesses felt in July has quickly faded as the reality of geopolitical events and government finances takes hold. As we begin to look ahead to 2025, here are three forces that industry should keep an eye on:
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Treasury Orthodoxy
When the papers were buzzing with stories about ministerial freebies, the self-professed Iron Chancellor Rachel Reeves was quietly building her power base across government. Unperturbed by early scandals, she used her Conference speech to sharpen her elbows and capitalised on the buildup to the Budget.
The fallout of the Sue Gray affair served as a convenient distraction for the return of good old-fashioned Treasury orthodoxy. Businesses are piling in over National Insurance Contributions (NICs), farmers are protesting in Westminster—and yes, they marched past Downing Street—but the key audience here is the Chancellor and the “Treasury Village.” Naturally, there has been, and will continue to be, resistance to tax hikes. However, Reeves and her team have taken a calculated risk, betting that they can retain enough business support in the short term buying time for their growth plan to bear fruit.
The signs are certainly not great right now, especially after the limp reception she received at the CBI Conference.
Fast-forward a few months, and Treasury will publish the results of the Spending Review. The delayed Budget and Spending Review have provided Reeves with a long window to seize control of the Government’s domestic agenda while Starmer focuses on building his profile on the world stage.
This isn’t a critique of the Prime Minister but an acknowledgment of how critical Reeves is to the domestic political landscape. While Starmer has taken on immigration, the Government’s focus on growth as its key mission and metric for success means Reeves holds most of the cards. Her decisions will determine which departments hold financial and political power for the remainder of this Parliament.
For investors and industry leaders, fostering business relations with the Treasury rather than Downing Street might be more prudent under this Government—a dynamic that Starmer’s team could eventually come to resent or seek to change.
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Harmony With (and Within) Planet Trump
One presidential term and a long business career provide the sample for Trump’s second stint on Pennsylvania Avenue. Internecine fighting is a hallmark of Donald Trump’s leadership style and businesses and commentators all expect to see Trump’s combative approach lead to at least one major showdown. Take your pick, Trump vs. China, Trump vs. Europe, or even (and we’re all expecting it) Trump vs. Elon.
But what about the UK? All of these conflicts will shape Labour and Starmer’s relationship with the new administration – and Starmer himself faces quite the dilemma: his rhetoric may draw the President-elect’s attention even before inauguration. Warm remarks about strengthening ties with the EU or resetting relations with China could conflict with Trump’s agenda and cause tensions which Starmer is keen to avoid.
Alternatively, Starmer could signal that Labour is embracing the mantle of Global Britain. With Peter Mandelson reportedly heading to Washington and Jonathan Powell appointed as National Security Advisor, two “big beasts” from the Blair years are shaping Britain’s place on the world stage. This holds its own challenges – cosying up to Trump risks attracting the ire of the EU. Can Starmer keep both parties happy?
Businesses should remain alert to the potential opportunities and challenges presented by the geopolitical path Starmer is charting. Whether this is greater alignment with the EU but tariffs with the U.S.; or the possibility of a trade deal with the US and distancing from the EU. There are a multitude of possibilities.
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Parliamentary Opposition
Back in Blighty, parliamentary business rattles on, and excitable MPs are seeking to shape their own roles. The intake of new Labour MPs is still acclimatising to life in Westminster, hunting for causes and campaigns. Their inboxes, however, are filling with questions about the Budget. Legitimate concerns are being raised about its impact on both national and local economies.
While the Government is projecting confidence in growth, progress on the Industrial Strategy (early stage Green Paper has left businesses with more questions than answers) and the Employment Rights Bill remains slow. Labour MPs, despite their talking points, are beginning to feel the pressure.
If Labours struggles to balance the competing demands of businesses, unions, and workers, industry leaders might start to look across the aisle.
Enter: Kemi Badenoch, newly elected Leader of the Conservative Party. Kemi will likely have almost five years before she faces the electorate. This could be viewed as a long window to turn the fortunes of the Party around, but this can only happen if she’s in the news for the right reasons. Her ideological leanings don’t necessarily align with business interests, but if she can communicate her positions on tax, Equality, Diversity and Inclusion (EDI), and environmental policy with greater nuance, she might be able to bring businesses along with her vision. For now, though, it’s still early days.
