A new prime minister can only deliver growth by putting British business first

As Andy Burnham begins his premiership, attention is focused on the new faces around the Cabinet table and the choices his administration makes in its first days.¹ For businesses and investors, however, the most important question is not who occupies Numbers 10 and 11, but whether the new government creates the conditions for long-term investment.

Governments do not build successful companies. Entrepreneurs and management teams do that: developing products, winning customers, creating jobs and taking the calculated risks that drive innovation and productivity. Government’s role is to ensure those decisions are made in an environment that rewards ambition rather than discourages it.

Growth starts with business; government creates the conditions

The scale of the opportunity is easy to underestimate. The UK is home to around 5.7 million private-sector businesses, with small and medium-sized enterprises accounting for almost 99.9% of the total.² They are not a peripheral part of the economy. They are its foundation.

At Connection Capital, we meet ambitious management teams across the country: engineering businesses, manufacturers, software providers, healthcare companies and specialist service firms. Their sectors differ, but the message is consistent. Ambition is rarely in short supply. The more common constraint is confidence.

Confidence is the binding constraint

Confidence is currently fragile. The Institute of Directors’ economic confidence index fell to -61 in June, while the CBI reported that private-sector firms expected activity to decline in the three months to September.^{3, 4} The Bank of England has also found that investment intentions are broadly flat, with uncertainty and financing conditions weighing on businesses’ willingness to commit to new projects.⁵

That is not an argument for government to eliminate every risk. Business leaders deal with uncertainty every day. It is an argument for policymakers not to add avoidable uncertainty of their own. Companies can plan around a clear tax and regulatory framework, even when it is not perfect. What is much harder is planning around frequent changes, short-lived incentives or persistent speculation about what may come next.

Private capital is ready — but needs certainty

The UK begins from a position of real strength: world-class universities, deep professional expertise, respected legal and financial institutions, and clusters of innovation across technology, life sciences, advanced manufacturing and the creative industries. It also has thousands of established SMEs with experienced management teams, strong customer relationships and the potential to become much larger businesses.

The challenge is converting those advantages into more companies that start, scale and remain in the UK. The British Business Bank has highlighted the need to mobilise more capital for promising scale-ups and help smaller businesses start, scale and stay in Britain.⁶ Finance alone is not enough, but without patient private capital many good businesses will struggle to invest in people, premises, technology and new markets.

Private investors are not short of willingness to back British enterprise. Many want to put more capital into UK businesses, particularly established SMEs and ambitious scale-ups. But they need confidence that the tax and regulatory framework will remain stable enough to justify long-term commitments. If policy treats private capital primarily as something to tax, rather than something to mobilise, it risks discouraging the very investment needed to drive productivity, employment and growth.

A practical pro-growth agenda

Putting business first does not mean removing every regulation or pursuing tax cuts irrespective of the public finances. It means applying a consistent test to policy: will this make it more or less likely that a well-run UK business invests, recruits, innovates or expands?

A practical agenda would offer greater tax certainty, protect incentives for entrepreneurship and reinvestment, ensure regulation is proportionate and predictable, improve access to skills and infrastructure, and make it easier for growing businesses to obtain the capital they need. It would also judge tax changes not only by the revenue they raise next year, but by the investment and enterprise they encourage over the next decade.

Measures to support pubs, hospitality and high streets are welcome. These businesses matter economically and socially. But a national growth strategy must also support the advanced manufacturer investing in new machinery, the software company expanding overseas, the healthcare provider opening another site and the engineering business considering an acquisition.

Reward investment, don’t discourage it

Britain does not lack entrepreneurial ambition. Nor does it lack investors willing to support it. What has too often been missing is the confidence to make long-term commitments against a shifting economic and policy backdrop.

The Burnham government has an opportunity to change that. Businesses do not need government to build their companies for them. They need it to establish a stable environment in which taking a risk, investing for the future and growing in the UK are consistently worthwhile choices. Private capital should be encouraged to help drive that growth, not taxed in ways that make investors hesitate.

Sources

1. Reuters, Britain’s new prime minister, Andy Burnham, vows to end years of instability, 20 July 2026.
2. Department for Business and Trade, Business population estimates for the UK and regions 2025: statistical release, 2 October 2025.
3. Institute of Directors, Confidence declines as operating conditions worsen, 1 July 2026.
4. Confederation of British Industry, Private sector growth expectations weaken - CBI Growth Indicator, 29 June 2026.
5. Bank of England, Agents' summary of business conditions - June 2026, 12 June 2026.
6. British Business Bank, Small Business Equity Tracker 2026, June 2026.
7. UK Private Capital, Economic contribution of UK private equity and venture capital in 2025, 13 March 2026.