Bank Governor Warns Growth Must Be Burnham’s Top Priority

Bank of England Governor Andrew Bailey has warned that reviving Britain’s faltering economy must become a central priority for the incoming Government, as businesses contend with sluggish demand, rising energy costs and renewed inflationary pressure.

Appearing before MPs on the Treasury Committee, Bailey said the UK’s fundamental economic challenge was its persistent lack of growth, describing the problem as a structural weakness that had developed over almost two decades.

“The big issue is growth in the economy,” he told the committee.

Bailey stressed that Britain’s subdued performance could not be attributed to any single administration, but reflected a longer-term problem stretching back around 16 or 17 years.

“This is not a story about any one government,” he said, adding that the country’s weak growth had become a “critical structural issue”.

The warning comes as Andy Burnham prepares to become Prime Minister after securing the backing of more than 85 per cent of Labour MPs, according to London Loves Business. He could enter Downing Street as early as next week.

Burnham is set to inherit an economy facing pressure on several fronts, including fragile business confidence, elevated operating costs and uncertainty surrounding global trade and energy markets.

Economists at Deutsche Bank expect forthcoming Office for National Statistics figures to show that the UK economy contracted by 0.1 per cent in May, following a decline of the same size in April.

A second consecutive monthly fall would deepen concerns over the strength of the economy, with the April contraction driven largely by weakness across the services sector.

Deutsche Bank UK economist Sanjay Raja described activity in areas including professional services, finance and property as “sluggish”, although he pointed to stronger retail demand during warmer weather as a more positive sign.

Businesses are also confronting further cost pressures following renewed conflict involving the United States, Israel and Iran, which has pushed up fuel and energy prices and heightened concerns over inflation. Chancellor Rachel Reeves has acknowledged that the international crisis will have consequences for the UK economy.

For the fresh produce and wider food supply chain, higher energy and fuel costs risk adding further pressure to transport, refrigeration, storage, packaging and distribution expenses — costs that businesses are already working hard to absorb.

The energy price cap for a typical household increased by 13 per cent from 1 July, while international instability continues to create uncertainty over future wholesale prices.

Bailey rejected suggestions that financial regulation itself was preventing stronger economic expansion, arguing that stability remained essential to investment and sustainable growth.

“We will not get growth if we don’t have financial stability,” he said.

His message to the incoming administration was unequivocal: reversing Britain’s long-running economic stagnation must be treated as an urgent national priority.

For food and fresh produce businesses facing increasing costs, squeezed margins and cautious consumer spending, the industry will now be watching closely to see whether the new Government can turn its promised focus on growth into practical measures that strengthen investment, competitiveness and supply-chain resilience.