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In February’s session for in-house senior counsel, David Blackburn, Partner at Brunswick Group and Natasha Burroughs, Director at Brunswick Group and former senior Civil Servant, discussed the positioning of the UK government and upcoming opportunities in the current climate of geopolitical turmoil.

The Labour Manifesto – the proof is in the plans

‘The Party’s margin of victory provided certainty amid broader international uncertainty’

Eight months ago, the Labour Manifesto and large margin of electoral victory signalled an encouraging direction of travel in many policy areas. Taken by surprise by the timing of the 2024 General Election, the policy development in the manifesto was deliberately scant and the Labour Party have spent the opening months of their government engaging with stakeholders and laying out consultations. However, David Blackburn explained that the implementation of manifesto promises already faces significant challenges in the UK. Economic instability both at home and abroad, faltering productivity, low growth, low private sector investment and accelerating demographic changes resulting in increased demand public services have created structural and circumstantial problems which would have presented significant barriers to whichever party was elected in 2024. However, Labour’s fiscal policy and commitment not to raise certain taxes have compounded many of these issues and left the party with little room for manoeuvre. David stressed that the proof will be in the plans announced in the next 12 months. While the Comprehensive Spending Review has delayed the announcement of flagship policies, significant policy intervention is expected towards the end of March, leaving time for stakeholders to engage with the government if they desire to do so.

Opportunities to explore in 2025

Natasha Burroughs examined three interrelated topics that are predicted to offer key growth opportunities during 2025: capital mobilisation, planning and infrastructure and the industrial strategy. The industrial strategy sets out eight potential areas where the UK can lead and drive economic prosperity, including advanced manufacturing, defence, the creative industries, financials services and life sciences. A paper on the industrial strategy is expected before the Spring, and there is still opportunity to engage with the government. Natasha explained that while capital mobilisation is not a new thing, we have seen the Labour government drive home the message that it wants to drive growth by mobilising different pools of private investment to work alongside public funds. There is enthusiasm for creative thinking about how to bring public and private capital together, whether that be through blended finance mechanisms, social impact investment or other pools of capital with different risk appetite. Natasha highlighted that without speeding up planning and delivering critical infrastructure, the government cannot realistically achieve any of its industry or capital mobilisation missions. Businesses with a record of large investments will have a major role in shaping government thinking about these projects going forward in areas ranging from grid connection and planning to long-term support and engagement with the government at all levels.

On the international stage, David explained that the UK is running against the tide by pushing for free trade in an era of growing tariff reform and greater trade barriers. There is a sense from the most recent round of discussions on the financial services chapter that there is a basis for ongoing discussion and greater regulatory dialogue between the UK and various Gulf states. Regarding Europe, David is sceptical that much can be achieved without a shift in the government’s political red lines following Brexit. Nonetheless, progress has been made with veterinary services agreements and travel cooperation for under-30s, and it is hoped that negotiations of aspects of the Trade and Cooperation Agreement and the security situation in Europe will both be opportunities to build closer ties with European partners.

Risk and reward – areas to monitor in 2025

Given the challenges that the current government is facing, David explained that there are some areas to monitor. However, not all these areas present only risks, and there are some opportunities that businesses will be able to capitalise on. The Comprehensive Spending Review does pose the risk of seeing more projects, particularly those from small and medium-sized enterprises, cancelled. Following the 2024 Autumn Budget, unless the government shifts its fiscal red lines around personal taxation, it is much more likely that business transactions and other important reliefs will be looked at to close the funding gap.

However, Natasha stressed that there are various areas for opportunity, including energy and critical minerals and artificial intelligence (AI) strategy, growth and regulation. Zonal energy pricing could incentivise industries of the future to move to areas like Scotland, which have low-cost renewable energy, though government is yet to make a final decision on zonal pricing. The government is looking to accelerate development of renewables, and promising signs have been seen around the reform of contracts for various schemes. Regarding critical minerals, diplomatic channels have been used to secure partnerships with key strategic countries such as Canada and Japan to mitigate against the risk of Chinese dominance over supply chains. Looking further ahead, senior officials have been travelling regularly to areas such as the Gulf, India and South Africa to have discussions regarding critical mineral access.

Natasha highlighted AI as an area with significant interest and the potential to be at the heart of the UK’s growth mission. The AI Opportunities Action Plan could stimulate investment in infrastructure, create UK national champions and help to embed AI in businesses and public services. However, it has also become highly politicised and there is increasing regulatory divergence between the UK and Europe, particularly after the UK didn’t sign the memorandum agreed at the Paris Summit. There are already several issues domestically, not least the issue of copyright and energy use for data centres. 

Questions and answers

David and Natasha answered three questions from attendees:

Q: Do you see the government placing growth ahead of environment and consumer protection?

A: Yes – at least rhetorically. We have seen the government make various controversial decisions, such as the Heathrow runway expansion, in the name of growth. Certain climate policies, especially those subject to judicial review, are expected to be in scope of the new planning bill and the government has promised to reduce the influence of the environment agency.

Q: Do you expect changes to freedom of movement with the EU given the roles that need to be filled in the UK, for example in hospitality and the NHS?

A: The government has three key objectives: growth, immigration and reducing NHS waiting lists. One of the challenges of freedom of movement with the EU is that it cuts across one of those political red lines. It is difficult to see a fundamental shift regarding the government’s stance on freedom of movement at the current moment, though changes to the visa regime for the NHS and wider case system may be seen.

Q: Has the government expressed interest in businesses in the critical minerals sector?

A: The government has been on the front foot in this area and has engaged with stakeholders and created a critical minerals strategy that the government is currently refining and seeking input on. The Minister for Industry, Sarah Jones, has critical minerals in her portfolio and actively meets with big and small players. Minister for Trade Policy and Economic Security, Douglas Alexander, speaks to businesses and stakeholders in key countries about critical minerals in the context of broader strategic trade agreements.

What’s next for 2025?

David explained that another key trend to watch out for this year is the growing focus on national security in trade, including screening FDI and increased regionalism in the global trade system. The UK may find this difficult to navigate as a mid-sized regional power.

Several big legislative moments are expected in Q2 and Q3 this year, with the Spring Fiscal Statement on 26 March and the local elections in May. The industrial strategy, planning and infrastructure bill and the pensions bill should all be watched closely, as well as the decisions surrounding the Bank of England interest rate decisions. The next sixth months are anticipated to be a difficult time for the government, who will be hoping to rebuild political capital.

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What’s coming up next?

The next in-house senior counsel event is scheduled for 26th March 2025. Further details and registration information are available below.

Commercial Law Update

Date: Wednesday 26th March 2025

Time: 10:00 – 11:00 GMT

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