British businesses claim to feel extremely beleaguered. The Confederation of British Industry (CBI) has described corporate tax rises - of £47 billion sterling (€73.88 billion) - between 1997 and 2005 as both "relentless and damaging".
The Chancellor of the Exchequer's apparent determination to meddle with regulatory and tax systems has produced a harmful rise in red tape; people who run small and medium-sized businesses complain about an ever-rising burden of form-filling and other bureaucratic headaches. Manufacturers have to cope with a strong exchange rate and difficult export markets. Service sector businesses are worried that a tight labour market is about to be made much worse by an explosion in public sector pay.
New Labour has displayed an astonishing degree of incompetence when it comes to anything that needs skills similar to those necessary for running a business.
The spectacular failure of the Millennium Dome is the most visible example of what I mean here. Another example is the continuing debacle over the so-called public-private partnership designed to improve London's crumbling transport infrastructure. The government knows what needs to be done. Everyone agrees that business is being damaged by the state of Britain's schools and lack of an adequate transport infrastructure.
But the way in which Blair and Brown are seeking to modernise public services is another example of incompetence. Any half-capable manager will tell you that good negotiating skills are an important part of business. And to pre-announce huge spending increases ahead of any negotiations with public sector trade unions over much-needed reform of working practices was just dumb. Any trade unionist worth his salt would have simply noticed that the government had staked the success or failure of its second term of office on its ability to deliver improved public services. That means the last thing that Tony Blair can afford is a series of strikes or other industrial action in the public sector. "Give us the money, Tony" is the basic refrain of every public sector union. And higher public sector wages mean spillover effects, in a tight labour market, for the private sector.
New Labour was supposed to be business friendly. Gordon Brown's "prawn-cocktail" offensive that took place before the 1997 election was designed explicitly to convince British industrialists that Labour was no longer the party of tax and spend. It has taken a while, but government spending is about to soar and taxes have been rising for some time - and not just corporate taxes. Personal taxes are on the up thanks to hikes in National Insurance contributions (the equivalent of PRSI).
At the political level, business feels doubly betrayed. Having fallen for the promises of New Labour, the Tory party, the natural home for most industrialists, offers no effective opposition to a government that is more vulnerable to criticism than at any time since it took office. The shine is coming off New Labour and an effective opposition would regard all of this as an open goal. Instead, as the Tories implode, Tony Blair and Gordon Brown can pursue their rather improbable adventure with impunity.
How much of all this is fair? Are UK entrepreneurs right to feel so hard done by? Everything is relative and when they consider the plight of their European counterparts they may not feel quite so aggrieved. About the only thing that the UK Prime Minister probably feels he cannot do, apart from levitate, is bully Britain into the euro. Gordon Brown's original decision to grant independence to the Bank of England was accompanied by the establishment of a set of monetary arrangements that now looks to have been inspired. Relative to the shambles that is European monetary (and fiscal) policy, UK economic policy-making looks to be a haven of sanity and stability. Even Tony Blair will be hard pressed to convince British business (and the wider public) that the euro will deliver a demonstrably better economy than the one they have now. More than anything else, business needs growth and the UK has plenty more of that than Europe. Equally important, faster UK growth is arriving in a much more stable fashion than it has for decades.
Tax and spend policies carry echoes of the bad old days when Britain experienced repeated booms and slumps that ultimately drove many businesses to despair or even the wall. The worry must be that policy backsliding will bring a return to the bad old days.
I think that this is unlikely, but there is not going to be nearly as much improvement in public services as is necessary. British business is right to moan but should not complain too much. There are worse alternatives.
Chris Johns is chief strategist at ABN-Amro Securities, London. All opinions expressed are entirely personal.
