Ellie Cox: Solid Conservative principles must underpin the party’s next business policy in order to boost growth

Ellie Cox is a councillor in Merton, and a former parliamentary and London Assembly candidate.

Britain’s defence sector is set for significant growth, with the UK government committed to increasing defence spending to 2.5% of GDP by 2027—an annual increase of £13.4 billion.

This presents major opportunities for UK manufacturers, tech firms and SMEs, particularly in aerospace, cybersecurity and AI.

Historically, increased defence spending has driven technological innovation, with breakthroughs often spilling over into other industries. The next wave of military modernisation will be no different. For example, AI technologies, initially funded by military research, are now playing a major role across industries.

Alongside defence, digitalisation continues to be a major driver of economic growth. Advances in AI and cloud technologies are forecasted to add over £550 billion to the UK economy by 2035, according to a report commissioned by Microsoft. These twin opportunities in defence and digitalisation highlight the transformative potential of sustained investment in both sectors—boosting UK GDP, supporting UK business growth and strengthening national resilience.

This approach reflects Thatcherite principles of backing private enterprise, encouraging competition and promoting self-reliance. To meet the demands of our modern economy, we must go further—actively backing innovation and digitalisation, not only to strengthen defence capability, but to open up wider growth opportunities for UK businesses.

We need to show that we understand and trust business—principles Labour has yet to demonstrate.

Their recent Budgets, including rises in National Insurance contributions, cuts to business rates relief and changes to agricultural and business property reliefs, increase costs and put pressure on the viability of some firms. Taken together with Labour’s proposed Employment Rights Bill—which would reduce employers ability to adapt—these measures risk shifting business focus away from growth and innovation towards managing rising costs.

With pressures like tariffs and UK energy prices, which are 50 per cent higher than the EU average, businesses are already facing significant challenges. In this environment, we need a clear framework centred on agility, stability, trade, investment, digitalisation and fairness to overcome today’s challenges and build a modern economy that is geared for future growth.

Agility and stability are essential for businesses to succeed in today’s fast-paced environment.

Margaret Thatcher’s 1986 deregulation of financial markets—the ‘Big Bang’—transformed the City of London into a globally competitive financial centre by removing outdated constraints and enabling firms to respond more dynamically to change. She recognised that sustainable economic growth and investment largely depend on the private sector – we must show the same commitment.

This is why supply-side incentives remain critical to boosting productivity and driving long-term economic performance. While Labour has signalled plans to stimulate growth through increased public capital spending, this approach is unlikely to succeed given high debt-to-GDP levels and strict fiscal rules that limit scope for large-scale investment.

Unlocking private sector investment into today’s high-growth British industries is the key to driving general economic growth and creating jobs but businesses require the flexibility to capitalise on emerging opportunities and a stable and predictable regulatory environment. Manufacturers and tech firms are already pivoting towards sectors with committed increases in government spending, particularly in defence.

Sudden shifts in tax or policy risk undermining confidence and so a clear framework is essential for businesses to plan, invest and grow with certainty.

Businesses need streamlined procurement processes, investment incentives and a firm commitment from the government to long-term UK-based production. For sectors like life sciences and advanced manufacturing, while initiatives like the Life Sciences Vision and Advanced Manufacturing Fund are a good start, further action is needed. Expanding R&D tax incentives, lowering tax, strengthening industry-academia collaboration and fostering private-public partnerships will help scale innovation and create a more supportive environment for sustainable growth.

It is investment that drives growth through both capital and a skilled workforce.

To attract private capital and support workforce development, we must create an environment that allows businesses to innovate and scale. Margaret Thatcher transformed London’s financial sector by deregulating the stock market, increasing competition and attracting global investment. This set the foundation for modern investment practices, demonstrating the importance of a clear regulatory framework in unlocking capital.

We must continue modernising the financial sector, particularly in response to the growing digitalisation of financial services. This should be a key focus in any future revisions to the Mansion House Reforms, ensuring the UK remains competitive in the evolving financial landscape. We should also enhance support for private investment, as highlighted in my article, The True Path to Growth is Unlocking Private Wealth for British Business Investment, by introducing an Enterprise Venture Debt Scheme and updating the Enterprise Investment Scheme to better support high-growth, innovative firms.

To ensure businesses have the necessary talent, reforming the Apprenticeship Levy to better align with industry needs and revisiting visa policies for skilled workers will help address the skills gap, filling critical shortages and supporting industry growth. In my article, Overcoming the Great British Skills Crisis, I propose amendments to improve access to training funding, ensuring businesses can attract and develop the workforce of the future.

Growing international trade is vital.

Fair competition means ensuring UK businesses, especially SMEs and exporters, are not placed at a disadvantage in an increasingly uncertain global environment. Margaret Thatcher’s government championed free-market principles, cutting trade barriers and deregulating industries to enhance UK competitiveness. Today, while the global context is more complex – with rising geopolitical tensions, post-Brexit challenges and Trump’s tariffs – the principle of enabling businesses to compete on a level playing field remains key.

Modern application of this principle requires targeted support for UK firms navigating global supply chains and market access. Many businesses are responding to international volatility by near-shoring or onshoring supply chains but this transition must be supported. The government should prioritise British firms in procurement, reduce non-tariff barriers in trade deals and work to improve customs and regulatory processes, particularly in relation to the EU – our largest export market, accounting for 42 per cent of UK exports.

Offering tax breaks for firms investing in UK-based supply resilience and targeted deregulation in high-potential sectors like technology and advanced manufacturing will help UK exporters expand into new markets and strengthen Britain’s position in global trade.

Digitalisation is key to remaining globally competitive and delivering more responsive, efficient public services. Thatcher’s policies of telecommunications deregulation and investment played a foundational role in the UK’s digital transformation, positioning the country as a global leader in connectivity. Today, we need a similarly ambitious strategy—not only to lead in the digital economy but also to ensure that both the public and private sectors are equipped to meet modern demands.

Expanding full-fibre broadband and 5G, investing in AI skills and supporting SMEs with access to digital tools are critical steps. Equally though, the government must lead by example—by upgrading public sector systems, embedding digital capability into frontline services and using data more effectively to improve outcomes. My article, How We Can Build a Smarter London Together, sets out steps to drive this transformation in urban areas.

To accelerate adoption across the economy, a targeted tax credit for small businesses adopting digital technologies would support innovation, particularly in undercapitalised sectors, because it would lower the cost of adopting new technologies and help SMEs innovate more quickly. Within the public sector, streamlining procurement processes and encouraging digital partnerships with innovative businesses will help modernise services.

A fair and competitive business environment is essential for long-term economic success. This means striking the right balance between protecting workers and giving businesses the flexibility they need to adapt and grow. Labour’s proposed Employment Rights Bill risks tipping that balance too far, introducing complexity that could hold back small firms and limit job creation. Instead, we should take a more proportionate approach — one that safeguards core employment rights while ensuring businesses can remain agile, competitive and confident in hiring.

To foster long-term business growth, the UK must focus on key principles to support British businesses: agility, stability, investment, trade, fairness and digitalisation.

Ensuring these principles are at the heart of Conservative business policy will provide the stability and confidence businesses need to grow.