New Prime Minister, familiar challenge

**Vishala Sripahma** (0:01)
New Prime Minister for Britain with familiar promises.

**Andy Burnham** (0:05)
A new political model and a new economic model.

**Louise McLean** (0:10)
Tackle the cost of living crisis, but also entice people into work.

**Vishala Sripahma** (0:15)
It's World Business Report from the BBC World Service. I'm Vishala Sripahma. On the way, Britain's seventh Prime Minister in a decade promises a new economic model, will this time be any different. And if you're heading to Europe this summer, don't be surprised if the longest part of your journey comes after you landed. Plus, we're live in Spain where the party is far from over, as fans welcome home their World Cup winners.
So Britain has its seventh Prime Minister in just over a decade, and like many leaders the world over, Andy Burnham has vowed to tackle the cost of living crisis and revive economic growth. But in his first speech as Prime Minister, Mr Burnham went further, arguing that Britain needs a new economic model.

**Andy Burnham** (1:13)
We will make this moment a circuit breaker for Britain, bringing forward the biggest changes in the last 40 years.
A new political model and a new economic model. And in doing more, build a new economy where we put life's essentials back under stronger public control to make them affordable to you again. But I can do something to give people some breathing space now. Some help with the cost of living. And I will set out some of those measures starting tomorrow, including how we pay for them.

**Vishala Sripahma** (1:58)
To Andy Burnham a little earlier on, tackling the cost of living may sound like a familiar promise. Global events over the last few years, like the pandemic, the war in Ukraine, and more recently, the US-Israel-Iran conflict has led to higher prices, putting pressure on households and businesses. Here's what people across the UK have been telling us about what they want the new Prime Minister to sort out.

**Peter Jankowski** (2:25)
I feel like there is quite a lot of issues that have been raised with the country, especially with the cost of living increasing and everything.

**SPEAKER_6** (2:33)
Labour have come in, put everybody's taxes in, the cost of living has gone through the absolute roof that most people can't even afford to eat. In the winter, the fuel bills are going up again. How comes that?

**SPEAKER_4** (2:43)
I've got a baby, so at the moment, we're juggling nursery fees, housing costs and remodelling a house. So there's a lot of outgoings, let me tell you, a lot of outgoings, a lot of bills.

**Katie Austin** (2:57)
The cost of living crisis is awful at the moment, everything is so expensive.

**Andy Burnham** (3:01)
I'm not pensioner, I'll be tired now, I'm OK, but it's hard, it's hard.

**Ed Butler** (3:06)
When you go out with family, we've got our grandkids with us and everything is so expensive.

**Vishala Sripahma** (3:10)
So that's how individuals are feeling right now about the economy in the UK.
But how about businesses? Well, Louise McLean is the director for Signature Living, a restaurant and bar chain based in Edinburgh in Scotland. She talked to me about the challenges her industry faces right now.

**Louise McLean** (3:28)
It isn't a sector contracting because we're hiring less people, it's the sector contracting because people are just waving the white flag of surrender. So if we can get more people into jobs by really stimulating the hospitality industry, that's a great start. And he can do that by reducing VAT for hospitality down to that same level as our European neighbours.

**Vishala Sripahma** (3:52)
And VAT being value added tax in the UK.

**Louise McLean** (3:55)
Yeah. So I mean, in France, for example, value added tax is 10%.
So they can afford to have far more staff working than we can because our value added tax is at 20% in the UK. And we're a massive outlier in Europe with that number.

**Vishala Sripahma** (4:12)
But something that governments have said is that they don't want to borrow more and that the tax burden is high. And so tax is clearly a way of raising that revenue. So we're not going to the bond markets to borrow more money.
What can he do to help businesses like you? Because like you say, there is a struggle when it comes to growth and hiring.

**Louise McLean** (4:34)
One thing he can do is tackle the cost of living crisis. Now that might be increasing the threshold for income tax to allow people to have a bit more cash in their pocket, but also entice people into work.
Because that's the main thing, work's got to be an attractive prospect. And if we can potentially increasing the threshold, that's something that could absolutely happen. But I hear what you're saying about, you know, tough choices and we can't increase borrowing, but we can grow our way out of this.