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Rachel Reeves Eyes US Economic Model

  //stocks-investing.news-articles.net/content/2026/02/22/rachel-reeves-eyes-us-economic-model.html
  Published in Stocks and Investing on Sunday, February 22nd 2026 at 10:24 GMT by This is Money
      Locales: UNITED KINGDOM, UNITED STATES

By Jonathan Hayes

Rachel Reeves, Labour's Shadow Chancellor, recently expressed a desire for Britain to emulate aspects of the US economy. While a seemingly counterintuitive statement given the current economic disparities, Reeves' ambition points towards a crucial, often overlooked, factor in economic success: the power of equitable ownership and dynamic capital markets. It's not the US's penchant for deficit spending Labour should examine, but its long-term approach to fostering growth through its listed companies.

The UK has, for decades, lagged behind the US in creating truly globally dominant firms. Apple, Microsoft, Amazon, and Alphabet are not simply larger versions of British companies; they represent a fundamentally different economic philosophy. The US system, while imperfect, has demonstrably facilitated investment, innovation, and - crucially - a broader distribution of wealth generated by those investments. The core issue isn't necessarily a lack of entrepreneurial spirit in Britain, but a systemic failure to cultivate an environment where companies prioritize long-term growth and shared prosperity over short-term gains.

The American model, at its best, rewards shareholders and employees. Apple, a prime example, has seen its share price soar over the past two decades, benefiting investors handsomely. However, this success isn't solely attributed to shareholder returns. Apple simultaneously maintains a massive payroll, demonstrating a commitment to its workforce, and aggressively invests in research and development, ensuring future innovation. This virtuous cycle - generating profits, sharing those profits, and reinvesting in future growth - is strikingly absent in much of the UK's corporate landscape.

Across the Atlantic, a culture of long-term value creation prevails. British listed companies, by contrast, often appear fixated on quarterly earnings reports and relentless cost-cutting measures. This short-termism stifles innovation and prevents the kind of strategic investments needed to compete on a global scale. The relentless pressure to deliver immediate results leads to a risk-averse environment where long-term projects with potentially significant payoffs are often overlooked in favour of quick wins.

The disparity in how companies treat their employees is also stark. While UK firms increasingly demonstrate a pattern of lavish executive compensation packages, ordinary employees often find themselves facing stagnant wages and limited opportunities for advancement. This creates a demoralizing atmosphere and contributes to the growing inequality that plagues British society. In the US, while executive pay is also a concern, a greater emphasis is placed on employee stock ownership plans (ESOPs) and other mechanisms for sharing wealth generated by the company's success. This fosters a sense of ownership and incentivizes employees to contribute to the company's long-term growth.

Labour's challenge isn't simply about increasing corporate taxes or imposing stricter regulations. While these measures may have a role to play, they address the symptoms of the problem, not the root cause. The party must recognize that a healthy stock market isn't merely a platform for generating profits for a select few; it's a vital engine for delivering shared prosperity. This requires a fundamental shift in corporate culture, incentivizing companies to prioritize long-term investment, employee welfare, and a broader distribution of wealth.

Potential policy levers include reforms to corporate governance rules to encourage long-term thinking, tax incentives for companies that invest in R&D and employee training, and promoting wider employee share ownership. Crucially, Labour needs to demonstrate a commitment to creating a stable and predictable regulatory environment that fosters confidence among investors. A vibrant and dynamic stock market requires trust and transparency.

Ultimately, Labour's goal should be to create a more inclusive economic system where the benefits of growth are shared by all, not just a privileged few. By learning from the successes of the US model - focusing on equitable ownership, long-term investment, and employee empowerment - the party can pave the way for a more prosperous and dynamic future for Britain. It's time to move beyond austerity and embrace a vision of economic growth that benefits everyone.