A top City investment bank has delivered a blunt verdict on Sir Keir Starmer and Rachel Reeves: for all the talk of national renewal, they left the economy no better off than they found it. For Britain’s small firms, the bill is landing as higher energy costs and fresh barriers to hiring and building.

In a research note published on Friday, Panmure Liberum said the former Prime Minister and Chancellor’s missteps on energy and housing meant it was “difficult to conclude” that the economy had improved in the two years since the general election.

“Progress in pockets of the economy have been stifled by new barriers to construction and employment leaving the UK, in our view, no better off than it was in July 2024,” chief economist Simon French wrote. He blamed a “new UK disease of prioritising luxury beliefs over hard-nosed competitiveness” for casting a shadow over the pair’s economic legacy.

The verdict cuts against the story both told on their way out. In a resignation speech defending his record, Starmer said he had left “this country in better shape than I found it” and that the “economy is stronger”. At last week’s Mansion House dinner, Reeves told City executives she had “restored economic credibility” and put the public finances on a firmer footing, echoing her earlier claim that the economy is not broken, just stuck.

For business owners, the detail matters more than the rhetoric. Housebuilding and energy were meant to be the twin engines of recovery. Labour’s manifesto promised to make Britain a “clean energy superpower” and cut household bills by £300 a year, alongside a pledge to build 1.5m homes over the parliament, a target that has since drifted out of reach.

French argued the refusal to open the North Sea to new drilling had deterred private investment and rationed an important source of power. “There remains little chance of a revival in economic growth whilst this approach creates a wider chilling approach on the deployment of capital into energy assets and auctions lock in higher energy costs for a further generation,” he wrote.

That is a pointed warning for energy-intensive SMEs, from manufacturers to hospitality operators, who have spent years absorbing bills they cannot easily pass on. Higher costs “locked in” for a generation is not the backdrop most owners planned their investment around.

On housing, French said the government had taken “a backwards step on private housing volumes as luxury beliefs swamp the positive rhetoric”, a blow to the builders, tradespeople and suppliers whose order books depend on shovels in the ground. He was warmer on infrastructure, crediting “more encouraging progress” on speeding up major projects.

The numbers tell a familiar story. Over the two years, the economy grew at roughly 1.2 per cent a year, broadly in line with the average since the 2008 financial crisis. GDP per capita, which accounts for population size, grew slightly faster than that post-crisis trend, helped in part by Starmer’s success in bringing immigration numbers down.

None of which will comfort owners who were promised a decade of renewal and, on Panmure Liberum’s reading, got two years of standing still. The wider growth picture has hardly helped. The message for the next administration is unsparing: competitiveness, not luxury beliefs, is what moves the dial for the firms that actually create the growth.