The inaugural International Investment Summit concluded in London yesterday with a wall of potential capital built up for the British economy.
Interestingly, organisers used the word “international” – instead of “global” – in the name to set this year’s summit apart from similar such events presided by former prime ministers Boris Johnson and Rishi Sunak in recent years. What, then, was different about the latest attempt by a UK government to draw some of the world’s biggest forces in capital and commerce to the country?
For starters, it was the culmination of the governing Labour Party’s efforts to woo business from the time it was in opposition. From those sessions, led by Chancellor of the Exchequer Rachel Reeves and Business Secretary Jonathan Reynolds, it will have had soundings on the potential future investments that companies were planning. Perhaps there was some pipeline management as magnates held back on announcements to see out the dying days of the erstwhile Conservative government.
Now in power, what Labour has promised is the “sound of opportunity” to emanate from the government at every turn. With Prime Minister Keir Starmer’s sights set on not just one term but 10 years in power, it has said that a “stable framework” will be on offer to back up that positive investment atmosphere.
But if the UK is to be back at the global table, its government must show that it is a credible player on the scene. However, not all members of the new administration have so far been as disciplined as the Reeves-and-Reynolds double act. And that tripped up the preparations for yesterday’s summit.
There was cold fury that was not very well disguised last week, when Transport Secretary Louise Haigh spoke of her own boycott of one of the UK’s biggest external investors. It took a remedial operation involving locally based diplomats, government envoys and a statement from the Prime Minister himself to repair some of the damage that had been done. This is not the way anyone wanted to end the week in the run-up to yesterday’s opening session at the City of London’s historic Guildhall.
The legacy of the previous government means that investors are naturally wary of the UK. Businesses are fervently hoping that this tendency to constantly rewrite the rules of the game is in the rearview mirror. Mr Reynolds spoke to this concern when he declared yesterday that the days of governments constantly shifting policies and priorities are over.
DP World, the UAE conglomerate that manages ports and other communications infrastructure in the UK as well as assets around the world, would evidently like this to be true. The firm that handles 10 per cent of global trade is increasing its investment in the country. It announced at the opening of yesterday’s meeting that it would lay down £1 billion ($1.3 billion) to construct large deepwater berths in the London Gateway and other facilities to better handle the mega container ships from around the world.
This is undoubtedly a boost for Mr Starmer’s ambitions for the UK’s growth. In a personalised speech, he spoke about attending a music college close to the summit venue. His career playing the flute did not take off in the end, but he can talk with some credibility about how the creative industries are an asset for the country.
He called on business leaders to help unlock the assets underlying the national economy. Declaring that the UK had turned a page on an era in which the government “needlessly insulted Britain’s allies”, he added that it was both a diplomatic and an economic priority for his administration to “repair Britain’s brand”.
Yet the question remains as to whether some foreign investors might be ruing recent developments in the UK, such as the regulators’ mishandling of the water sector that led to a considerable amount of foreign capital being wasted. There is still no clear framework set out for how the government can address this problem. As a result, some of these investors are reportedly writing off their investments.
Are the spheres of AI, biotechnology or life sciences likely to become playgrounds for political intrigue or ineptness that other sectors have suffered?
For his part, Mr Starmer appears to be placing a lot of importance on the value of business and private investment. In a room that had the likes of former Google chief executive Eric Schmidt in attendance, he said: “Wealth creation is the number one priority of a Labour government.”
The Prime Minister has a large parliamentary majority and political dominance to drive forward his priorities. The downside, however, is that the government has no financial space for its domestic spending objectives. As a result, it is raising taxes at the same time as it is boosting employee rights and raising wages for state works.
When politics stops being driven by chaos, as Mr Starmer has promised, the UK still has one big challenge. And that is to show that it has the discipline, across the board, to deliver the platform it has promised to the investors who queued up to listen to Mr Starmer yesterday.
