“You have to grow your business; I have to grow my country”
Growth is undoubtedly central to Keir Starmer’s governing strategy. The key takeaway from the government's inaugural Investment Summit is Britain must start growing faster, and it must start now. The summit may prove a step in the right direction, with sizable fanfare around the £63 billion package of investment announced at the summit. Industry leaders appear to have given a vote of confidence in Britain’s economic potential. However, with the upcoming budget in mind, the summit has not calmed everybody’s jitters about the friendliness of Starmer’s Britain to investment and growth.
The lead up to the summit wasn’t ideal for Keir Starmer. Firstly, the emails of attendees were accidentally leaked, then he faced questions over not inviting US entrepreneur Elon Musk. Finally, a £1 billion port investment was temporarily shelved after comments from Secretary of State for Transport Louise Haigh. And once the summit was underway, Google’s former CEO sat opposite the Prime Minister and declared how he felt “shocked” to find out that Labour is pro-growth.
Setbacks aside, Starmer spoke confidently on his plans to improve Britain’s business environment and attract investment. A particular bogeyman is regulation, or “red tape”, which can stifle growth and innovation potential. Starmer insisted where the red tape is strangling new infrastructure and housing “then mark my words – we will get rid of it”. Inflated levels of bureaucracy which hinder growth will also be “ripped out”.
Starmer also launched a renewed image of Britain and its economic capabilities, suggesting Brexit has done significant impact to Britain’s economic credibility. He is “determined” to mend “Britain’s brand as an open, outward looking, confident, trading nation”. Rachel Reeves’ closing remarks included details about the capping of corporation tax at 25%.
The growth promise was followed by the announcement of a substantial package of £63 billion of public investment. This package includes £27.8bn for the new national wealth fund, £6.3 billion on datacentres, £21.7 billion on carbon capture over the next 25 years, £24 billion further on clean energy, and £3 billion on transport infrastructure. Australian bank Macquarie has pledged to contribute £20 billion towards these investments. However, it should be noted that some of these initiatives including the national wealth fund and green investments were announced previously and folded in to bulk out the summit.
These figures are all well and good, but the question that needs to be answered to gauge whether the summit is a step in the right direction is: What do the business experts think about the state of Britain’s openness to business?
Positive statements have been released by the CEOs of the London Stock Exchange, Aviva, investment fund M&Q who control roughly $350 billion in assets, and the British Business Bank. Anders Opedal, boss of Norwegian gas giant Equinor said: "I think the government are putting forward a very good strategy for how to improve, working together with the private sector, now it is about execution and getting execution right”.
The real concerns about the summit are more to do with the upcoming changes to Britain’s financial landscape. Valid questions are being raised about whether Rachel Reeves is going to change Britain’s borrowing rules. There are also now rumours of an increase in National Insurance contributions from the employer-side.
Ahead of these possible law changes and the budget on October 30th, the Summit is an opportunity to inspire confidence in the economy by setting the tone for a wealth-creating, job-producing and a prospering economy.
For now, the summit can be marked as a win for Labour. Nobody can credibly argue the package of investment isn’t Labour taking its growth agenda seriously or attempting to make Britain a more friendly place for business. But, it would be a mistake to consider it a one-off, independent event. It is part of a broader economic program, and in the coming weeks may prove to be Labour giving with one hand before taking away with the other if the budget contradicts some of these business-friendly messages on tax. In the meantime, leaders can work out how to use this agenda to their advantage and hold him to his words.