Doubt over UK industrial strategy cloud investment push at summit

When British Prime Minister Keir Starmer welcomes business leaders to a major investment summit in London on Monday, his message to executives like BlackRock, Vodafone and GSK will be simple: Invest your money in Britain.

But undermining his sales pitch is the ongoing uncertainty over his new administration’s industrial strategy. Prospective investors are keen to know what kind of incentives will be offered to invest money in factories, infrastructure and job creation in the UK. Although the government plans to outline its preferred areas at Monday’s meeting, it will not reveal the full plan until the spring.

“We’ve seen a lot of companies wait to invest until they know what the longer term is,” said Stephen Phipson, chief executive of MakeUK, which represents British manufacturers. “You need a long-term vision of where we want the country to be and how government resources will be mobilized.”

Starmer has said that encouraging inward investment is one of his main objectives, as he seeks to generate the economic growth needed to meet his government’s priorities and win re-election in five years. He and Chancellor of the Exchequer Rachel Reeves see the investment summit as an important forum, with the government expected to announce billions of pounds of commitments from business.

On Sunday, the Department for Business and Trade nominated Microsoft UK CEO Claire Barclay to chair its new Industrial Strategy Advisory Council, which is tasked with helping the government develop its business plans. It came as Starmer on Thursday removed some uncertainty by nominating former Darktrace chief executive Poppy Gustafsson as investment minister, ending a three-month search that saw first-choice candidate Benjamin Wegg-Prosser ousted. Was done.

Gustafson’s challenge will be to show that Britain is attracting new spenders: In a blow before the summit, Dubai-based logistics giant DP World halted a major investment at its London port, which was announced after the British summit. It was to be done in. The government criticized employment practices at one of its subsidiaries.

Additionally, several recent investment announcements are restatements of previous plans, including a £10 billion plan by Blackstone to establish a massive artificial intelligence data center in Blyth, northeast England, and an £8 billion plan from Amazon Web Services.

Part of Labour’s appeal to CEOs has been that it is producing a national industrial strategy – an approach that the Conservatives have largely abandoned during their 14 years in power. While former Tory business secretary Greg Clark invented one during Theresa May’s premiership, it was sidelined under her successor Boris Johnson.

Chevon Haviland, director general of the British Chambers of Commerce, said, “We need to send a message to the world about the investment opportunities that exist here and create a new ‘Brand Britain 2.0’ that builds on the past, but also looks to the future. Is.” “That means bringing green and digital innovation to the heart of what we do, investing in infrastructure and skills, removing barriers to investment, and putting more energy and resources into exporting.”

And while Clarke expressed reservations about picking the winners, BCC’s Haviland said the new plan “should be about leveraging the country’s competitive advantage. It should identify areas and places where we are a world leader and it We must determine how we use them for development.

Labor argues that an industrial strategy is needed to keep pace with the US, EU and China.

“We have to compete,” Business Secretary Jonathan Reynolds said when asked about industrial strategy on a panel at Labour’s annual party conference last month. “To be honest, I’m fed up of people telling me how good the French offering is.”

Labor is setting its industrial strategy against the backdrop of the UK economy, where almost all of its growth over the past five years has been driven by two superstar sectors: technology and science-based industries. Sectors such as hospitality and manufacturing have struggled to expand, and a third of the sectors, which account for about 20% of gross value added, are still below their 2019 output levels, nearly five years after Covid hit.

The Trade Department said on Sunday it would prioritize eight sectors in its industrial strategy: financial services, defence, life sciences, technology, clean energy, creative industries, advanced manufacturing and professional and business services. The government said it would publish a so-called green paper on industrial strategy on Monday, launching a consultation to which businesses would be invited to contribute.

“Our modern industrial strategy will ensure stability for investors and give them the confidence to plan not just for the next year, but for the next 10 years and beyond,” Reynolds said in the statement. “This is the next step in our pro-worker, pro-business plan.”

However Labor has yet to convince business that its plans for the economy are the right ones. Executives were frustrated by a working day at the party’s annual conference last month, where ministers had limited access. Meanwhile Starmer and Reeves have faced criticism for taking an overly gloomy outlook on the UK’s economic situation which has coincided with a decline in consumer confidence.

“Global investors need to have confidence in the UK’s long-term economic vision to commit more capital,” said Kamal Bhatia, CEO of Principal Asset Management. Holding.

The investment summit has assumed added importance due to the country’s difficult fiscal position ahead of the make-or-break Budget on October 30. Reeves is under pressure to plug a £22 billion deficit he says he inherited from the previous government. Without curbing development. He has said that the rush into private investment is key to the successful delivery of Labour’s election promises.

But the outline of that budget is another uncertainty factor looming over the meeting, with Reeves expected to announce tax hikes in areas such as capital gains, pensions and wealth. He is also committed to reforming the non-dom tax regime and closing so-called interest loopholes, decisions that have sparked warnings of a flight of capital by Britain’s super-rich.

The ministers want to use the summit to reintroduce positivity into the government’s message. The agenda includes keynote speeches from Starmer and Reeves, as well as the premier having a “fireside chat” with former Google CEO Eric Schmidt.

Other sessions include:

With assistance from Ellen Milligan and Alex Wickham.

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