Skepticism over UK Industrial Strategy Cloud Investment Push at Summit

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(Bloomberg) – When UK Prime Minister Keir Starmer welcomes business leaders to a major investment conference in London on Monday, his message to the likes of BlackRock, Vodafone and GSK will be simple: put your money in Britain.

But undermining his sales pitch is continued uncertainty about his new management industry strategy. Potential investors are keen to know what kind of incentives will be in place to benefit them while investing in industry, infrastructure and job creation in the UK. While the government plans to outline its preferred sectors at Monday’s meeting, it won’t reveal the full plan until spring.

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“We see a lot of companies waiting to invest once they know what that long 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 are going to be held.”

Starmer said encouraging inward investment is one of his biggest goals, as he seeks to generate the economic growth needed to fund his government’s priorities and get re-elected in five years. He and Chancellor of the Exchequer Rachel Reeves see the investment conference as an important hub, as the government is expected to announce billions of pounds in business commitments.

On Sunday, the Department of Business and Trade named Microsoft UK chief Clare Barclay to chair its new Industry Strategy Advisory Council, tasked with helping the government develop its business plans. It came after Starmer on Thursday cleared some doubts by finally appointing former Darktrace CEO Poppy Gustafsson as investment minister, ending a three-month investigation that had seen the first candidate, Benjamin Wegg-Prosser, withdraw.

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Gustafsson’s challenge will be to show Britain attracting new spending: before the conference, the Dubai-based giant DP World stopped a major investment in the port of London, which was to be announced at the conference, behind the British. the government criticized the employment practices of one of its subsidiaries.

In addition, several recent investment announcements were updates to previous plans, including Blackstone’s £10 billion ($13 billion) plan to set up a large intelligence data center in Blyth, northeast England, and £8 billion from Amazon Web Services .

Part of Labour’s pitch to CEOs has been that it is developing a national industrial strategy – an approach largely avoided by the Conservatives during their 14 years in power. While former Tory Business Secretary Greg Clark made one during Theresa May’s prime ministership, it was shelved under her successor Boris Johnson.

“We need to send a message to the world about the investment opportunities that exist here and build a new ‘Brand Britain 2.0’ that builds on the past, but looks to the future,” said British Chambers of Commerce Director General Shevaun Haviland. green and digital at the heart of what we do, investing in infrastructure and skills, removing barriers to investment and putting more energy and resources into exports.”

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And while Clark expressed an aversion to picking winners, BCC’s Haviland said the new system “must be about leveraging the country’s competitive advantage. It should identify the sectors and areas where we are world leaders and show how we are building on them to grow.”

Workers say an industrial strategy is needed to align with the US, European Union and China.

“We have to compete,” Business Secretary Jonathan Reynolds said at the Labor party’s annual conference last month, when asked about industrial strategy. “I’m sick, to be honest, of people telling me how good France’s contribution is.”

Labor is building its industrial strategy against the backdrop of a UK economy where almost all of its growth over the past five years has been fueled by two star sectors: the technology and science industries. Areas such as hospitality and manufacturing have struggled to grow, while a third of sectors accounting for nearly 20% of gross value added are still below their 2019 productivity levels nearly five years after Covid struck.

The business ministry said on Sunday it will prioritize eight sectors in its industrial plan: financial services, defence, life sciences, technology, clean energy, creative industries, advanced manufacturing and professional and business services. The government said it will publish a so-called green paper on the industrial strategy on Monday, starting a consultation with businessmen who have been invited to contribute to it.

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

However, Labor must convince businesses that its economic plans are the right ones. Executives were left disappointed by the business day at the group’s annual conference last month, where ministers were not present. Meanwhile, Starmer and Reeves have faced criticism for their overly bleak outlook on the UK economy which has coincided with a drop in consumer confidence.

“Global investors need to gain confidence in the UK’s long-term economic outlook to make more money,” said Kamal Bhatia, CEO of Principal Asset Management, which has around $650 billion of assets under management globally and is “underweight” in the UK. . to hold

The investment conference took on added importance due to the country’s tricky financial situation ahead of the do-it-yourself budget or recess on October 30. Reeves is under pressure to close the £22 billion deficit he says he got from the previous government, without curbing growth. He said the crowding out of private funds is essential to the successful implementation of labor’s election promises.

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But the structure of that budget is another hanging item in the meeting, as Reeves is expected to announce tax increases in areas such as capital gains, pensions and property. He is also committed to reforming the estate tax and closing the so-called carried interest loophole, decisions that have sparked warnings that Britain’s wealthiest will pay the bills.

Ministers intend to use the conference to re-introduce a positive outlook into government messaging. The agenda includes key addresses by Starmer and Reeves, with the prime minister also due to hold a “fireside chat” with former Google CEO Eric Schmidt.

Other sessions include:

• A discussion on the value of economic sustainability with BlackRock CEO Larry Fink, University Superannuation Scheme CEO Carol Young and Brookfield Asset Management CEO Bruce Flatt.
• Panel on investment climate with Aviva CEO Amanda Blanc and Global Infrastructure Partners CEO Adebayo Ogunlesi
• “Accelerating innovation” session featuring Chief Investment Officer Ruth Porat and Vodafone CEO Margherita Della Valle

—Courtesy of Ellen Milligan and Alex Wickham.

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