FTI Consulting UK Public Affairs Snapshot: “This is the moment to back Britain”: International Investment Summit signals start of Government delivery on stability and growth

Yesterday (14th October ) marked a significant moment for the new Government, as it sought to turn a corner following its initial solemn tone on the UK economic outlook. Having made an election commitment to hold an Investment Summit within the first 100 days of government, falling a day short of this commitment did not mean falling short on the investment target. From the announcement of £1.1bn worth of investment to grow London Stansted airport, to £25bn for data centre construction, the £63bn total investment figure – rounded off with an exclusive reception with Elton John and His Majesty the King, the Summit can be seen as a marked success. 

This is a sharp turnaround from the end of last week when the Transport Secretary caused the owner of P&O Ferries to pull out of the Summit and jeopardised their planned investment following her comments advising consumers to boycott the company. This cast a shadow over the professionalism and success of the event, however following Downing Street distancing the Government from the comments, a resolution was found and the Prime Minister, Chancellor and Business and Trade Secretary Jonathan Reynolds are all very pleased with the overall Summit outcomes.   

Sitting in stark comparison to the Prime Minister’s Downing Street rose garden speech in August, where he told the country that “things will get worse before they get better”, the Summit’s upbeat and forward-looking tone was welcomed by private investors. 

Telling business leaders that “it’s time to back Britain”, Starmer sought to provide assurances that the Government would seek to “upgrade the regulatory regime to make it fit for the modern age” and no longer hold back investments in key infrastructure projects.  

The Industrial Strategy Green Paper was also launched, which aimed to demonstrate the Government’s “vision” for its Industrial Strategy, a 10-year plan supporting Labour’s core mission to deliver economic growth targeted towards eight growth-driving sectors – Advanced Manufacturing, Clean Energy Industries, Creative Industries, Defence, Digital and Technologies, Financial Services, Life Sciences, and Professional and Business Services. 

Alongside the Industrial Strategy Green Paper and a regulatory overhaul, the commitment to cap Corporation Tax at 25% for the duration of parliament, the rebranding of the UK Infrastructure Bank as the National Wealth fund, the creation of the British Growth Partnership to increase institutional investment in UK, a strategic infrastructure plan due in 2025,  and the revamping of the Government’s Office for Investment, Labour has presented what it believes is a plan which provides long-term investor certainty.  

The Government is however battling a difficult narrative. It will need to prove that its pro-business stance can work in collaboration with significant new regulation to enhance workers’ rights, something the Prime Minister sought to face head on at the Summit, stating that the Government’s labour market policies introduced last week were “pro-growth” policies, which would benefit workers, businesses, and the country. 

Whilst the Summit may have reassured businesses in terms of growing the economy,  tax still remains the elephant in the room. In the run up to the Budget, there has been heightened speculation on how the Chancellor might seek to raise the funds needed to address the spectre of the ‘£22bn blackhole’ she has pointed to in the UK’s public finances. Recent attention has turned to an increase in employer National Insurance Contribution (NIC), but perhaps a more pertinent talking point for many is rumours of changes to the capital gains tax regime. This, along with a consultation on intent to reform carried interest, and close tax loopholes for non-doms and on inheritance tax, have led many critics to challenge Starmer’s assertion that Labour’s number one mission is wealth creation. Yet, with two weeks to go, the Government’s lips remain understandably tightly sealed on what will be revealed on 30th October. Only after the Chancellor unveils her plans will we get the true picture for the economy and the response from the business community.

Beyond business and investors, Starmer will undoubtedly look to the Summit’s success to steer renewed confidence amongst the public in the Government’s mission to drive economic growth – as well as settle unrest among the Parliamentary Labour Party following a bumpy few weeks.  The International Investment Summit can be chalked up as a success which has come just at the right time, but there is no time to luxuriate, with the even greater challenge of the Government’s first Budget just around the corner.