Stockcam | E+ | Getty Images
LONDON — The United Kingdom’s Labor government hopes to attract foreign capital to the country on Monday as it hosts the inaugural International Investment Summit in London.
Prime Minister Keir Starmer, Chancellor of the Exchequer Rachel Reeves and Business Secretary Jonathan Reynolds are leading the one-day event at London’s Guildhall, which is expected to be attended by around 200 executives from the UK and abroad.
Former Google chairman Eric Schmidt, Goldman Sachs CEO David Solomon, BlackRock chief Larry Fink and GSK chief executive Emma Walmsley are among the guests. Newly appointed Investments Minister Poppy Gustafsson, co-founder of UK cyber security firm Darktrace, will also be on hand to promote the UK as a place to do business.
During the event, the government announced easing regulations and paved the way for billion-pound investment deals in artificial intelligence, life sciences and infrastructure, as Starmer hailed “a great time to support Britain”.
“We will remove the red tape that holds back investment and ensure that every regulator in this country takes development as seriously as this room,” Starmer told delegates at the start of the summit.
“We have a golden opportunity to use our mandate, to end the change, policy twisting and plaster of paris that make it so difficult for investors to assess the value of any proposal,” he added.
British Prime Minister Keir Starmer gives an interview to the media while attending the 79th United Nations General Assembly at the United Nations Headquarters in New York, USA, September 25, 2024.
Leon Neal | Via Reuters
Prospective attendees and observers had expressed frustration to CNBC about the lack of information ahead of the event, with details about the location and schedule being withheld until Thursday. Some said in advance that they would not attend, while others still were according to information weighing whether or not to fly since late last week.
“Uncertainty about what’s going on undermines the event,” said Dr. Bruce Morley, a lecturer in economics and finance at the University of Bath, to CNBC by phone. “There is a lot of speculation.”
London Mayor Sadiq Khan dismissed those concerns on Monday, however, saying the turnout had exceeded expectations.
“They wouldn’t have come if they didn’t think it was worth coming and seeing,” Khan told CNBC.
The UK budget in view
A major concern has surrounded the timing of the summit, which comes just over two weeks before the chancellor’s Budget, amid a lack of detail on the radical changes it claims are needed to plug an alleged £22bn black hole in the public finances . The date was set by Labor’s pre-election pledge to hold a business summit within their first 100 days in office.
Reeves has already ruled out changes to corporation tax, alongside increases in income tax and the National Insurance social security payment. He has also backed down on suspected plans to hit private equity bosses with a higher tax rate and a mandate to abolish the country’s centuries-old Non-dom status for rich people.
Increases in capital gains tax (CGT) and inheritance tax (IHT) remain on the table, however, with the chancellor reportedly considering raising CGT by as much as 39% for the highest taxpayers. according to in the Guardian. This would be a significant increase from the current band from 20% to 28%depending on the asset, and what investors said could hinder entrepreneurship in the country.
A Treasury spokesman described the report as “pure speculation,” in an email to CNBC.
A pro-business Labor government
The event is part of Starmer’s pledge to lead a more “business-friendly” Labor government, with the prime minister telling CNBC last month that his “number one priority was wealth creation” as he used a visit to the U.S. to attract Wall Street Investing.
Labor has sought to paint a more positive picture of the economy after being accused of talking doom in its first months in office. It is also seeking to position itself as a reliable partner after years of turmoil – including Brexit – a slaughter of prime ministers and a sell-off in the bond market.
Business confidence, which initially rose after the party’s July election, took a hit in September amid uncertainty over the budget. Gross Domestic Product (GDP) rose slightly in August after two consecutive months of stagnation, but is struggling to return to the modest highs reached earlier in the year.
Amanda Blanc, chief executive of UK insurer Aviva, welcomed the government’s efforts to reassure businesses and said she expected to see further easing of regulatory requirements.
“It’s really important that we feel confident as business leaders, confident as an economy,” he told “Squawk Box Europe” on Monday.
Morley said the government would have to address its productivity shortfall if it wanted to further revive growth and urged the government to use the summit to target investment in emerging technologies such as artificial intelligence and robotics.
“We are lagging behind our peers in this area. This would be one way to catch up, by finding incentives to attract these types of companies,” he told CNBC by phone.
“The UK will not have an increase in economic activity without this increase in productivity,” he added.
On Sunday, the government announced the launch of its new industrial strategy and advisory committee, chaired by Microsoft UK chief executive Clare Barclay, which is designed to focus on eight “growth-driving areas”. These include the creative industries, financial services, advanced manufacturing, professional services, defense, technology, life sciences and clean energy industries.