London — British Prime Minister Keir Starmer promised on Monday to scrap regulation that holds back economic growth as he hosted some of the world’s biggest businesses at a conference designed to woo international investors.
Starmer and his Labour Party came to power in July pledging to end years of political instability and win back the faith of private investors to reinvigorate Britain’s rundown infrastructure and public services.
Yet many investors remain cautious about Britain, complaining that it takes too long to build anything.
“We are determined to lead the way on growth,” Starmer told the summit at London’s Guildhall. “Determined to get Britain building. Determined to get our economy moving.”
Britain had been one of the most popular destinations for international investment until the 2016 vote to leave the EU triggered uncertainty over its future trading rules, and a lengthy period of political instability.
According to Reuters calculations, the value of foreign direct investment inflows as a share of Britain’s economy hit a nine-year low of 2.7% in the second quarter of 2024.
The government, bound by fiscal rules that limit its capacity to borrow, is now aiming to use the summit to attract tens of billions of pounds of investment and show it can once again become a top destination for private capital.
At the same time, Starmer’s government is moving to improve workers’ rights, which he said should encourage investment rather than deter it, arguing that it would build a sustainable economy with a more secure workforce.
The government also elaborated on its industrial strategy on Monday, which will set out a policy on everything from skills to research & development, funding, energy supply and technology to create a supportive environment for companies.
Many companies previously criticised the lack of an overarching plan. Starmer said his government was “not in the business of picking individual winners” among businesses but wanted to give them “the best conditions to succeed".
As part of the approach, regulators, including the Competition and Markets Authority (CMA), will be reviewed. The antitrust regulator, which gained greater prominence when Britain left the EU in 2020, made headlines around the world last year when it blocked Microsoft’s $69bn acquisition of the Call of Duty maker. After a backlash from the companies and investors it tore up its own rule book to reopen and then approve the case after Microsoft came back with changes.
David Ricks, head of pharmaceutical giant Eli Lilly, which announced a £279m investment, welcomed the approach on regulation, telling BBC Radio that with Britain outside the EU it needed “to be quite different to make it interesting”.
In one boost to the government, the heads of a group of banks, insurers, private equity and tech firms said in a letter to the Times newspaper that Britain retained many attributes that made it appealing to investors, such as world-leading universities, and a strong financial services and legal sector.
But regulation is not investors’ only concern. Markets are retreating from bullish bets on Britain as concerns grow about debt-laden public finances and possible tax hikes in an October 30 budget.
After Labour announced it had inherited a £22bn black hole in the public finances, its first budget — and who it will target to raise money — will be crucial to the mood.
Business minister Jonathan Reynolds appeared to suggest on Sunday the government could raise national insurance contributions for employers in the budget.
Starmer said the budget would have the “tough love of prudence”.
Reuters
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