Dial back the doom: UK's International Investment Summit strikes change of tone

Event is billed as a chance for a government that has peddled pessimism in its first 100 days to prove Britain is open for business

Keir Starmer, UK Prime Minister, meets workers during a visit to the Encirc Glass factory in Chester. Bloomberg

A marketing call for sponsors said Monday's UK International Investment Summit would come alive as “enthusiasm grows for UK's economic prospects”, helping officials deliver some global big-hitters to hang their branding over the event.

The Labour government has invited sovereign wealth funds, businesses and infrastructure funds to attend with the aim of showing the country is “open for business”. Barclays, HSBC, Lloyds M & G, Octopus Energy, and TSL Group are now the main backers for the event at Guildhall in London.

Former Google boss Eric Schmidt has agreed to appear on stage with Prime Minister Keir Starmer. Ruth Porat president of Alphabet and Google; Alex Kendall, chief executive of Wayve, and Bruce Flatt, chief executive of Brookfield Asset Management, will also appear as headliners.

Elon Musk, who was onstage with former prime minister Rishi Sunak at last year's AI summit in Buckinghamshire, is not invited after taking what critics said was a cheerleader role when the UK was hit by race riots in the summer.

The new UK leadership is hoping that its gathering can bring billions of foreign direct investment (FDI) into the struggling economy.

Hundreds of executives and investors from around the world are expected to attend, while British politicians and senior business figures will make overtures to them about how the UK is “open for business”. They will point to the recent pledge by US private equity firm Blackstone to invest £10 billion ($13.3 billion) in building what will be Europe's largest AI data centre in north-east England as proof that the UK is fertile investment territory.

The chief executives of Blackstone, BNY Mellon, and CyrusOne have confirmed their attendance at the summit. “Seeing global investors back the UK is a vote of confidence in our economy, and shows we are an investment destination of choice,” UK Business and Trade Secretary Jonathan Reynolds said recently.

The summit sets out the ambitions of Chancellor of the Exchequer Rachel Reeves to show “whether it is new film studios, cutting-edge technologies, or green energy, it is clear every part of the UK has the potential to benefit from private sector investment".

Some question the timing, just two weeks before Ms Reeves unveils her first budget. In the run-up to the July election, Labour pledged to hold an investment summit within 100 days of taking office. However, some business leaders have questioned the ability of investors to make large and firm commitments before the budget, simply because the tax landscape will not be clear before the end of October.

Timing

“Certainly, the feedback from our members has been that it would have been better if the investment summit had taken place after the budget, when the fiscal and wider economic situation would have been clear,” Marco Forgione, director general of the UK's Chartered Institute of Export and International Trade, told The National. “The summit, though, is an opportunity to progress engagement and develop conversations, which can be finalised after the budget, so the timing’s not perfect. But hosting the summit is still important in showcasing the great opportunities for investment.”

Likewise, Douglas Flint, former chairman of HSBC and current chairman of global investment company Abrdn, told The National that “the challenge for the government is that the summit will precede the budget, the outcome of which will be a critical data point for investment decisions”.

Gloomy picture, upbeat message

The bleak picture that Mr Starmer and Ms Reeves have been painting of the UK economy in recent weeks, seemingly in an effort to prepare taxpayers for some harsh measures in the budget, has been criticised as being too gloomy and at odds with the environment they want portray to foreign investors.

September's consumer confidence figures made for depressing reading, with GfK's Index falling seven points, which Katie Cousins at Shore Capital described as “a foot shoot by Starmer and Reeves that is causing unnecessary damage to the UK consumer economy in Q3, wiping out the progress achieved over the last six months”.

Meanwhile, business confidence headed in the same direction, as shown by figures from S&P Global which indicated UK private sector activity growth slowed for the second month in a row in September. Meanwhile, a survey by the Confederation of British Industry showed the export numbers for British manufacturers were at their weakest in the three months to September in nearly four years.

“Ahead of what promises to be a difficult budget next month, the government is treading a narrow path to put the public finances on a sustainable footing while maintaining the confidence of business and investors in the recovery,” Ben Jones, CBI lead economist, said.

It is a difficult path to tread – being realistic about the short-term prospects for the UK economy and hinting at tax rises and spending cuts on the one hand, while convincing investors that growth is not far away and Britain is the best place to put your money for the long-term.

Former Bank of England economist Stuart Cole told The National the language from government about “difficult decisions” on raising taxes would be more likely to hamper incoming investment than encourage it.

“If I was considering investing in the UK I would certainly want to see what the forthcoming budget will hold before committing any funds,” Mr Cole said.

Nonetheless, while many business figures would prefer to see pessimistic rhetoric surrounding the economy toned down, given that it can have a real effect on investment and consumer spending, the chance that the International Investment Summit might crystallise some firm commitments is being welcomed.