Rachel Reeves welcomed the announcement of a £63 billion investment at the World Business Summit yesterday, saying the UK was “open for business”.
Eye-catching deals included a £6.3 billion investment by four US companies in UK data centers – which are key to the implementation of artificial intelligence (AI) – as well as a £1.1 billion expansion of Stansted Airport.
But the summit threatened to be overshadowed by fears of punitive tax increases in the budget later this month and a further rise in government borrowing costs amid worries in bond markets.
Investment drive: Chancellor Rachel Reeves (pictured) announced the UK is 'open for business'
However, the Chancellor struck an optimistic tone: “Following the investments secured at this summit, my optimism for the UK burns brighter than ever. “It's a sign of confidence in the British economy.”
Ministers claimed the investment would create 38,000 jobs in the UK, although some initiatives have already been announced.
The Conservative Party stated that Labor took credit for some of the work done during its time in government.
And business leaders have expressed concern about the prospect of tax increases in the Oct. 30 budget.
Reeves gave her the clearest signal yet that employer contributions to Social Security were likely to increase. Businesses are also deeply concerned about the increase in capital gains tax (CGT), which could discourage investment.
One of the city's grandsons said he expected CGT to rise from current levels, but the government would likely avoid a “cataclysmic” increase.
Meanwhile, away from the splendor of London's Guildhall – where the summit was held – bond markets remained jittery on the outlook for national debt amid speculation that Reeves would change budget rules to allow her to allocate billions more in public money for investment.
The 10-year Treasury yield – the rate of return bond investors expect given the risk of lending to the government – rose above 4.25% for the first time since the election.
The heads of yesterday's summit were the head of Goldman Sachs, David Solomon, and Larry Fink, the head of the world's largest
asset manager, Blackrock. Fink was very positive about the UK's prospects, saying that it “opens our eyes to the fact that this could become the next real direction for capital flows.”
The chief executives of British-listed BAE Systems, Aviva, Barclays, Severn Trent and International Airlines Group, owner of British Airways, were also among the roughly 300 business leaders the government said were in attendance.
They sat in the great hall as Prime Minister Sir Keir Starmer declared: “This is a great moment to support Britain.”
Some may have been less convinced by his claim last week that the labor rights package, which would give workers rights from day one, was “pro-growth.”
The positivity was underlined by the suggestion that the Budget would contain measures that would be painful for some, with the Prime Minister declaring that the UK's strained public finances required “tough love and caution” and that the Government must act “fast” to repair public services and the economy.
Barclays chief executive CS Venkatakrishnan has warned against hitting banks with higher taxes. He told Bloomberg TV: “Banks are among the highest taxed entities in the UK, we are an important part of the economy.”
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