Keir Starmer is walking down a narrow street. After a difficult first 100 days in office, the Prime Minister had an opportunity on Monday to restart Labour’s central mission of restoring economic growth.
But as some of the world’s most powerful financiers arrive in London to attend the new government’s first international investment summit, they are at odds with Starmer’s cabinet over how to achieve that mission. That purpose will be achieved.
Meanwhile, Transport Secretary Louise Hague’s branding of P&O Ferries as a “rogue operator” and the Prime Minister’s drift may look like another classic Westminster spat. But at the heart of the labor economy project is the tension between promoting growth and ensuring a more equal distribution of profits.
As he welcomes hundreds of business executives to the London Summit this week, the Prime Minister will put the biggest beast of modern capitalism behind his plan to make Britain’s economy the fastest growing sustainably in the G7. I’m sure he’s trying. Executives from Goldman Sachs, BlackRock and Google are also scheduled to attend.
With a tight budget for Rachel Reeves in two weeks, that might not be such a bad idea when finances are tight. Even if the chancellor were to ease voluntary fiscal rules, as many expected, he is unlikely to significantly increase borrowing for investment, fearing a negative reaction from financial markets.
Most economists believe that business investment is essential to achieving productivity gains and promoting economic growth. The UK has lagged behind the G7 in investment spending for decades, particularly since the 2008 financial crisis, which coincides with a period of stagnant living standards and shows there is room for improvement. It shows.
However, there is some discomfort within the Labor Party over the involvement of certain companies. Some of the companies taking part in Monday’s event have been criticized for keeping Britain in a trap of high inequality. Even if you commit to investing, will the benefits be equally felt?
Two companies in particular have raised eyebrows: DP World, the Dubai-based owner of P&O Ferries, and Macquarie, the Australian investment firm nicknamed the Vampire Kangaroo that previously owned Thames Water.
The Prime Minister also addressed concerns by offering investors attending the summit to “do everything in our power” to stimulate growth by eliminating red tape and regulations that “unnecessarily stifle investment.” There is also the possibility of provoking it.
Despite this, some businesses are still unhappy about how open Labor is to investment.
Some executives attending the summit are concerned that they will do so before Reeves’ budget targets high taxes on corporations, wealthy individuals and private equity executives. . After all, ministers have not ruled out raising national insurance contributions for employers.
Mr Starmer last week hailed Labour’s “new deal” for workers as the biggest upgrade to workers’ rights in a generation. The Prime Minister believes the measure is important, although it has been attacked by some business leaders as an anti-growth charter that will damage the UK.
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The plan acknowledges that modern capitalism cannot always function without guardrails, as shown by the rise in zero-hour contracts, more than a decade of slow wage growth and rising poverty at work. .
Labor will also prioritize investment alongside the private sector through the Wealth Fund and GB Energy, with the idea that co-investment will help leverage private investment and ensure the country shares in some of the gains from growth.
Although the Prime Minister is critical of red tape and regulation, perhaps the government will accept that growth at all costs is not a comfortable place for Labor after all.
But Starmer will need to strike a delicate balance at the summit to welcome big business to London and encourage them to invest in the UK.