Rachel Reeves hailed £63billion of investment announced at a global business summit yesterday as she declared Britain was ‘open for business’.
Eye-catching deals included four US firms ploughing £6.3billion into UK data centres – which are key to the roll-out of artificial intelligence (AI) – as well as a £1.1billion expansion of Stansted airport.
But the summit threatened to be overshadowed by fears of punishing tax hikes in the Budget later this month and a further rise in government borrowing costs amid concern on the bond markets.
Investment drive: Chancellor Rachel Reeves (pictured) announced Britain is ‘open for business’
Striking an upbeat note, however, the Chancellor said: ‘After the investments secured as part of this summit, my optimism for Britain burns brighter than ever. It’s a sign of the confidence in the British economy.’
Ministers claimed that 38,000 jobs were set to be created across the UK as a result of the investments, though some of the initiatives have already been announced.
The Conservative Party said Labour was taking credit for some work done while it was in government.
And business leaders expressed concern over the prospect of tax rises in the Budget on October 30.
Reeves gave her clearest signal yet that employer National Insurance contributions were likely to rise. Firms are also deeply concerned about an increase in capital gains tax (CGT) which could deter investment.
One City grandee said they expected CGT to go up from its present level but that the Government was likely to avoid a ‘cataclysmic’ hike.
Meanwhile, away from the splendour of London’s Guildhall – where the summit took place – bond markets remained jittery over the outlook for national debt amid speculation that Reeves will tweak Budget rules to allow her to plough billions more of public money into investment.
Yields on ten-year gilts – the return expected by bond investors for the risk of lending to the Government – rose above 4.25 per cent for the first time since the election.
Bosses at yesterday’s summit included Goldman Sachs chief David Solomon and Larry Fink, head of the world’s largest
asset manager, Blackrock. Fink delivered a highly positive assessment of the UK outlook, declaring that it was ‘opening up our eyes that this might become the next real destination for capital’.
Chief executives from UK-listed BAE Systems, Aviva, Barclays, Severn Trent and British Airways-owner International Airlines Group were also among around 300 business leaders that 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 back Britain.’
Some may have been less convinced by his claim last week that a workers’ rights package which will give employees day one rights is ‘pro-growth’.
And underscoring the positivity was the implication that the Budget will contain painful measures for some, with the PM declaring that Britain’s strained public finances needed ‘tough love and prudence’ and that the Government must act ‘quickly’ to fix public services and the economy.
Barclays chief executive CS Venkatakrishnan warned against hitting banks with higher taxes. He told Bloomberg TV: ‘Banks are among the highest taxed entities in the UK, we’re an important part of the economy.’
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