Sunday, December 22, 2024

Was Starmer’s investment summit a success?

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However, the elephant in the room was the Budget at the end of this month.

Speaking to reporters at the conference, Chancellor Rachel Reeves once again refused to rule out imposing National Insurance contributions on employer pension contributions – a potential £10bn to £20bn hit to employers.

Meanwhile, the chancellor gave her clearest indication yet she is prepared to ditch traditional methods of measuring national debt to invest in UK infrastructure, by referencing three former policy makers who support the idea.

Current rules require government debt to be falling as a percentage of national income by the end of the parliament.

Excluding borrowing to fund investment would give her tens of billions of pounds worth of extra wiggle room but could raise government borrowing costs as lenders to the government feel they are taking more risk.

The government also resurrected the idea of an Industrial Strategy, publishing a green paper that promised to enshrine it in law so it can’t be easily binned as it was by the previous government.

It said it would not try and pick winners but focus on the UK’s strengths across eight sectors: advanced manufacturing; clean energy industries, creative industries; defence; digital and technologies; financial services; life sciences; and professional and business services.

With a nod to the former England manager Gareth Southgate, who was a panel member to discuss the UK’s creative and cultural strengths, Sir Keir said he wanted to make sure the pitch was mown and the changing rooms were nice for the teams playing.

Was the summit a success? Labour certainly think so and were keen to point out that last years Sunak led investment summit only raised £39bn.

By contrast, the government pointed to the £63bn in private sector investment as proof of that its plan was already working and said it was prepared to spend its own money to unlock even more investment. Some of this investment had already been announced previously.

These numbers are hard to judge. You never know how many of these investment would have been made anyway but are held back or accelerated to coincide with these events.

Its also hard to know how much is being held back the Budget, which many think will determine the government approach to tax, spending and borrowing for the rest of this parliament.

The kind of time frame these investors prefer.

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