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British Prime Minister Keir Starmer promised on Monday to scrap regulation that holds back economic growth as he hosted some of the world’s biggest businesses at a conference designed to woo international investors.
Starmer’s Labour Party came to power in July, pledging to end years of political instability and win back the faith of private investors to reinvigorate the UK’s run-down infrastructure and public services.
But many investors remain cautious about Britain, complaining that it takes too long to build anything.
The new government, which has had a rocky start, told investors it would streamline planning to accelerate building, overhaul regulation to promote innovation and deliver cheap, clean energy.
In an attempt to outshine rival governments competing for investment, it will later host executives from the world’s biggest banks, investment groups and insurers at St Paul’s Cathedral with King Charles and a performance by Elton John.
“We are determined to lead the way on growth,” Starmer told the summit at London’s Guildhall. “Determined to get Britain building. Determined to get our economy moving.”
Britain had been one of the most popular destinations for international investment until the 2016 vote to leave the European Union triggered uncertainty over its future trading rules, and a lengthy period of political instability.
According to Reuters calculations, the value of foreign direct investment inflows as a percentage of Britain’s economy hit a nine-year low of 2.7 per cent in the second quarter of 2024.
The government, bound by fiscal rules that limit its capacity to borrow, is now hoping to use the summit to attract tens of billions of pounds of investment and show it can once again become a top destination for private capital.
It defended early moves to improve workers’ rights, saying more secure employment would create a more sustainable economy, and it laid out its plans for an industrial strategy that would encompass skills, R&D, energy supply, planning and funding.
Many companies had previously criticised Britain’s lack of an overarching plan.
Britain also announced plans to ease bank ring-fencing rules and remove redundant reporting requirements for firms.
REGULATORY REVIEW
Regulators, including the Competition and Markets Authority (CMA), would be reviewed, it said.
“We will make sure that every regulator in this country takes growth as seriously as this room does,” Starmer said.
The anti-trust regulator, which gained greater prominence when Britain left the EU in 2020, made headlines last year when it blocked Microsoft’s $69 billion acquisition of “Call of Duty” maker Activision Blizzard.
Following a backlash from the two companies, it tore up its own rule book to reopen and then approve the case after Microsoft (MSFT.O) came back with changes.
David Ricks, head of pharmaceutical giant Eli Lilly (LLY.N), which announced a 279 million pound ($364 million) investment, welcomed the new regulatory approach, telling BBC Radio that with Britain outside the EU it needed “to be quite different to make it interesting”.
But regulation is not investors’ only concern.
Markets are retreating from bullish bets on Britain as concerns grow about the debt-laden public finances and possible tax hikes in an Oct. 30 budget.
After announcing it had inherited a 22 billion pound black hole in the public finances, Labour’s first budget - and who it will target to raise money - will be crucial to the mood.
Business minister Jonathan Reynolds appeared to suggest on Sunday the government could raise national insurance contributions for employers.
Starmer said the budget would have the “tough love of prudence”.