Did the global investment community feel the political love last night in London?

Last night at St Paul’s Cathedral, 300 invited guests gathered to hear Sir Elton John perform. However, the typical gig-goers were replaced by an audience of business leaders and executives from around the globe. The red carpet had been rolled out by Prime Minister Sir Keir Starmer, hosting his much-heralded UK International Investment Summit 2024 and visitors were given a royal welcome by the King himself, while mixing with celebrities such as Andrew Lloyd Webber and hearing presentations from the likes of Gareth Southgate.

The build-up to the summit was overshadowed by who wouldn’t be attending with questions around why rocket man, Elon Musk was seemingly not invited to the event. DP World threatened to sacrifice their £1bn investment after the Transport Secretary labelled their company P&O Ferries a “rogue operator” and urged consumers to boycott them. Sorry may seem to be the hardest word, but DP World was brought back to the table after Downing Street distanced the government from the comments, even though they had apparently approved their use in the first place.

At a headline level, the conference was a success with a string of large investment announcements and the duet of Prime Minister and Chancellor promising the prominent audience that they would play their song. The PM outlined his determination to see the UK as the highest growing economy in the G7 – an accolade last achieved all the way back in Q1, 2024!

The message was not to abandon the yellow brick road but to follow it into a new stable UK economy, where the doors are open for business and investment, where regulation is stripped back and where a new age of economic prudence is backed up by better public services - pro-worker, pro public-services and pro-business have become the new circle of political life for the Labour government.

The headlines were dominated by the huge and impressive announcements – a total of £63bn of new investments announced “around” the summit. The reality stretches far beyond a big day in London where everyone got their cheque books out. In fact, some of those investment announcements had already been made earlier this year, such as the Blackstone £10bn announced in May, or even last year, such as the DP World £1bn investment announced in early 2023 or the first half of the Iberdrola £24bn, announced in September 2023. However, repackaging the same announcement is far from a new political tactic, and good news is still good news, even if it did not happen yesterday.

The focus on Foreign Direct Investment (FDI) is nothing new for the UK and we have always performed well against our European counterparts. In the last year, 1,555 new FDI projects were launched in the UK, attracting investment from around the globe, and although that figure was down a third on the peak of 2016-2017, the fall was on a par with other countries in Europe. An expectation that the new government might potentially downsize the Office for Investment (OfI) was overtaken this week by the news that it will in fact be expanded and strengthened under the leadership of a new Minister for Investment, Poppy Gustafsson OBE, the former CEO of Darktrace. Further, not only has the OfI expanded but has added powers, with the Prime Minister tasking government departments to engage with and contribute to the OfI through their respective sectors.

In addition, there were new commitments yesterday around the National Wealth Fund and the expansion of the remit of the first £5.8bn of capital to focus on green hydrogen, carbon capture, ports, gigafactories and green steel. The Industrial Strategy consultation paper published yesterday focused on eight priority growth-driving sectors - Advanced Manufacturing, Clean Energy Industries, Creative Industries, Defence, Digital and Technologies, Financial Services, Life Sciences, and Professional and Business Services.

The elephant in the room yesterday was what was left unsaid about the forthcoming budget and taxation, with rising speculation that Rachel Reeves will impose a hike on employers’ national insurance contributions, adding a potential £16bn tax bill onto UK businesses. Add to this the 158-page Employment Rights Bill published last week, and the 64-page consultation paper on the new Industrial Strategy (Invest 2035) launched by the government yesterday and some will justifiably think the promise of less regulation is still somewhere off. Perhaps any investors still standing after extra taxes and regulations will indeed be rewarded with the opportunities.

Announcements and policies aside, the greatest achievement for Starmer yesterday was calling together a meeting with such a massive scale of financial firepower. The people in the room yesterday could collectively call on assets that would dwarf the entire UK economy many times over, and just one company alone (BlackRock) has an annual turnover around ten times the entire public spending level in the UK. The Prime Minister is right that economic growth and prosperity cannot be delivered and funded by government but needs investment from the types of players in the room yesterday. However, we will not see immediate results, and much like the electability of a new Conservative leader and opposition, I think it’s going to be a long, long time before we see the actual results of yesterday.