The prime minister has characterised his first 100 days in office as having been at times “choppy” – albeit that at least some of the choppiness was of his own making. With that symbolic landmark more or less safely past, his hope, no doubt, was that Monday’s investment summit could usher in a new start. A stellar turnout of top national and international executives would culminate in a sufficient number of headline investment pledges to convey confidence in the new government and kickstart the much promised, and much hoped for, economic growth.
Unfortunately for Sir Keir Starmer, this is not quite how it turned out. The efforts that he and his designated chancellor had made over months to reassure business that it had nothing to fear from a Labour government – or at least from their Labour government – received something of a setback just as the invited luminaries prepared to gather.
In the course of an interview, the transport secretary, Louise Haigh, described P&O as “a rogue operator” for a notorious fire and rehire scandal. Haigh appeared not to know, or not to care, that P&O’s parent company, DP World, was an expected big-hitter at the investment summit, where it was due to announce a billion-pound investment in the London Gateway container port.
Cue offence on the part of DP World, a threat not to send any representation and a postponement of the investment. Cue, in turn, an attempt by the prime minister to dissociate the government from Haigh’s remarks, and what may or may not be some backtracking by DP World (although how far remains to be seen). Whatever the outcome, however, this little episode has had a cost. Starmer has had to overrule a senior minister, and thus expose evidence of divisions – not just among Labour MPs, but in the government – about attitudes to business.
So, another “choppy” day. And while such missteps can be put down to inexperience – on the part of a perhaps loose-lipped minister or an insufficiently coordinated government – there comes a time when such excuses wear thin, and that time will surely soon be upon us.
Inexperience might also help to explain the timing of the business summit, which also leaves something to be desired. It is understandable that a new government – in particular a new Labour government – would want to honour its business-friendly claims as soon as possible and demonstrate its loudly proclaimed commitment to growth, with encouragement for investment to that end.
The difficulty is that the government has shown less urgency about the Budget, which is still two weeks away. And with new speculation swirling almost daily about even such basics as whether the fiscal rules might be redrawn, business leaders could be forgiven for waiting to see what the chancellor’s final decisions will be before committing themselves to loosening their corporate or entrepreneurial purse strings.
The tone of the chancellor’s pre-Budget discourse has hardly been conducive to business positivity, either. The focus on “black holes”, the warnings of hard times ahead, the strong hints about tax rises and employers maybe having to pick up the bill for national insurance increases, not to speak of the pain having to be borne by those with the “broadest shoulders”, have contributed to a picture of almost unrelieved gloom. Who, it might reasonably be asked, would want to risk investing in such a basket case?
That said, the timing of the investment summit is as it is, and the best must be made of it. The convergence in London of so many business leaders (with or without DP World) represents an opportunity that the government can use to its advantage – and remembers some of the fundamentals on which Labour campaigned for election. The first and pre-eminent of these is economic growth.
As prime minister in waiting, Starmer might be said to have been right first time around. Growth is the prerequisite for improving living standards, maintaining and improving public services and boosting public morale. The chancellor’s Budget is still in the making, but she and the prime minister would do well to give a positive steer about where it will go, with more about carrots on offer than sticks. It is worth noting here that Rachel Reeves has dropped some of her most doom-laden talk in recent days – although largely by dint of saying nothing at all.
Nor, for all the despondency of the last few weeks, is the horizon entirely bleak. There is some encouragement to be found among the latest not-too-bad economic indicators, whether for GDP or inflation. There are also cheerleaders for the UK’s economic prospects – notably Michael Bloomberg, who opened a recent article by saying that he had “never been more bullish on the UK’s future” and complimenting this country on having Europe’s fastest-growing economy. True, with the German economy, in particular, languishing, the UK might look better than it would otherwise. But comparative prospects are key for investors and not to be sneezed at either.
All in all, the prime minister needs to return to his original message of growth and good governance. He needs to ensure that his government speaks from the same script and avoids unforced mistakes, such as insults to a business world it needs on its side. The investment summit offers an early test – and one the government cannot afford to fail.