I was in London before and after the election where the result had been widely forecast and was met with absolutely no surprise by anyone and where the first weeks of the new government feel sensible and stable. We will know more about the detailed agenda after the King’s Speech this week and the Budget in October but the consistent language about growth, and the crucial role that business has to play in delivering it, is encouraging. I am sure BAB members will join me in wishing the new government luck; the problems they face are exactly the same as they were three weeks ago and the solutions are not easy to find or execute.
Clearly without productivity growth, a better rate of growth in GDP and higher rates of investment it will be impossible to deliver the change that has been promised. We would argue that crucial to this will be remaining attractive and competitive as a place for businesses to invest, both absolutely, and relative to the other options in the region. The UK has many natural advantages, especially for potential US corporate and financial investors which have contributed to its success over recent decades in attracting inward investment, but these innate advantages have to be matched by a pro-business attitude towards the cost of doing business. Energy or workforce costs are often the largest input items in business P&Ls and in both cases, the UK needs to find a way to be internationally competitive. The same applies to taxation; not just the rate of corporate tax that is levied but the other taxes hidden elsewhere in the P&L including energy levies and employment taxes.
Two other observations about the UK situation; first, after 8 years of political argument, the UK now looks like the most grounded and stable place in the region and for companies making investment assessments, the long-term stability of a market, measured over say 30 years, is crucial. Second, and perhaps I should not be surprised, but does any country do the handover of political power better? Within fewer than 24 hours of the election there is a new government and new Prime Minister. No lawsuits, no street demos, no drama.
The contrast with the political situation in the USA is jarring. I won’t attempt to provide an analysis of the events of the last three weeks, starting with the first presidential debate and finishing with the shooting in Pennsylvania; there is enough comment in the US and British media to satisfy the most curious reader. No doubt there will be more drama to come between now and November 5th when, as a new American citizen, I hope we get a clear result one way or the other. My sense is that the US political system and its institutions are remarkably robust and have weathered worse partisan storms than those we see today. I also think that for international investors, including the thousands of British companies, large and small, that are active in the US, the attractiveness of the market, and the faith in its fundamentals, remains extremely strong and will remain so for the foreseeable future.
And on July 24th we will publish the 2024 BAB Transatlantic Confidence Index, produced in partnership with Bain & Co. This annual survey measures the confidence that companies have in the other market as a place to invest and although the fieldwork was carried out before the UK election and the most recent developments in the USA, it will give a good guide as to how sentiment is trending in this crucial business corridor. If you would like to attend the events we are holding in London or Washington, speak to your BAB contact or follow the link here.
BAB has a busy period of work ahead; we will be making sure that we introduce ourselves and our members to the new government ministers as they set out their policy priorities in the relevant departments of state. We will continue to argue for investor friendly policies to support the overall ambition for growth in the UK as we did with our recent paper on the Life Sciences sector and we have plans for reviews in the Defense and Infrastructure industries as well as continuing our work around sustainability and the digital economy.
Our convening and networking program will run through to the end of July when we will take a break for August before returning with a full program of events in London, New York and Washington in the autumn. You can see some of the things we have lined up here.
