Budget fears take shine off £60bn boost to UK investment

Rachel Reeves hailed the £63bn investment announced at a global business summit yesterday and declared Britain was “open for business”.

Eye-catching deals include four US companies investing £6.3bn in UK data centres, which are key to the rollout of artificial intelligence (AI), as well as a £1.1bn expansion of Stansted Airport.

But the summit threatened to be overshadowed by fears of punishing tax rises in the Budget later this month and a further rise in the government’s borrowing costs amid concerns in bond markets.

However, striking an optimistic note, the Chancellor said: “Following the investments gained as part of this summit, my optimism for Britain shines brighter than ever.” “It is a sign of confidence in the British economy.”

Ministers said 38,000 jobs would be created across the UK as a result of the investments, although some of the initiatives have already been announced.

The Conservative Party said Labor was taking credit for some of the work done while it was in government.

And business leaders expressed concern about the prospect of tax rises in the Budget on October 30.

Reeves gave the clearest signal yet that employers’ National Insurance contributions were likely to increase. Businesses are also deeply concerned about an increase in capital gains tax (CGT) which could deter investment.

A senior City figure said he expected CGT to rise from its current level, but the Government was likely to avoid a “cataclysmic” rise.

Meanwhile, far from the splendor of London’s Guildhall – where the summit took place – bond markets remained nervous about the outlook for the national debt amid speculation that Reeves will amend budget rules to allow him to invest billions more money. public in investments.

Ten-year bond yields – the return expected by bond investors for the risk of lending to the government – ​​rose above 4.25 percent for the first time since the election.

Bosses at yesterday’s summit included Goldman Sachs chief David Solomon and Larry Fink, head of the world’s largest company.

asset manager, Blackrock. Fink gave a very positive assessment of the UK’s prospects, stating that it was “opening our eyes to see that this could become the next real destination for capital.”

The chief executives of BAE Systems, Aviva, Barclays, Severn Trent and International Airlines Group, which owns British Airways, were also among around 300 business leaders the Government said attended.

They sat in the great hall as Prime Minister Sir Keir Starmer declared: “This is a great moment to stand behind Britain.”

Some may have been less convinced by his claim last week that a workers’ rights package that will give employees rights from day one is “pro-growth”.

And underlining the positivity was the implication that the Budget will contain measures painful for some, with the Prime Minister declaring that Britain’s strained public finances needed “tough love and caution” and that the Government must act “quickly” to fix services public and the economy.

Barclays chief executive CS Venkatakrishnan warned against banks with higher taxes. He told Bloomberg TV: “Banks are among the highest taxed entities in the UK, we are an important part of the economy.”