ALEX BRUMMER: How British firms are set to spend £500billion
ALEX BRUMMER: How British firms are set to spend £500billion now the Brexit brakes are off
Despite Labour’s crackpot nationalisation and share-grab policies, there was a shaming silence from many in the business community about this existential threat to the functioning of the capitalist system which has served this country so well.
One notable exception was Paul Walsh, chairman of global catering giant Compass, who warned that millions of people would have their pension savings hammered by a Corbyn government. Estimates stated such a result could wipe an average of £11,200 from pension pots and delay savers’ retirement by more than three years.
Finally, now, with a Tory win, those nervous ninnies too pathetically timid to speak out beforehand are ready to unleash investment plans that had been frozen amid fear of business-bashing Corbyn in No 10.
Earlier this year, Rolls-Royce received £20million from the UK government to support development of its small modular nuclear reactors which are seen as one of the answers to future energy needs and the climate change emergency
It’s estimated that £500billion has been sitting in the bank accounts of the biggest FTSE 100 firms waiting to be invested. Release of that money ought to put an end to the recent period of economic stagnation and help Britain lead other countries out of the current global slowdown.
The fact is that the lifting of the anvil of uncertainty about a path to Brexit has been greeted with immeasurable relief by traders, analysts and in the boardroom of large corporations.
The pound, which plummeted then seesawed following the EU referendum, climbed to $1.35 against the dollar and could go higher, with Donald Trump pledging a comprehensive trade deal with Britain. Thankfully, sterling’s rise should brush away all fears of the Bank of England having to raise interest rates. The stock market FTSE 100, comprising the biggest UK and international companies, climbed by more than 100 points.
Business leaders are urging Boris Johnson to make a concerted effort to back the Industrial Strategy Council. Pictured: Prime Minister Boris Johnson making a statement outside Downing Street
And shares among the next layer of UK-focused FTSE 250 firms shot up stratospherically. It cannot be stressed forcefully enough that removing uncertainty and mapping out a clear and swift path to Brexit is what Britain plc needs.
That said, though, there remain fundamental weaknesses and slow growth.
Primary among the causes are low productivity, a tax system which fails to support innovation adequately, government ministers as ever not doing enough to support Research & Development, some outdated infrastructure dating back to the 19th century and a shockingly lax attitude in government to take-overs by foreign firms of jewels in our industrial crown.
Paul Walsh, chairman of global catering giant Compass, warned that millions of people would have their pension savings hammered by a Corbyn government
Foreign raiders must not be allowed to pick off any more British companies in the way that we have recently seen satellite pioneer Inmarsat snapped up, while aerospace innovator Cobham and delivery firm Just Eat are in the throes of being sold. As it strives to regenerate the economy, the new Tory government must quickly learn that not all overseas investment is in our national interest.
Surprisingly, the Tories’ election manifesto was modest in its ambition for entrepreneurship and enterprise. It pulled back from plans already set in motion to lower taxes on companies from 19 per cent to 17 per cent in an effort to maintain the UK’s global competitive advantage. But the priority is to invest heavily in innovation. Britain is world leader in a host of areas: financial technology, new drug treatments such as immunology, vaccines, genetic research and artificial intelligence.
Yet, except for the very biggest pharma companies, bringing new products to market and building enterprises for the long term is very difficult.
Earlier this year, Rolls-Royce received £20million from the UK government to support development of its small modular nuclear reactors which are seen as one of the answers to future energy needs and the climate change emergency.
But this was a risible sum compared with the £500million its subsidiary got from the German government to develop power units.
Business leaders are urging Boris Johnson to make a concerted effort to back the Industrial Strategy Council, the body led by Andy Haldane, the Bank of England’s chief economist, which has been charged with boosting wages and improving productivity across British businesses.
Haldane is peerless in advocating the need to address shortcomings in productivity and restore growth to struggling communities. Principally, he wants big improvements to our transport and digital infrastructure and better quality education.
Above all, Britain desperately needs a vision for the future that reaches beyond Brexit.
It’s the duty of those businesses which sat in silence, terrified of a Corbyn government, to embrace the mood of optimism now and not allow it to be dissipated.
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