Keir Starmer is treading a narrow path. After a challenging first 100 days in government, the prime minister has an opportunity on Monday to relaunch Labour’s central mission: to restore economic growth.
But as some of the world’s most powerful financiers fly into London for the new government’s inaugural international investment summit, they do so with Starmer’s cabinet at odds about how that mission should be achieved.
On the one hand, the prime minister cutting adrift his transport secretary, Louise Haigh after she branded P&O Ferries a “rogue operator” might appear to be another classic Westminster squabble. Yet at its heart lies a tension in the Labour economic project – between driving growth and ensuring the proceeds are shared more evenly.
In welcoming hundreds of company bosses to the London summit this week, the prime minister will be seeking to get the biggest beasts in modern capitalism behind his plan to get Britain’s economy growing at the fastest sustained rate in the G7. The bosses of Goldman Sachs, BlackRock and Google will be among those attending.
At a time when the public finances are in a tight spot – ahead of a tough budget for Rachel Reeves in two weeks – that may not be such a bad idea. Even if the chancellor relaxes her self-imposed fiscal rules, as is widely expected, she is unlikely to add significantly to borrowing for investment, fearing a negative response in financial markets.
Most economists believe business investment is crucial to unlocking gains in productivity and driving economic growth. For decades the UK has trailed the G7 on investment spending, particularly since the 2008 financial crisis – matching a period when living standards have stagnated, showing there is scope for improvement.
However, there is discomfort within Labour’s ranks over the involvement of certain companies. Some firms flying in for Monday’s event have been criticised for locking Britain into a trap of high inequality. Even if they promise to invest, would the benefits be felt evenly?
