(Bloomberg) -- Anne Glover is exactly the sort of person the UK’s new Labour government wants on its side.
She has been a venture capital investor for more than three decades. She is a member of the Bank of England’s Court of Directors. She also sits on the investment committee for one of the largest university endowments on the planet.
Under Prime Minister Keir Starmer, the Labour party has made a variety of overtures to City of London types like Glover. His top deputies have been courting financiers and world leaders alike in a push to reignite investment in the country. They’ve supported regulators’ efforts to revamp many of the UK’s onerous rules for public companies. They’re even putting together a sovereign wealth fund they’ve said will act as a concierge service for business.
Still, Glover’s not convinced.
“There’s so much speculation, I don’t think we have a clue what’s actually going to land,” Glover said. “I’m not so sure that — at this much higher policy level — that they’ve been able to say much.”
This month, Bloomberg Radio interviewed top executives from around the world to get their view on Starmer’s first 100 days in office. Their comments come just days before he and Chancellor Rachel Reeves convene their inaugural investment summit, where they’re hoping to make it clear that Britain is open for business as well as reset relations with key trading partners. Later this month, Reeves will reveal her efforts to balance the nation’s finances in her first budget statement on Oct. 30.
Financiers across London have been puzzled by Starmer’s decision to go ahead with the investment summit before Reeves had a chance to present the budget. His government has also been tight-lipped on its actual plans for enticing investors to plow more money into the country’s aging infrastructure. With so many questions swirling, Monday’s event is being viewed as a key litmus test of the prime minister’s ability to make good on his promise to bring growth back to the UK.
Here’s what the executives shared:
MIKE EAKINS
Chief investment officer for Phoenix Group
The UK's largest long-term savings and retirement provider is ready to go shopping on Monday.
At least that’s the hope for Mike Eakins, Phoenix Group’s chief investment officer.
“Phoenix stands ready to get to invest alongside other pension funds and insurance companies and indeed the government itself,” he said, noting the onus is on policymakers to ensure there’s a ready “pipeline of investable assets that long term investors such as Phoenix and other pension funds and insurance companies can invest in.”
The government has announced that a raft of tech tycoons and financiers are planning to attend the summit, including former Google Chief Executive Officer Eric Schmidt, Brookfield Corp.’s Bruce Flatt and Barclays Plc’s C.S. Venkatakrishnan. Still, some key Wall Street bosses — including JPMorgan Chase & Co.’s Jamie Dimon and Blackstone Inc.’s Steve Schwarzman are unlikely to attend — which has been viewed as a setback for Starmer’s planned charm offensive.
It was former Prime Minister Rishi Sunak’s surprise decision to call an early election — which catapulted Labour into power months earlier than expected — that left the new administration with just months to coordinate a series of high-profile events. Finalizing the investment summit has turned into a scramble as a result.
Still, Starmer has been looking to put the event back on good footing. He will open the summit by discussing artificial intelligence with Schmidt.
“Our ask is that the government should be really bold in headlining what it wants to achieve from that investment summit,” Eakins said. “We really should be extolling the virtues of the UK as a place to come and do business.”
BILL CURTIN
Global head of mergers and acquisitions at Hogan Lovells
The giants of the UK’s private equity scene are under pressure on many sides, according to Bill Curtin, who leads the mergers and acquisitions practice at Hogan Lovells.
Distributions — how much capital private equity firms return to investors — are at their lowest level in more than a decade. That’s been a problem for the industry ever since the Federal Reserve and other central banks around the world began ratcheting up interest rates, crimping the value of many of their pandemic-era investments and making it more costly for them to refinance existing debt.
That Reeves has proposed a variety of tax increases for the industry risks making a bad situation even worse, Curtin said.
“If there's increasing cost through taxation, interest rates and the like, it doesn't paint a pretty picture for private equity,” said Curtin, who’s based in New York.
Starmer has been boldly warning the first budget would be painful for those “with the broadest shoulders.” Labour has said it will announce plans to reform the carried interest tax regime when it unveils its budget later this month. Potential proposals have ranged from smaller tweaks in line with other countries to bigger changes like boosting the tax rate for carried interest — fund managers’ portion of profits on asset sales — to 45% from the current level of 28%.
At first, Labour had said it believed it could raise £565 million ($737 million) in additional tax revenue annually by treating more carry as income. Now, though, an Oxford Economics report published earlier this month found that ending the preferential tax regime would cost the Treasury around £1 billion a year in lost revenues because of wealthy people emigrating or not coming to the UK. While Reeves still intends to close the loophole on taxing carried interest, she is now reviewing her approach to maximize the revenue raised.
Private equity accounts for a large percentage of the M&A transactions that occur in the UK, Curtin said, noting that makes it “very difficult for the ministers not to pay attention to those voices and to their concerns going forward.”
MICHAEL MOORE
Chief executive officer of the British Private Equity and Venture Capital Association
To the titans of private equity and venture capital, the new Labour government has had all the right messages so far, according to one top lobbyist.
Now, Michael Moore says, the industry is ready to hear more detailed policy plans.
“Many of these ideas are still at a kind of higher level, conceptual stage, and we do need to see quite a lot more detail,” said Moore, who leads the British Private Equity and Venture Capital Association. “The government continues to say a lot of the right things, but we can’t live without the details indefinitely.”
Reeves’ repeated warnings that she intends to close the loophole on taxing carried interest seem to have spooked many top financiers across the City. The private equity firm General Atlantic, for instance, has warned the government that dozens of dealmakers in London could leave if plans for higher taxes on carried interest go ahead. The hedge fund billionaire Alan Howard is considering a move to Geneva from London. Jeremy Coller, a pioneer of Britain’s private equity sector, has already left for Switzerland.
Moore said Reeves’ proclamations about the impending tax changes — along with her warnings about the perilous state of the UK’s public finances — have made her upcoming fiscal statement a pivotal moment for the private equity industry’s relations with the new Labour government.
“The bigger risk for us is that we send signals to the industry that we're not a competitive place internationally, and that over time we'll lose the great advantage that we currently have,” Moore said. “They will look to be in a tax environment, an investment climate that allows them to develop their careers and their investment approach consistently and with some predictability.”
LLOYD LEE
Managing partner and co-founder of Yoo Capital
Starmer’s plans to initiate a blitz of planning reforms has been welcome news for the investment firm behind one of London’s biggest redevelopment projects.
Labour has put housebuilding at the core of its plans, promising to build an average of 300,000 homes a year — a target that previous Tory governments have set and failed to meet. Starmer has also vowed he’ll reform the leasehold system and introduce new protections for renters.
“One of the concerns that people always have the minute there's changes is `How long are you going to take to do it?’” Lloyd Lee, managing partner and co-founder of Yoo Capital. “Because in the end, whether it's a year, a month or 10 years, I still have people who don't have enough housing.”
For years, Yoo Capital has been redeveloping Olympia, a more than 130-year-old exhibition center that’s about one mile west of Kensington Palace. When the work on the venue finishes this year, Olympia will be home to 100,000 square feet of bars and restaurants and 500,000 square feet of office space.
Lee’s work on the project has given him a front-row seat to Britain’s planning system, the mere mention of which can draw groans from developers and lawmakers alike. Development decisions often lie in the hands of depleted local councils, and objections from local residents can hinder ambitious projects.
“You cannot, on the one hand, allow progress to be impeded by the organizational structure of the system, but, equally, I think it'd be dangerous to just get rid of the system,” Lee said. “Any vision in London has to be public private together as one.”
Yoo Capital last year announced it will develop a plot of land in London’s Camden neighborhood that currently houses a recycling center in order to turn it into a creative quarter for the film and cultural industries. The firm also recently received planning permission to redevelop Shepherd’s Bush Market, a 106-year-old bazaar in West London.
“Even before today, we were long London,” Lee said. “You now have Labour at the council level, in many cases. Certainly Labour at the mayoral level and at the central government level. We'd really like to see continued increases in the coordination between all levels of government.”
ANNE GLOVER
Chief executive officer and co-founder of Amadeus Capital Partners
Starmer and Reeves have been too pessimistic on the economy since coming to office almost 100 days ago, according to Glover.
Reeves has repeatedly said that the unveiling of the government’s budget later this month will likely be a painful moment for the UK, which needs to fill a £22 billion fiscal hole. Some have worried those warnings have damaged business confidence and risked undermining the Labour party’s careful work to court the business community.
“The economy isn't growing fast, but it's stable, and it wasn't stable for the last four years,” Glover said. “Inflation has been subdued. Interest rates will come down,” she said, noting “I do think they're a little bit more pessimistic than they need to be.”
In the first half of the year, Britain’s economy enjoyed a “Goldilocks moment” with slowing inflation, rising employment and healthy growth, allowing Starmer to put last year’s recession further in the rear-view mirror in his first 100 days on the job. Still, optimism has dimmed more recently and the Institute of Directors said this month that UK business chiefs are the most pessimistic they have been about the economy in years because they fear looming tax hikes and workplace regulations.
Glover said her hope is the new government will be measured in its approach to any changes in tax policy.
“There is a tendency for governments to kind of want to announce the change the next day so nobody can game it — I think that would be a mistake,” she said. “Phase them in, give people the chance to adapt. Don't be ideological about it, be practical.”
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