(Bloomberg) -- Prime Minister Keir Starmer believes the sheer “shock and awe of investment” will kick-start Britain’s sluggish economy, but it remains to be seen whether Labour can significantly increase the amount of cash that foreign investors put into UK infrastructure.
The government said Monday’s summit of Wall Street bosses, major asset managers and sovereign wealth funds, held at the City of London’s historic Guildhall, secured £63 billion ($82 billion) and would create nearly 38,000 jobs.
The headline number was more than double that announced ahead of the Conservatives’ final investment event last November. However, on both occasions the ruling party has included a number of projects that were already announced or planned.
Last year, at least a third of the nearly £30 billion of investment boasted by then-prime minister Rishi Sunak had already been revealed. This time around, more than half of Labour’s announcements were based on pre-existing projects.
Energy
One of Monday’s biggest investments was announced by Iberdrola SA, which owns UK utility Scottish Power, ahead of the summit. It said it will double a £12 billion plan, announced last year, meaning a huge injection of cash into Britain’s green energy sector. However, the extra money will be largely allocated to projects that were already planned such as the East Anglia 2 offshore wind farm and a subsea transmission investment called Eastern Green Link 1.
East Anglia 2 is one of several wind farms that resulted from the UK’s renewables subsidy auction last month. Two other farms, being built by Orsted A/S and Greenvolt, also emerged from September’s auction. The government said they would unlock £10.5 billion worth of investment combined.
The projects allowed Labour to boast of a “tidal wave” of clean energy investments. Most of these investments have been confirmed since Labour took power in July, yet were part of existing plans and not revealed for the first time at Monday’s summit.
Transport
The same goes for other investments, such as £1.1 billion toward the expansion of Stansted airport to the north of London. The extension of the airport’s terminal was granted planning permission a year ago, while Sunak was still Conservative Prime Minister.
Another £1 billion investment is expected to come from DP World, the company that pulled out of the summit last week after a minister called it a “rogue operator” — before coming in from the cold when Downing Street moved quickly to warm relations over the weekend. The plan for a fifth and sixth berth at London Gateway, DP World’s huge container ship port to the east of the capital, confirms fresh and welcome investment. However, the expansion is part of the company’s long-held plans for the site, which was originally intended to hold seven berths.
Technology
An additional £18 billion of investment was hailed by the government, from private equity firm Blackstone Inc. and tech giant Amazon.com Inc. Blackstone will spend £10 billion on a data center in northeast England, at a site that it bought in May — again, while the Conservative government was still in power. Amazon Web Services’ £8 billion injection into its own UK data center network was revealed last month.
Many of the investments, like Amazon’s, have been confirmed since Labour swept to power at the general election on July 4. While they are likely to have been in the works for months, ministers could argue that the government has created a sufficiently welcoming climate to seal the deal on billions of pounds worth of capital spending. Business Secretary Jonathan Reynolds said last month that Labour’s plan “to make Britain the destination of choice for investments” was behind a £1 billion project by Turkish conglomerate Eren to build a recycled paper plant in north Wales — which was also included in Monday’s big number.
For some delegates at Monday’s convention — which featured the likes of former Google CEO Eric Schmidt, Lloyds Banking Group Plc boss Charlie Nunn and Barclays Plc’s C.S. Venkatakrishnan — the most important thing was how Labour presented itself, rather than the trumpeting of grand projects.
“It is less about the big numbers and more about cutting through the silo mentality that has been very prevalent in the government,” said Mervyn Davies, former head of Standard Chartered Plc, describing Starmer’s speech as “statesmanlike”. The sentiment was echoed by Abrdn Chairman Douglas Flint, who said during an interview at the summit that he was also impressed by the PM.
“Words matter,” Flint said.
--With assistance from Brendan Murray, Kate Duffy and Rachel Morison.
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