With less than a week to go until the government holds its International Investment Summit, it is hoped that the conference will really lead to a greater understanding of the government’s plans to boost investment in the UK and drive growth.
The summit, aimed at driving foreign direct investment into the UK, is to be held on October 14, with confirmed speakers including Ruth Porat, president and chief investment officer at Alphabet and Google; Alex Kendall, chief executive of AI firm Wayve; and Bruce Flatt, chief executive of Brookfield Asset Management.
Among those expected to attend are leading UK business leaders, high-profile investors, and businesses.
The government says the event will provide an opportunity for it to “establish enduring partnerships with businesses to boost investment in the UK and to give investors the certainty and confidence they need to drive growth”.
Becoming popular
So what can the government do to make the UK more attractive to investors?
According to the Association of Investment Companies, attracting both domestic and international investment requires the right environment.
Annabel Brodie-Smith, communications director at the AIC, says: “Abolishing stamp duty would simplify the tax system and stop penalising UK investors for buying UK shares. It’s particularly important for investment companies, which already pay stamp duty themselves when they purchase UK assets – a form of double taxation.
“The new government has acted swiftly to address our concerns about the misleading cost disclosure rules that were damaging the investment trust industry.
“They have temporarily suspended these rules for investment trusts and are now going to consult on a new regime. It’s vital that these new rules recognise the unique characteristics of investment companies, permanently end misleading cost disclosures and enable investors to make better informed decisions.”
A healthy environment for start-up and scale-up businesses is also essential, Brodie-Smith says.
She adds: “We were pleased to see that the venture capital trust scheme was extended until at least 2035, helping it continue to back early-stage UK companies.
“The scheme celebrates its 30th birthday next year and there is now an opportunity to enhance and extend it so it can do even more to support the winning businesses of tomorrow.
“Investment trusts are a great British success story. They provide a tried-and-tested way of overcoming the practical challenges of investing in infrastructure and new technologies. Their permanent capital structure removes the need to redeem investors’ units when they want to sell and therefore facilitates stable, long-term decision-making.
“As well as offering permanent capital, investment trusts have independent boards and offer liquidity through the stock market – a combination of features that could be attractive to institutions and the general public, as well as to the government.”
The UK has a clear national mission to drive economic growth and back wealth creation across every region of the country.
While the government has said that the summit will make clear the UK is open for business, and that it is on track to deliver an ambitious programme, the timing of the event – two weeks before the Budget – has been questioned.
Some concern was raised last month over the level of detail released about the agenda.
At the time, it was reported in the Financial Times, FT Adviser’s sister paper, that organisers were confident of putting on a high-quality event but accepted that communication with companies could have been better.
The summit is being sponsored by Barclays, HSBC, Lloyds, M&G plc, Octopus Energy, and TSL.
A national mission
Andrea Rossi, chief executive of M&G, says: “The UK has a clear national mission to drive economic growth and back wealth creation across every region of the country.
“At M&G, we have actively invested in the UK for 175 years, driving progress and helping people, businesses and communities thrive. We continue to support a range of companies, invest in critical infrastructure and play our part in boosting regional economies.
“The International Investment Summit is a crucial moment to put the UK back on the investor map, showcase market opportunities and reinforce how business and government can work in partnership.”
To help drive economic growth in the UK, the government has also launched the national wealth fund (NWF) – a sovereign-backed green catalytic fund – to invest in new technologies and infrastructure.
Brodie-Smith says: “It’s early days for NWF but we are encouraged by the government’s plans.
“The NWF is aiming to attract £3 of private investment for every £1 of public investment, so it’s crucial that it creates compelling opportunities for investors while funding the projects the UK needs to drive sustainable economic growth.”
The AIC has proposed the creation of partnership funds – investment companies whose shares are traded on the stock market that would invest in national infrastructure, renewable energy, the net-zero transition, technology and innovation, and other productive assets.
Too many people in the UK are taking one of the biggest financial risks of all: taking no risk. This needs to change.
Brodie-Smith adds: “The NWF would act as a cornerstone investor in these funds, helping them raise capital swiftly. Individual investors could participate along with institutions and the NWF could sell down its holdings in these funds once they are established, allowing capital to be recycled into new projects.”
According to the City of London Corporation, the UK must develop a financial and professional services strategy to unlock up to £7.7bn in additional capital from foreign sovereign investors by 2030.
Over the past decade, sovereign wealth and public pension funds who have opened a UK office have more than doubled their UK investments compared to the five years preceding their presence in the country, the City Corporation said in a press release.
This has led to an additional £13.4bn investment across the UK in areas such as infrastructure, innovative tech sectors and renewable energy.
Chris Hayward, policy chairman of the City of London Corporation, said: “The UK’s financial and professional services are the engine in the country’s economy. It is therefore essential that the UK positions itself as the premier destination for overseas investors.
“The £7.7bn of additional capital from foreign sovereign investors setting up offices in the UK will serve alongside the government’s NWF as a crucial vehicle to drive growth not only in London but in every corner of the UK.
“The UK needs a long-term financial and professional services strategy, overseen by a financial and professional services council. This will provide a streamlined and organised system that supports foreign investors seeking to invest capital in the UK.”
In a press release the Investment Association said that the upcoming Budget comes at a critical moment for the new government, and is a clear opportunity for chancellor Rachel Reeves to also recognise the role the investment management industry can play in securing the future of the UK.
Chris Cummings, chief executive of the IA, said: “Too many people in the UK are taking one of the biggest financial risks of all: taking no risk. This needs to change.
“We must create a culture of investment that allows more people to benefit from the UK’s position as an international centre for investment management, and work together to move away from ‘safetyism’ – the over-emphasis on avoiding risk without considering the unintended consequences.”
The IA’s Budget submission includes rebranding the stocks and shares Isa as the ‘investment Isa’, including long-term asset funds to encourage greater investment in “productive capital”, extending the tax roadmap to cover adjacent taxes, including those which might impact people’s confidence to invest, and opening up private markets to more pensions and Isa savers, capitalising on new tech to boost their operation.
Ima Jackson-Obot is deputy features editor of FT Adviser