UK announces £30bn boost at Global Investment Summit
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The UK government will today try to woo hundreds of business leaders as Rishi Sunak hosts a major business event at Hampton Court.
More than 200 executives are set to attend the Global Investment Summit, including Goldman Sachs chief executive David Solomon, JPMorgan’s Jamie Dimon, Blackstone boss Stephen Schwarzman and Aviva’s Amanda Blanc.
Prime minister Rishi Sunak and business & trade secretary Kemi Badenoch will be hosting, with Barclays, HSBC and Lloyds Bank sponsoring the event.
With a dollop of hype, the government says the summit “marks a huge step forward for levelling up”.
This claim is based on the fact that some of the “A-list CEOs and investors” attending have collectively pledged £29.5bn in new UK projects and capital. That spending, Downing Street says, will create over 12,000 jobs.
It’s rather more than the £10bn which the UK lined up two years ago for the previous summit in 2021.
But these sums aren’t always really new money. £7bn of today’s total comes from Iberdrola, the Spanish owner of Scottish Power, which has “confirmed £7 billion of investment as part of a total £12 billion programme for 2024-28.” But, a year ago, Iberdrola did say Scottish Power would lift its capital spend to £6.7bn between 2023 and 2025.
Other deals being touted today are also focused on the energy sector, alongside tech, life sciences, infrastructure, and housing.
Australia’s IFM Investors also intend to invest £10 billion over the next four years for large-scale infrastructure and energy transition projects, the government says, adding:
IFM will sign an MoU with the Department for Business & Trade at the summit to identify commercially viable opportunities, with potential projects including Nala Renewables, a UK-based portfolio company within IFM, which is actively seeking investment opportunities in the UK as it looks to achieve a renewable capacity target of 4GW by 2025.
The gathering is part of the government’s push to boost investment in the UK and spur growth, following the tax cuts announced in last week’s autumn statement.
Attendees will get a lesson on the UK’s innovative past, as the summit will celebrate “British Ideas – Past, Present and Future”, from the steam train to quantum computing.
Get through that, and they can enjoy a reception at Buckingham Palace hosted by the King.
Also coming up today
The Bank of England is facing calls for reform after a House of Lords report found that the central bank’s reliance on “inadequate” forecasting models and a lack of intellectual diversity within its most senior ranks contributed to inflation sticking at among the highest levels in decades.
In a report critical of Threadneedle Street, the powerful Lords economic affairs committee said the central bank had made “errors” in its handling of the inflation shock triggered after the Covid pandemic and Russia’s invasion of Ukraine.
While saying that all major central banks had incorrectly expected the toughest inflationary period in four decades to be “transitory”, it warned that mistakes at the Bank had fuelled a “dramatic” fall in public confidence.
The agenda
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Today: UK holds Global Investment Summit at Hampton Court
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11am GMT: CBI distributive trends survey of UK retail
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3pm GMT: US new home sales data for October
Key events
Metro Bank shareholders approve rescue deal
Newsflash: Metro Bank has just announced that its shareholders have backed its rescue deal.
Over 90% of shareholders have voted in support of all resolutions, Metro Bank says.
This eans that a deal to raise extra funds from investors and refinance debt can now go ahead.
The package consisted of a £325m capital raise, including £150m of new equity from shareholders, and £600m of debt refinancing.
The equity raise will be led by Metro’s largest shareholder, the Colombian billionaire Jaime Gilinski Bacal’s Spaldy Investments, which will contribute £102m. His stake will now rise from 9% to 53%, making him the controlling shareholder.
Investors had been warned earlier this month that if the package was rejected, Metro Bank would probably be judged to be unviable and placed into the resolution process for failing banks.
Reminder: as flagged earlier, Barclays is reportedly in exclusive talks to buy Metro’s mortgage book.
Santander chair Ana Botín welcomes removal of UK banker bonus cap
Britain’s recent decision to lift the cap on bankers’ bonuses has been welcomed….. by the boss of one of Europe’s largest banks.
Santander executive chair Ana Botín said today she welcomed the removal of the UK’s banker bonus cap, which limited banker’s bonuses to twice their base pay.
Botín argued that a similar move in the rest of Europe would better align bankers’ interests with those of their shareholders.
Botín, whose bank is Europe’s fourth-largest by assets, said Santander would consider changing the way it paid its UK staff following the removal of the cap.
She told the Financial Times, at the first day of its Global Banking Summit,
“It’s a business where you should be compensated in a variable way, so I think it’s good news for our industry, it makes a lot of sense.
“I’m sure we will adapt to that.”
The UK’s financial regulators formally scrapped the banker bonus cap at the end of October – a move that was condemned by unions as an ‘insult to working people’
Barclays in talks to buy £3bn Metro Bank mortgage book
In the banking sector, Barclays is in exclusive talks to buy embattled lender Metro Bank’s £3bn portfolio of residential mortgages, according to Sky News.
Metro has been seeking a buyer for its pool of residential mortgages since early October, and Barclays now appears to be in poll position to secure the deal.
The development comes shortly before Metro Bank is due to announce whether its shareholders have overwhelmingly backed a £925m refinancing plan.
The recapitalisation, which has already won approval from bondholders, was announced last month following a weekend of intense talks about a rescue deal.
Exclusive: Barclays is in exclusive talks to buy a £3bn residential mortgage portfolio from Metro Bank, part of a financial restructuring package for which the smaller London-listed high street lender expects to announce shareholder approval later today. https://t.co/iDEYDtz6CL
— Mark Kleinman (@MarkKleinmanSky) November 27, 2023
The £925m package will see the Colombian billionaire Jaime Gilinski Bacal becoming its majority shareholder.
Bacal built his name snapping up the assets of struggling lenders on the cheap, turning around their fortunes and selling them on for a big profit.
Back at the UK’s Investment Summit, Rishi Sunak has denied that David Cameron’s political comeback as Foreign Secretary will bring a return of his “golden era” approach to China.
Sunak told investors at Hampton Court that his Government had a more cautious approach to engagement with Beijing than Cameron’s.
Sunak said:
“If David was here what he would say is the China of today is not the China he dealt with over a decade ago.
“It has changed, it’s right that our strategy evolves to take account of that.
“Our strategy can be summarised in three approaches: it’s to protect, align and engage.
“We have got to protect the UK against the risks, where they manifest themselves.”
UK retailers brace for disappointing Christmas
UK retailers are bracing for a disappointing festive period, according to a new survey which highlights the weakness of the economy.
The CBI’s latest distributive trades survey shows that retail sales volumes fell year-on-year in November for the seventh consecutive month (although at a slower pace than in October).
Firms expect sales to decline again in December, implying this Christmas will be tougher than last year, as the cost of living crisis hits spending.
Retail sales volumes fell year-on-year in November for the seventh consecutive month, but at a slower pace than last month, according to the latest CBI #DTS. The downturn in sales is expected to moderate further next month pic.twitter.com/xkNFJmhl96
— CBI Economics (@CBI_Economics) November 27, 2023
Sentiment amongst retailers recovered somewhat in November, with firms expecting their business situation to improve slightly over the next three months #DTS pic.twitter.com/TniYiXW6hh
— CBI Economics (@CBI_Economics) November 27, 2023
Retailers also reported a reduction in headcount in the year to November, while investment is set to decline in the year ahead – not good news as the UK hosts its investment summit push.
Martin Sartorius, CBI principal economist, says:
“Retail sales have languished in negative territory for much of 2023, reflecting the impact of strained household finances on the sector’s fortunes. Though sentiment has picked up slightly, firms do not feel that a revival in activity is imminent. Given the weakness in trading conditions, it’s little surprise that firms are scaling back on their investment ambitions.”
“Retailers had hoped the Chancellor’s Autumn Statement would offer a reprieve from next year’s hike in business rates. While prioritising relief for SMEs and key sectors is understandable, many retailers are being left to contend with another increase in costs at a time when they are least able to afford them.”
Retailers also reported that they kept cutting back on orders with their suppliers, while internet sales continued to drop year-on-year.
Online sales are expected to fall again in December.
China has launched criminal probe into ‘insolvent’ shadow bank Zhongzhi
Over in China, the troubles gripping financial conglomerate Zhongzhi have deepened, after a criminal investigation into the Chinese wealth manager began.
The Chaoyang Public Security Bureau revealed over the weekend that Beijing police are investigating whether any crimes have been committed by Zhongzhi Enterprise Group, which is one of China’s biggest privately-owned financial conglomerates.
In a social media post, the Bureau said authorities were looking into “many” suspects involved with the company and encouraged investors to report their losses in order to help with the ongoing investigation.
It added:
“Investors are requested to actively cooperate with the police in investigating and collecting evidence and safeguard their rights and interests through legal channels.”
The announcement comes just days after the company told investors that it is “severely insolvent.” following the departure of several senior executives. It has sizable exposure to China’s real estate sector.
Zhongzhi’s troubles first came to light when one of its trust companies, Zhongrong International Trust Co, missed payments on several investment products over the summer.
hongzhi apologised to its investors in a letter last week, which showed it has total liabilities of about 420 billion yuan to 460 billion yuan (£46bn to £51bn), compared to estimated total assets of 200 billion yuan (£22bn).
Here’s a clip of Rishi Sunak telling investors why the UK is the best place to do business:
“When I say that this country can be the best place in the world to invest and to do business, you should believe me.”
Rishi Sunak says the UK has the “fastest investment growth anywhere in the G7”.https://t.co/xItZsH7tea
📺 Sky 501, Virgin 602, Freeview 233 and YouTube pic.twitter.com/575KlhhZzy
— Sky News (@SkyNews) November 27, 2023
Anyone braving London’s transport system from Heathrow Airport today may be discouraged from investing in the UK.
Passengers traveling to and from Heathrow this morning faced disruption, with outages on the three rail lines that connect the airport to the city.
The new Elizabeth Line, as well as Heathrow Express and Piccadilly lines to Heathrow were all suspended for multiple reasons, according to Transport for London’s website.
Social media had posts from passengers saying they were stuck on Heathrow Express trains with no communication while others expected to miss their flights.
Here was the scene just before the speeches kicked off:
Sunak then denies that summmits such as today’s gathering are “just big talking shops”.
He says the summit has “galvanised” new investments worth £30bn, which will support “tens of thousands of jobs” across the UK, and create new growth,
That’s a huge vote of confidence in the UK, he says, giving the global investor community another pat on the back.
The PM lays it on thickly (again), telling the audience at Hampton Court palace:
Thank you for choosing to be part of that future. Than you for everything that you are doing for this country.
With your support, we can and we will build an even brighter future for our children, and our grandchildren.
Sunak hails highly-skilled immigration talent
Half of the UK’s most innovative companies have an immigrant founder, Sunak says.
The “most competitive visa regime for highly-skilled international talent is right here in the UK”, he argues.
He points to the High Potential Individual visa, which lets a young person from a global top 50 university to come to the UK with their family for two years, to explore, study, or invent…
Nothing like that exists anywhere else in the world, and it tells you everything about our pro-innovation, pro-growth, pro-business philosophy.
[More generally, though, Sunak has said today that net migration was too high, and he’s determined to bring it down].
“Here at home we’re delivering a world-class education system,” Sunak insists.
That might surprise any clued-up global investors who have heard that hundreds of schools are built with crumbling and potentially dangerous concrete.
The UK has one of the most highly qualified workforces in Europe, Sunak says, and points to the lifetime skills guarantee which helps people retrain and learn new skills.
Innovation is the “golden thread” running through the UK economy, Sunak gushes.
He points to Brexit, claiming the UK is delivering agile regulation, which is pro-innovation and pro-growth, now it’s outside the EU.
Sunak then runs through some of the great names of UK innovation.
The PM says:
Ours is the country of Newton, Faraday, Hodgkin and Lovelace.
Of Stephenson’s steam engine, Darwin’s theory of evolution and the World Wide Web, invented by Tim Berners-Lee who I’m delighted is attending here today.
[Berners-Lee was actually working at CERN, which is near Geneva, when he invented the WWW….].
Sunak’s argument is that the spirit of innovation is alive. The UK has less than 1% of the world’s population, but has three of the world’s top 10 universities
[Oxford, Cambridge, and Imperial College London, according to one recent survey, so not Hull, Blackadder].
The UK also has the third highest research publications, and second most Nobel laureates, he adds, and more tech unicorns than anyone after the US and China.
The UK has lower capital gains tax rates than France, Germany, Italy and Japan, and some of the most generous tax reliefs on stock options anywhere in the world, Sunak adds.
Sunak insists UK is cutting taxes
The UK has the fastest investment growth anywhere in the G7, Rishi Sunak says
This country can be the best place to invest and do business, the PM insists, citing three competitive advantages.
Our low-tax approach, our culture of innovation, and our people.
On tax, Sunak says his administration believes people and businesses make better decisions about how to spend their money than governments ever could.
I believe that allowing you to keep more of the return on your capital, our company becomes more competitive as a place to invest, grow and create jobs.
Sunak insists the govermnent is cutting taxes – citing last week’s decision to let firms write off much of their investment in full (the much-heralded ‘biggest business tax cut in modern British history).
[However, the UK tax take is still heading for a postwar high]
