International investment is fine – but Boris Johnson cannot ignore the frustration felt by UK businesses

I’ve been hearing expressions of irritation privately for months now. The wonder is that it has taken as long as it has to boil over

James Moore
Tuesday 19 October 2021 14:32
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Issues with global supply chains

A bit of dinner cooked up by a Michelin three star chef, tea with the Queen and hey presto, billions of dollars of investment and tens of thousands of jobs are pouring in. This is what you get if you BELIEVE IN BRITAIN!

Yes the prime minister, Boris Johnson has been holding an investment summit with the glitterati of global business and such an event requires that a noise is made. Thus an announcement of £10bn coming in - including from the continent, in the direction Johnson is usually shaking his fist. In fact, the lion’s share came courtesy of the latter in the form Iberdola, a Spanish power company, which is pumping £6.5bn into an offshore wind development off the coast of East Anglia.

Look at the lovely new investment, they said. Except it wasn’t new. Anyone paying attention to will have been aware that the project was actually announced back in February when Siemens, a German company, was selected to manufacture the turbines. In this case, the announcement omits the “new” from news.

Plus ca change, you might say, and perhaps we should forgive a the government a little light news management as it seeks to polish the UK’s rep as an investment hub, a rep which was badly tarnished by the Brexit vote. According to analysis by EY, the consultancy, the country endured three straight years of falling market share in its wake, losing its crown as the most popular European destination for foreign investors to France in 2019 and then again in 2020. Things have, to be fair, recovered somewhat since then but for how long can this last?

The UK may have been courting foreign investment – but the government has been cynically attempting to pin the blame for panic buying, empty supermarket shelves and queues at the petrol pumps on British business. “Over reliant” on cheap international labour, it claimed. Stop moaning and pay the workers more, it said. Except that there aren’t enough workers to go around and while employers could stand to pay their employees more, especially in some key sectors, not everyone can afford the £3,000 bonuses Amazon is ponying up.

No wonder Craig Beaumont, chief of external affairs for the Federation of Small Businesses, described the rhetoric he heard at the Tory Party conference as “horrifying”.

Just this week, Stephen Phipson, boss of manufacturers trade body Make UK, chimed in – saying: “There is a feeling within industry that the government is still fighting the last war and sees business as the enemy within.”

I’ve been hearing similar sentiments expressed privately for months now. The wonder is that it has taken as long as it has to boil over.

Those assembled at the investment summit will have been made aware of the chaotic backdrop against which this event is taking place.They’ll have likely been told about the hostile rhetoric directed at the local business community too.

Among those assembling for the show was Jamie Dimon, the boss of JP Morgan, the reigning pontiff of the global banking industry. The high priests of finance usually favour bland platitudes when it comes to expressing their views in public. Why put money at risk?

But Dimon is a bit different. He’s usually happy to say what he thinks and he has been particularly blunt when it comes to the subject of Brexit. The EU “has had, and will continue to have, the upper hand” he wrote in his annual letter to shareholders earlier this year. “It is clear that, over time, European politicians and regulators will make many understandable demands to move functions into European jurisdictions. Paris, Frankfurt, Dublin and Amsterdam will grow in importance as more financial functions are performed there.”

This is a theme to which Dimon has repeatedly returned. And it isn’t just rhetoric. The trading hub his bank has set up in Paris serves as a demonstration of that.

The problem isn’t just unique to the financial services sector either, as Intel’s recent decision to shun the UK as a location for its new European chip factory demonstrates.

Johnson can bang on about the importance of the City of London and his desire to lure international businesses when it suits him but its leading lights have been voting with their feet.

Dimon and the other attendees will, of course, be aware that the supply chain crisis is a global one. But they will also know that the UK has experienced the worst of it, and why.

Quite what they’ve made of the government’s shameless complaining about of their domestic peers isn’t entirely clear. Perhaps Dimon will enlighten us in a future shareholders letter? That might be fun to read.

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