Close Menu
Invest Intellect
    Facebook X (Twitter) Instagram
    Invest Intellect
    Facebook X (Twitter) Instagram Pinterest
    • Home
    • Commodities
    • Cryptocurrency
    • Fintech
    • Investments
    • Precious Metal
    • Property
    • Stock Market
    Invest Intellect
    Home»Investments»How to make sure the budget secures the investment Britain needs
    Investments

    How to make sure the budget secures the investment Britain needs

    October 14, 20246 Mins Read


    Prime Minister Keir Starmer has promised to “rip out the bureaucracy that blocks investment” in the UK. He was speaking at his government’s first international investment summit, an attempt to encourage the finance and business worlds to put more money into the country.

    But the government will need much more investment – by both the private and public sectors – than can be drummed up with one summit and an intent to slash red tape if it is to meet its economic goals. So Labour’s upcoming first budget on October 30 presents a vital opportunity to lay the foundations for an investment boost over the coming years.

    A major, long-term aim is to get the UK’s annual growth back to its pre-2008 banking crisis rate, when it was around 2% a year. The UK has been growing at about half that rate since then.

    This slower economic growth has damaged people’s living standards as well as the tax receipts the government needs to fund public services, particularly since the pressures of the COVID pandemic.

    Slow growth could be turned around by increasing investment in things like infrastructure. The UK has lagged behind comparable economies in this regard – it has had the lowest rate of investment in the G7 group of major economies for 24 of the last 30 years.

    Last year, the UK’s GDP per capita (a measure of the average income) was nearly £11,000 lower than it would have been had the economy continued to grow at its pre-2008 rate.

    Rather unusually, despite the UK’s debt recently reaching 100% of GDP – the highest amount in more than half a century – the usually fiscally conservative International Monetary Fund (IMF) has said the UK should consider focusing on investment. This, it says, could potentially boost GDP growth and thus stabilise the debt-to-GDP ratio.

    And the UK’s spending watchdog, the Office for Budget Responsibility (OBR), believes it is possible to raise economic growth through more investment. The OBR estimates that a sustained 1% of GDP increase in public investment could increase the level of potential national output by just under 0.5% after five years, and around 2.5% in 50 years.

    So, there will undoubtedly be a number of investment measures in the Budget. But how many depends, in part, on whether the chancellor, Rachel Reeves, revises some restrictions on borrowing, known as the fiscal rules. There could be adjustments such as offsetting government debt with its assets, including student loans. Reeves is reportedly looking at this possibility – which could create as much as £50 billion of additional fiscal headroom.




    À lire aussi :
    The chancellor has tied her own hands with her fiscal rules – here’s why she should change them


    She could also re-institute the previous Labour government’s golden rule: only borrow to invest. This could separate out capital investment (spending on things like roads and other infrastructure), which is needed to support long-term growth, from day-to-day spending on public services. It would also increase the transparency of what the borrowing is for, and whether it can deliver growth that can help stabilise the debt-to-GDP ratio.

    These changes would prevent public investment from being cut in order to meet one of the current fiscal rules Reeves is adhering to. That is, that debt must be falling as a percentage of GDP over a rolling five-year period. As it stands, this rule restricts how much Reeves can borrow – even if that is what the country needs to grow economically.

    A change to this rule could help the government fund its two new initiatives to promote public investment: the National Wealth Fund, which requires just over £7 billion over the parliament, and GB Energy, which needs about £8 billion.

    Convincing investors

    Investments in the National Wealth Fund and GB Energy could further raise economic growth by “crowding in” private investment. For example, investing in infrastructure like a road entices private firms to invest too, perhaps in new premises or more staff, because a better transport link will make these firms’ investments more profitable.

    The government’s aim is to bring in three times the public investment in the National Wealth Fund to invest in infrastructure and key sectors. GB Energy likewise intends to bring in private investors to support the green transition that can generate new output and jobs.

    But targeting growth will take more than just finding the money. It also requires a regulatory approach and planning system that generates confidence among private investors to put their money in alongside the government.

    The impending Budget won’t set out all of the details that investors are looking for, but they will expect to see the growth strategy and assess whether it is credible. For instance, successive governments have struggled with planning reform, so investors will be justified in wondering what will be different this time.

    UK chancellor Rachel Reeves in Downing Street

    Rachel Reeves could potentially give herself an extra £50 billion to spend if she changes the fiscal rules.
    Fred Duval/Shutterstock

    Investors will also be on the lookout for a more certain regulatory regime over several years. The main impediments to investment tend to be uncertainty, including over regulation and planning, as well as being able to find workers with the right skills. This Budget is an opportunity to set out what the government plans to do in both areas over its five-year parliament.

    One positive signal to investors would be if the Budget sets out a broad definition of “capital”. For physical capital like a factory to be properly used, it requires people (human capital). And we hear a lot about green assets and digital assets, which essentially means that capital can be physical, human or green, as well as digital.

    By outlining its policies around infrastructure and skills, as well as its environmental and digital policies, any proposed growth strategy would be more holistic and likelier to have a positive impact on growth.

    But the difference between a strategy and a great strategy is in its execution. The Budget will almost certainly set out various fiscal policies to support growth. But the ability to deliver this strategy will determine whether it is truly a budget for growth.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

    Related Posts

    Trump has bought $103 million in bonds since first day in office

    Investments

    How much should you allocate to your IRA?

    Investments

    How to play bonds amid Fed uncertainty

    Investments

    Cat bonds not pressuring reinsurance pricing, main competition is traditional: J.P. Morgan

    Investments

    A refugee’s journey to $20m property portfolio

    Investments

    UK legend John Wall announces retirement after 11 seasons in NBA

    Investments
    Leave A Reply Cancel Reply

    Top Picks
    Cryptocurrency

    Next Cryptocurrency to Explode, 21 March — UPCX, Form, Reserve Rights, Flare

    Stock Market

    Urbint raises $35M to boost storm response tech for utilities facing relentless hurricane season

    Commodities

    Efforts to improve farm roads and agricultural sector underway in Kiulu, says assemblyman

    Editors Picks

    A-Mark Precious Metals Sets Fiscal First Quarter Earnings

    October 16, 2024

    MP to attract investments with pro-industry policies: CM

    February 15, 2025

    New Cryptocurrency Releases, Listings, & Presales Today – opTrade AI, POPG, DPIN

    March 8, 2025

    Great Southern Copper étend la minéralisation de cuivre au projet Chili -Le 04 février 2025 à 11:06

    February 4, 2025
    What's Hot

    Investing in stability isn’t cheap, and Canadian utilities are getting pricey

    August 18, 2025

    Rise of stablecoins reshaping global currency regime

    August 10, 2025

    Cryptocurrencies Dip After Report of US Probe of Tether – BNN Bloomberg

    October 25, 2024
    Our Picks

    Northisle Copper and Gold publie les résultats de forage de la cible West Goodspeed en Colombie-Britannique

    July 2, 2025

    Custom Commodities rebrands as Custom – The Gilmer Mirror

    August 22, 2024

    Un automobiliste tué en percutant un câble tendu en travers d’une départementale de Dordogne

    April 2, 2025
    Weekly Top

    Flight Mode Ban: NEFGAD faults NCAA, petitions NOTAP over Nigerian Airplanes Technology Status

    August 20, 2025

    How much should you allocate to your IRA?

    August 20, 2025

    Canadian fintech rides smaller wave after last year’s record high

    August 20, 2025
    Editor's Pick

    Groundbreaking digital technology designed to deliver better care at Wolverhampton hospital given ministerial stamp of approval

    August 14, 2025

    Central bank digital currencies show clock is ticking for cash

    August 9, 2024

    All Metal Gear Solid games in chronological order

    August 18, 2025
    © 2025 Invest Intellect
    • Contact us
    • Privacy Policy
    • Terms and Conditions

    Type above and press Enter to search. Press Esc to cancel.