Lawyers Join Business Leaders In Reflecting Concerns Raised At Investment Summit

On the eve of the forthcoming budget, lawyers have reminded the government of the warnings expressed by business chiefs at the recent Investment Summit over the risk of stifling investment with increased financial burdens on business.

With chancellor Rachel Reeves set to deliver her first budget on 30 October, lawyers at Irwin Mitchell are reminding the government of the advice given at its own Investment Summit by global business leaders on 14 October.

Andrea Rossi, the boss of London based M&G and one of the event sponsors, welcomed the prime minister’s words on reducing regulation, but warned the summit of the risk of tax rises in the budget, saying: “…you’re not going to grow the economy if you tax the economy too much.”

Reeves was quick to reassure business, pointing out that business taxation remains a key part of the government’s growth plan, with Corporation Tax set to be capped at 25% for this parliament.

The warnings follow publication of the latest FDI statistics by the ONS, which showed the value of the UK’s inward FDI position had increased by £126.8 bn, with the financial services sector seeing the largest increase in inward FDI earnings at £8.4bn

Irwin Mitchell’s regular report about the attractiveness of the UK to overseas investors revealed in July that London remains the most attractive city for investment in the UK. Outside the capital, Brighton and Edinburgh are making their mark, with key northern cities showing the potential they have with the right support – support the government will be counting on Investment Zones and Freeports to help deliver. The next Irwin Mitchell report is set to be published in November.

Expert Opinion

“On the eve of the budget, the warning of business leaders will be a key part of the advice the chancellor will be asked to take on board.

“With talk of spending cuts for various departments, Reeves will be walking a tightrope between the need to find savings, versus the risks of taxing too heavily and stunting growth, a hard thing to do in the wake of the government’s own Investment Summit.

“While commitments on Corporation Tax remain, coupled with pledges not to raise taxes on working people, trade offs must follow and don’t rule out tax changes elsewhere. A hike in National Insurance contributions for business is a move Reeves could consider.

“Reducing red tape and resisting tax rises are important as the government looks to make the UK a stable place to invest. Poppy Gustafsson’s appointment as investment minister, coupled with foreign secretary David Lammy’s ‘reset’ with Europe are important for giving confidence that the UK is open for business but this must be backed by delivering the right economic conditions.

“Irwin Mitchell’s reports show that London remains the UK’s jewel in the crown for FDI, buoyed by its financial services sector, so news the UK Infrastructure Bank headquartered in Leeds will now operate as the National Wealth Fund, pumping capital into green technology is a welcome boost for the north.

“The ghost at the Investment Summit table was and remains the forthcoming budget. For all the talk of reducing regulation, many will see the incoming re-employment regulation as a challenge to that claim, while business believes it will be asked to bear some of the incoming taxation burden.

“In order for the government’s much-vaunted growth strategy to bear fruit it will need to walk a fine line between balancing regulation and tax if it wishes to be remembered as the most pro-business UK government ever. The budget will give us an early indication of how likely that will prove to be.” Bryan Bletso, Head of International at Irwin Mitchell