Reports of civil unrest in the UK will not have helped the Chancellor’s charm offensive in the US and Canada, says TERRY MURDEN
While England’s towns and cities were being trashed and Scotland fretted that it might be next, the Chancellor Rachel Reeves was calming nerves among her North American hosts as her tour of financial institutions and energy companies risked turning into a damage limitation exercise. Scenes of rioting back home were not the best way to convince cash rich pension funds and data managers that the UK was a safe home for their money.
Over the past week she has been on a three-day charm offensive in Wall Street and Toronto and her timing could not have been more inauspicious with a global stock market rout accompanied by headlines of rioting in British cities and the Tesla and Twitter owner Elon Musk warning of civil war.
One thing investors look for as a haven for their money is political stability and the past few days have risked the UK’s reputation as an oasis of calm amidst tensions in other parts of the world. Attempts to brush off the violence as a brief outpouring of frustration in pockets of urban deprivation did not impress governments around the world. Nigeria, Malaysia, India and Australia were among those to urge caution among their citizens who planned to travel to the UK and as Ms Reeves arrived in Toronto the Canadian government updated its own travel advice.
It left Ms Reeves’ offer of a robust nation built on “stability, investment and reform” looking a little bruised as she explained her call for private sector investment to help build an economy that has been holed by a huge overspend by the Treasury.
In a busy schedule she met representatives from BNY, Vanguard, Soros Fund Management, The Carlyle Group and Franklin Templeton. In Toronto, she was re-acquainted with Mark Carney, the former governor of the Bank of England, who now chairs Brookfield Asset Management.
In her favour is that she is a new arrival into the fraternity of financial movers and shakers and, as such, has no record of ministerial mishaps. As such she had no baggage to hide and her hosts would have been keen to hear more about the new Labour government’s plans.
Her eagerness to get things done will have gone down well in a continent known for moving quickly and on a large scale. They will forgive the civil unrest as not so unusual in a world beset with anger, as long as it does not become a recurring feature that threatens economic stability.
Canada’s Maple 8 pension funds have invested billions of pounds in the UK economy in recent years and Ms Reeves hopes her trip will have done enough to persuade them to do more. She has already called on UK funds to pull together in a Canada-style operation that would boost investment and “fire up the economy”.
While her hosts may still be smelling the smoke of burning fires in British cities Ms Reeves did not return to the UK empty-handed, having confirmed a number of attendees for her showcase international investment summit on 14 October, two weeks before her maiden budget.
In that statement she may need to re-assess the decision to impose a higher levy on oil and gas firms, a move designed to hasten the shift to green energy but one that could also weaken the UK’s grip on energy supply, rather than strengthen it. Big Oil is already scaling back on green investment and on its commitment to the North Sea in a way not seen in Norway. Ms Reeves won’t win friends among international investors and energy firms with home-grown policies that are seen as a massive own goal.
The content of her budget will doubtless call on whatever emerges from her North America trip, but the events in England and Northern Ireland should also focus her attention on what she can do to quell the anger of those who took to the streets.
Immigration may not be her direct responsibility, but there is deep-seated anger amongst the urban poor in the UK who feel ignored and humiliated as they see illegal incomers receive handouts and accommodation whilst their own benefits are cut and they are pushed further down waiting lists. These are matters that are in Ms Reeves remit and a failure to address them will plant the seeds of further unrest.
Terry Murden was Scotland editor and Business Editor at The Sunday Times, Business Editor at The Scotsman, and Business and City Editor at Scotland on Sunday. He is now Editor of Daily Business
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