John Swinney may have learned some hard truths after joining global investors in London, writes TERRY MURDEN
AS he listened to some of the biggest business players on the planet discuss their options for investing in the UK, John Swinney must have been wondering why Scotland didn’t seem to be featuring among the riches being promised to the new Prime Minister.
A record £63 billion was pledged by an A-list of celebrity investors, many brandishing a bank account several times bigger than the Scottish budget.
The final tally was more than double the amount secured at last year’s summit, enough for the new Labour ministers to get one over the Tories, though, in truth, many of the deals were negotiated by the previous government. No matter, it was a day to make Sir Keir Starmer blush with pride, while turning Mr Swinney’s cheeks green with envy.
The First Minister had travelled to the International Investment Summit, held in London’s gracious Guildhall, on the back of Scotland’s record for receiving more inward investment than any other part of the UK outside London.
However, on this occasion, its success was on a par with the national football team. Of all the deals announced on Monday, none was specifically targeted at Scotland. Dig deeper and most of the £63bn is being invested in the English regions (see list below). Mr Swinney would have returned home with only a free souvenir notepad and pencil.
The empty swag bag was a reminder that Scotland was fishing in deep water with nothing more than a twig and a length of string. That foreign direct investment record is not to be sniffed at, but it is built largely on a collection of relatively small scale deals. Undoubtedly, Scotland’s universities play a part in attracting what are mainly technology-led businesses, but – with the odd exception – they tend to be mid-sized firms or branch operations of multinationals keen to take advantage of government grants.
The London summit was on an altogether grander scale. The biggest names in international investment were not being asked to throw a few shillings at startups, or scaleups. The ask was for multi-billions in financing essential and long-term infrastructure needed to underpin a modern economy: data centres, ports, battery storage facilities and nuclear energy plants.
Amid the handshakes and smiles it must have occurred to Mr Swinney that the UK is perhaps not the basket case his nationalist colleagues like to believe. And with Scotland failing to get a share of the spoils, he must surely have wondered how it would fare as an independent country.
By cutting itself off from the rest of the UK, Scotland would no longer be entitled to take part in future London summits. Could Scotland compete by putting on such a show of its own? That must be doubtful. Investors from London, let alone those from New York, Dubai and Singapore, are reluctant to travel north of the border even for the regular tech investment events.
The last EIE showcase in Edinburgh failed to draw London investors, forcing the organisers to consider taking the show on the road. The X3 ‘Global’ Summit due to be held in the city over three-days at the end of May, was called off. There was talk of re-arranging it for later this year but there has been no further word.
It has to be said that the UK as a whole has been tarnished by political fiasco and by the unsatisfactory outcomes of Brexit, none of which have made the international business community eager to part with its cash. Sir Keir Starmer and his Chancellor Rachel Reeves have been determined to change the mood music and allow the money to roll in.
There are still obstacles to overcome. In an interview during Monday’s London summit, David Ricks, chief executive of the US pharmaceuticals company Eli Lilly, remarked that Brexit had turned the UK into “a relatively small market for most multinationals and certainly for Americans”. It was up to the UK to show it had the flexibility and agility to respond and encourage innovation, he said.
Scottish independence supporters will see this as an endorsement for getting Scotland back in the EU. But rejoining the EU without the rest of the UK would be like attending a gun club with only a few bullets in the ammunition belt. Investors would see the UK weakened by two former partners now in competition with each other, layering more regulation and cost on to the price of doing business. They would respond by diverting their investments directly into the eurozone.
A message that Mr Swinney may have picked up is that no international investor, who is able to choose where to get the best return on their money, wants to take a chance on a country that offers too many uncertainties. As Jim Wright, fund manager at Premier Miton, said: “You can have as many summits as you like, but ultimately it comes down to spread sheets and risk analysis”.
With Alex Salmond’s death at the weekend reawakening the independence debate It would be interesting to know how many of those investors who attended Monday’s summit had looked at Scotland and decided it was just too much of a risk.
Terry Murden was Editor and Business Editor at The Sunday Times Scotland, Business Editor at The Scotsman, and Business and City Editor at Scotland on Sunday. He is now Editor of Daily Business.
Monday’s agreed deals included the following:
After a weekend wobble over a minister’s ill-timed comments on employment practices, the Dubai-based transport operator DP World is investing £1bn in London ports. Manchester Airports Group is investing more than £1.1 billion in London Stansted Airport.
ABP, the UK’s largest port operator, has committed over £200 million to a joint investment with ferry company Stena Line in a new freight ferry terminal at the Port of Immingham.
Blackstone confirmed a £10 billion investment in Blyth, Northumberland, to create one of the largest artificial intelligence data centres in Europe.
CCUS investors (including Eni, BP and Equinor) reached a commercial agreement with the government that will unlock £8 billion of private investment to launch carbon capture clusters in the heartlands of the North West and North East of England.
Octopus Energy have committed to a £2 billion investment in renewable energy generation, including four new solar farms in Bristol, Essex, East Riding of Yorkshire and Wiltshire that will power up to 80,000 homes as well as breaking ground on a new 12 MW battery in Cheshire.
SeAH Wind has made an additional £225 million investment into wind technology manufacturing in Teesside.
CloudHQ is developing its new state-of-the-art £1.9 billion data centre campus in Didcot in the Midlands.
Eren Holdings confirmed a £1 billion investment in the redevelopment of Shotton Mill in Deeside, North Wales.
CoreWeave is building on its £1 billion investment announced in May and the opening of its European headquarters in London by investing a further £750 million-plus in the UK to support the demand for critical AI infrastructure. The investment in the UK is CoreWeave’s second largest investment in a country following the US.
Holtec, a major US advanced nuclear engineering company, has confirmed a significant investment of £325 million in a new factory in South Yorkshire.
BW Group proceeding with a £500 million investment, which includes new battery energy storage projects in Hampshire and Birmingham.
Haleon has received planning permission to develop a new £130 million Global Oral Health Innovation Centre in Weybridge, Surrey.
Macquarie is investing £1.3 billion into new green infrastructure including its Island Green Power solar farm in Stow. The £12bn top-up by ScottishPower owner Iberdrola includes £4bn for a wind farm off East Anglia.
Leave a Reply