By Alistair Smout
HAMPTON COURT, England (Reuters) -Prime Minister Rishi Sunak announced 29.5 billion pounds ($36.8 billion) of private sector investment in Britain at a gathering of global executives on Monday aimed at catapulting the country back to Europe’s top spot as a destination for foreign money.
After the government last week offered permanent tax breaks for businesses to modernise plants and machinery, Sunak is hoping foreign investors will help speed up Britain’s moribund economy.
Australian funds IFM Investors and Aware Super will pump 10 billion pounds and 5 billion pounds, respectively, into projects ranging from infrastructure and energy transition to affordable housing, Sunak’s office said in a statement.
Spanish power giant Iberdrola would add 7 billion pounds to its investment plans in Britain, which include transmission and distribution electricity networks, the statement said.
Iberdrola said it would now be investing nearly 14 billion euros in Britain by 2028.
Microsoft will invest 2.5 billion pounds in artificial intelligence infrastructure.
“Your decision to choose to invest in Britain is a huge vote of confidence in our country’s future,” Sunak told the investment summit at London’s 16th-century Hampton Court palace.
Britain, like many other countries, is seeking private sector investment to help overhaul its economy for the net-zero era and to build the kind of infrastructure that its stretched public finances cannot fund on their own.
Investment minister Dominic Johnson said that Britain would welcome investments from China to help meet those goals.
But several major investors have said the political and regulatory uncertainty triggered by the 2016 Brexit referendum vote and subsequent political turmoil have diminished Britain’s appeal while other countries have made themselves more attractive for foreign direct investment (FDI) flows.
France has overtaken Britain as the European country with the highest number of new FDI projects. President Emmanuel Macron announced 13 billion euros ($14 billion) of investment commitments in France at a similar FDI gathering in May.
Britain has emphasised the value of investments, rather than the number of projects. Sunak said new funding for industries such as clean energy, life sciences and advanced technology would create high-quality jobs across Britain.
Britain’s government acknowledges it needs to do more to compete as laid out by a review launched after the country missed out on some high-profile investments.
Financiers Stephen Schwarzman from Blackstone, Jamie Dimon from JP Morgan Chase, David Solomon from Goldman Sachs and Aviva’s Amanda Blanc were among those attending the event.
King Charles later hosted a reception at Buckingham Palace on Monday evening, where he met attendees including Mansoor Bin Ebrahim Al-Mahmoud and Hamed bin Zayed Al Nahyan, the leaders of the sovereign wealth funds of Qatar and Abu Dhabi respectively, and Nissan’s Chief Executive Makoto Uchida.
Britain now lags France and Germany in perceived attractiveness for FDI, according to accountancy firm EY. Business minister Kemi Badenoch called for ideas from attendees on what should be done differently “rather than sticking to the status quo.”
Nissan said on Friday it would build electric cars at its plant in northeast England, but competition between states for investment had stepped up in the wake of the United States’ Inflation Reduction Act.
Sunak said that as the pound was not a reserve currency like the dollar, “an approach that has got significant deficit-funded subsidies is not good”.
“I don’t think subsidy races are sensible… government’s role is to create the conditions for the private sector, through regulation or other means, to make the investments that are necessary.”
The 10-billion-pound investment plan for the UK of IFM was a significant jump from the original announcement last year of 3 billion pounds, while all the other projects announced by the government were new, a government official said.
($1 = 0.9168 euros)
(Writing by William Schomberg and Alistair Smout, Additional reporting by Paul Sandle, Editing by Louise Heavens, Mark Potter and Bernadette Baum)