Why Labour must take urgent action to restore investor confidence and turbocharge economic growth

Scotland’s financial and professional services are a key part of the UK’s economic future

Almost exactly a year on from the Labour party sweeping to power, we are beginning to see how Sir Keir Starmer and Rachel Reeves plan to deliver on their ambitions to restore confidence in the UK’s economic prospects and turbocharge growth.

The spending review and now the industrial strategy have both provided more detail on the government’s vision, building on some of the positive moves the government has already made.

No one would dispute that the Prime Minister and Chancellor of the Exchequer are operating in an evolving – and often difficult – international context, and that they have acted swiftly and effectively to mitigate emerging challenges.

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Keir Starmer and Rachel Reeves have been engaging in good faith with business, but the October Budget hit business confidence (Picture: Jacob King) | PA

Good work undermined

Similarly, the government has begun a process of regulatory reform that could help stimulate business activity and it continues to show a willingness to engage in good faith with industry, including financial services. Plans to reduce energy costs for some industries, albeit on an elongated timescale, will also be welcome.

Yet it is fair to say that much of this good work had been undermined by less positive changes elsewhere. Few would dispute that the October Budget knocked business confidence at a time when momentum finally appeared to be returning to the UK economy. Further negative changes later this year may dent confidence still further.

Equally, while the government continues to favour reform, many businesses are growing increasingly frustrated at the pace of change. Above all, there is a sense that the optimism that surrounded the new government’s economic prospectus is – a year on – rapidly diminishing.

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Strong interest in Scotland

Following a recent trip to the United States to promote investment in our financial services industry, it is clear there is still strong international interest in what Scotland and the wider UK have to offer. We may have challenges around infrastructure and the general business environment, but Scotland’s financial and professional services sector continues to punch well above its weight.

The strength of our universities, the depth of our talent base, our record in innovation, our relative political stability and the clarity of our regulatory frameworks are all powerful selling points.

While economic fundamentals matter, so too does sentiment, so it is important that we address some of our weaknesses, otherwise there is a risk of the UK’s attractiveness deteriorating in comparison to other locations. The government is making efforts to address some of these challenges and recent announcements offer an opportunity to restore investor confidence.

That is one reason why Scottish Financial Enterprise is organising a Global Investment Summit, which will take place in Edinburgh this October. Convened in partnership with the City of London and the Lord Mayor, the summit will bring together major international investors, UK business leaders, politicians and policymakers to help unlock the next wave of growth.

Clear government support will send a strong message that financial and professional services remain a key part of the UK’s economic future, and that Scotland is central to that. After a year in office, the government’s probationary period is now over. The country and economy urgently need momentum – and, with its plan now in place, the government must kickstart it.

Sandy Begbie is chief executive of Scottish Financial Enterprise