Starmer aims to refocus attention on growth after hit from markets

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Prime Minister Sir Keir Starmer will pledge on Monday to make Britain the “best state partner” for the world’s artificial intelligence companies, as he seeks to boost the UK’s growth prospects against an ominous economic and political backdrop.

Starmer, writing for the Financial Times, will claim Britain’s “values ​​of democracy, open trade and the rule of law” make the UK a natural location for AI companies to invest, and vow to create new “AI Growth Zones” by removing planning restrictions. “

“I am determined that the UK will become the best place to start and scale an AI business,” he wrote. “I know growth in this area cannot be state-led. But it is entirely the government’s job to ensure the right situation.”

Starmer hopes to be back on the front foot after a week in which his economic plans were battered by markets, leaving Chancellor Rachel Reeves facing the need to cut spending or raise taxes to keep her fiscal plans on track.

Reeves, who returned from a trip to China on Monday, will “haul in” on regulators this week asking them to be more ambitious in removing obstacles to growth.

Meanwhile Starmer is facing calls from Kimmy Badenoch, the Tory leader His city minister Tulip Siddique was sackedHis whereabouts are uncertain after being embroiled in a property scandal involving the ousted government of Bangladesh.

Britain’s borrowing costs rose last week Close to a 16-year high Against a backdrop of sticky inflation and fears that Reeves’ tax hike budget contributed to stagnant growth.

The sense of economic gloom was compounded by a survey of UK chief financial officers by Deloitte, which showed business optimism fell to a two-year low in the fourth quarter.

The survey found that a net 26 percent of CFOs felt more pessimistic about their business prospects than they did three months ago, marking the first time sentiment has entered negative territory since the second quarter of 2023.

CFOs said cost cutting would be a likely response to Reeves’ £25bn increase in employer national insurance contributions.

Deloitte said UK corporates expected to reduce capital spending, discretionary spending and a sharp fall in hiring from the pandemic. Nevertheless, the survey found that confidence is above the lows seen in 2020 and 2022.

Shadow chancellor Mel Stride told the BBC that “business confidence is sinking because of the government’s actions” and insisted Reeves should have stood down. His visit to China to calm the market.

But an adviser to the chancellor said: “Is he seriously saying he should have canceled his trip to stay home for the weekend to deal with a closed market? It would have been rightly seen as a market panic.”

An ally of Starmer said any suggestion that Reeves’ position was under threat was “absolute rubbish”.

Starmer continues to believe that Reeves’ October budget, which sought to stabilize public finances and shore up public services with a £40bn tax hike, will prove viable in the long term, despite market volatility.

Reeves is planning his own speech on growth, but that has been delayed until later this month before his trip to the World Economic Forum in Davos.

On Thursday, he will convene the eight regulators to explain what they are doing to boost growth. in him Mansion House Speech In November he told the watchdog: “The UK is controlling for risk, but not controlling for growth.”