How Britain can seize the next decade

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Rula Khalaf, editor of the FT, picks her favorite stories in this week’s news.

Welcome readers, I’m backpacking in Vietnam and Laos this week, so I’ve prepared something a little different.

As readers know, the purpose of Sunday’s Free Lunch is to present analysis that counters.

So for this edition, rather than the usual synthesis of my findings, I wanted to share more of what the analysts told me. : Here’s what they say.

First, the global background: Great Britain stands out for its (relative) stability, and Germany faces an election in the US Trump is more interested in the uncertainty of fomenting.

As for trade disruption, Britain’s expertise in services and its position outside the EU puts it less in the line of fire for Trump’s tariff plans, which are more focused on trade in goods, particularly with China and the European trade bloc.

Labor has already eaten up this “sustainability dividend” with high-tax timber companies in its autumn budget. are good to be.

“The UK should pursue an independent trade policy. The advantage of being outside the EU will be reduced if the UK simply accepts the US approach to China. A multipolar world is one in which geopolitically attractive countries excel.”

Building this advantage will require a targeted approach to trade in services, which could allow Britain to export its comparative advantage in high-value services and cut red tape involved in trade with the EU, the UK’s largest trader partner, will promote supply chains.

Trump’s lack of influence is also why some Wall Street’s biggest institutions They are betting that UK stocks will correct the rest of Europe this year. They believe that banks and energy companies, which have large weights on the London Stock Exchange, may feel a boost from Trump’s prediction and low oil prices also look attractive :

But UK stocks still need a catalyst to rally equity values, I asked Hugh Gimber, global market strategist at JPMorgan Asset Management, where that might come.

“Developed market stocks have outperformed over the past decade. But the UK is underperforming in this sector, making it almost impossible to keep pace. If investors start to find more evidence that AI-related Capex is set to unlock productivity in the economy , we expect to see a wide range of recent sectors. It will certainly help level the playing field for the UK.”

Indeed, Britain ranks third in the Capital Economics Index, best placed to favor AI adoption given its large services sector and flexible labor market.

The push for Britain’s massive pension fund, the largest in Europe, could support more investment in public and private equity, both at home and abroad, but Gimber suggests it needs better leverage.

“Next to the domestic trade, £3.2 billion was raised in the last financial year, but the transaction costs for the stock exchange are a clear competitive disadvantage against other regions. It is not only about the participation of the retail investor, but it also reduces the number of new companies to list in the UK incentives.

Crusally, successful policy changes must create greater incentives for both individuals and institutions to put money to work in the UK, as well as rebuilding confidence and removing barriers.”

Several studies suggest closing duty on stocks could increase returns in the long run promoting growth.

And with strong public finances, Removing the Barriers is where Sam Dumitriou, head of policy at Recycling Britain, believes the UK could get the biggest bang for its buck.

“Britain’s bottleneck is buildings. It’s just too hard to build new homes in our most efficient places, it’s too hard to build new transport links. Hinkley Point C, the most expensive nuclear power station ever built, is involved is a six-year dispute Including “Fish Disco”.A series

We know what needs to be done. Reform the planning system so that it no longer essentially prohibits new investment in everything from homes to industry.”

The Labor Planning and Infrastructure Bill is expected in the coming months. If it can streamline regulations, speed up approvals and clear more land for development, investment could jump.

The government’s industrial strategy, due to be published this spring, is set out to actively attract private investment opportunities in key infrastructure projects. It is also expected to outline Britain’s existing strengths in areas of high demand education, renewables (wind, carbon capture and storage), life sciences, aerospace technology, artificial intelligence and creative industries. (Less red tape, broader investment incentives, and improved access to training and top talent.)

That Britain does these complex things quite well, but struggles with simpler tasks, is reason for optimism, adds Callum’s collection, ax hunting.

“Britain just needs the right policies to get back on track, not a complete institutional overhaul. It has fallen to the point where basic infrastructure, housing and energy are just about average for the advanced world, including material living standards and productivity. improvements”.

Indeed, until the past few years, Britain has struggled with political stability. Now that it has, investment has returned. Add in a few reverse trade deals and its planning reforms, and things can only get better.

Dumitriu added:

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Food for thought

Greenland is in the spotlight. Trump wants to buy the icy island for its apparent treasure trove of rare earth metals Affordable wealth in Denmark Could be all they were done. America could be better off mining at home.