Britain must get competitive or lose a generation of business leaders
Taxation is not an ideological battleground but a matter of national interest. If global rivals such as New York or Singapore offer stronger incentives, it is just inevitable that operations and individuals will follow, says Chris Hayward
Restoring economic growth has become the defining challenge of our national life. And against a backdrop of geopolitical tension, economic fragmentation and rapid technological change, the challenge is all the starker.
Later this week, I’ll address the annual Policy Committee Dinner, an event attracting a cross-section of senior political, business and financial services leaders, and underscoring the City Corporation’s role as a critical convenor for the UK’s growth agenda.
I will be emphatic – on the three “T”s (tax, talent, and technology), challenges that were once marginal, are now existential.
The message from business leaders is remarkably consistent. Costs are rising. The global competition for jobs, investment and high growth firms is becoming more ruthless by the month. And investors are contending with the most profound shift in financial market infrastructure since the 1980s.
We should not waste time waiting for a silver bullet – or obsess over one, singular reform that can solve all our problems. The UK’s economic history shows that progress is often achieved by a series of small, deliberate interventions – practical steps that make the economy more competitive, year after year.
Take just one example. If the UK had maintained its historic two per cent trend growth rate from the 1970s to 2010, instead of drifting closer to 1.3 per cent, the missing 0.7 percentage points would have been worth around £17.5bn to the economy last year. A decimal point on a spreadsheet, but a colossal difference for public services, regional investment and the long-term health of the economy.
Competitiveness must return to the centre of policy – and fast. Government must act urgently. Taxation is not an ideological battleground but a matter of national interest. If global rivals such as New York or Singapore offer stronger incentives, it is just inevitable that operations and individuals will follow.
Britain does not need to compete with zero tax jurisdictions, and nor should it. But it does need a framework that reinforces the UK’s strengths, rather than eroding them. The risk is clear: without a more competitive posture, a generation of founders and innovators may decide that success means selling early, listing elsewhere or relocating entirely.
The government’s decision to introduce a three-year moratorium on stamp duty for London IPOs is exactly the kind of step we need to see. It shows that targeted, incremental policy shifts can change behaviour and restore confidence.
But a wide gap remains between early-stage success and public listing. And it’s here that we must focus in the coming months – and it’s to address this gap that I’ll be making the case for tax changes to ensure high growth firms stay in the UK.
Alongside tax, Britain must recognise that a digital big bang is well underway. Tokenised assets, instantaneous settlement and fully digital wholesale markets are no longer hypothetical, they are already reshaping global finance.
Dublin, Singapore and New York are moving at speed
Competitors are moving at speed. Dublin, Singapore and New York are upgrading infrastructure to host digital trades at scale. The warning is unambiguous: if we don’t build the infrastructure, we won’t host the transactions. This is a financial revolution – we either lead it, or we lose it.
In this context, the government’s commitment to appoint a Digital Markets Champion is both timely and essential. And the City Corporation pledges to do everything in our power to support this agenda.
Finally, the UK needs more confidence in itself. Britain confronts a crisis of self-belief, even as overseas investors continue to deploy billions into Aberdeen, Edinburgh, Manchester, Birmingham and London. Wherever I go – across Europe, Asia, America and the Gulf – investors consistently praise the UK’s universities, legal system, innovation culture, global talent base and political stability. The challenge is persuading Britain to see itself with the same clarity. Self-doubt is an indulgence we can no longer afford.
The coming months will test whether the UK is prepared to match its potential with purpose. The fundamentals remain strong: world-class talent, deep capital pools, global reach and institutional advantages which are the envy of other markets. But strengths alone do not guarantee success. Securing the next era of British growth will demand urgency from government, ambition from industry and a collective willingness to lead rather than lag.
Chris Hayward is policy chairman at Canada Corporation