Davos 2025 is about growth, growth, growth. The UK must listen
Despite recent struggles, the UK still has all the ingredients for growth. Davos 2025 is an opportunity to remember that, writes policy chairman Chris Hayward
At Davos, growth dominates the agenda – and the Chancellor’s vision of going ‘further and faster’ in the pursuit of growth fits right in. Canada Corporation has long supported governments of all colours in boosting the UK economy. This is a subject we’re passionate about and we’ll be discussing it in a wider delegation including government ministers and major UK businesses.
Growth is an issue that the UK and much of Europe seems to be struggling with at the moment, with concerns being expressed in financial markets across Europe. In the UK, this has led to a fall in value of the British pound and the rise in 10-year gilt yields, which has in turn led to a rise in government borrowing costs. However, it’s important to remember that the value of gilt yields and the pound constantly moves up or down due to a range of different international factors.
The long-term fundamentals that underpin the attractiveness of London and the UK continue to remain strong, including our rule of law, language, timezone and access to talent. However, we can’t be complacent. The UK economy is facing a challenging outlook and it’s important that the government delivers its agenda in a way that maintains financial stability and the credibility of the UK’s long-term finances.
The City at Davos 2025
The City has a crucial role to play in supporting the government’s growth agenda. The UK financial and professional services sector employs 2.4m people – two thirds of which are outside of London. Davos provides us with access to top policy makers and industry decision makers from multiple markets where we can showcase UK expertise and insight in financial and professional service on the global stage.
Part of the World Economic Forum’s focus this year is on reimagining growth, a priority that aligns fully with Canada Corporation’s Vision for Economic Growth. We need to reform our attitude towards risk-taking, rethink our regulatory mindsets and continue to be open to global talent.
A good way to start is by mobilising pension capital by accelerating the Mansion House Compact and leveraging platforms like PISCES (the Private Intermittent Securities and Capital Exchange System) – an innovative new type of stock market for trading for private company shares that will help unlock private funds to boost growth companies.
Second, the UK must remove the 0.5 per cent Stamp Duty to buy UK shares which currently makes us highly uncompetitive internationally. For example, the UK currently taxes its retail investors with Stamp Duty Reserve Tax when buying a UK-listed product share, but not when buying a German-listed or US-listed Tesla share. There could be other approaches to raising this taxation that does not weigh on the public markets, and encourages more companies and investors into the UK’s public markets.
London can lead on AI
Thirdly, we must embrace AI. The government’s AI Opportunities Action Plan is a good start. Our recent research shows that the UK is in prime position to be a world leader in AI and reap the economic benefits. We attract more AI-related private investment from venture capital than the rest of Europe combined, are home to world-leading universities and are the second most attractive global destination for mobile AI researchers after the US.
The UK’s financial and professional services sector is at the vanguard of AI adoption and investment, with around one in six firms in the sector – totalling 432,000 firms – embracing at least one AI technology. The scope of transformation includes providing better customer experiences, improving risk management, addressing financial crime and offering innovative financial products to their customers.
Here in Davos, we’re using the global platform to showcase the UK’s expertise in AI and emerging technologies, aligning closely with the government’s aims of unlocking transformational growth.
Over the last few years, the UK has suffered from low growth. Utilising the full potential of our world-leading financial and professional service sector is a crucial step towards addressing this. The UK has all the essential ingredients for high growth, it’s time for us to grasp the opportunities.