Sunak warned that the outlook for the global economy was “more uncertain and more challenging than any time in recent history” as he admitted that the UK’s growth rate was too low.
“We want it to be higher,” he told an audience of bankers and investors, including Mr Bailey, at Hampton Court Palace in London.
The Prime Minister said a “large chunk” of the productivity gap between the UK and faster-growing G7 economies like the US could be explained by “lower business investment that’s characterised the UK economy for decades”.
Mr Sunak insisted he was “taking steps to fix that”, highlighting last week’s move to make a flagship business tax break permanent.
“Make no mistake, we are cutting taxes,” he said in an opening address.
With a general election looming and Tory infighting over immigration providing the backdrop to the summit, it also emerged that Labour had hosted a breakfast on the morning of the event attended by almost three dozen business leaders, including several British chief executives.
Stephen Schwarzman, the boss of private equity giant Blackstone, praised the UK’s “pro-business” stance, adding that the company was examining opportunities in data centres and student housing across Europe, as he described the UK as one of the few places where growth was “holding up”, despite uncertainty.
He also blasted US president Joe Biden’s debt-fuelled Inflation Reduction Act (IRA) – which is offering hundreds of billions in subsidies for green investment in the world’s biggest economy.
Mr Schwarzman said: “We’re currently running deficits of $2 trillion (£1.6 trillion) a year. I’m not sure that’s a model that everyone would run out and duplicate.
“I don’t know if I would recommend that to the UK.”
Analysts at S&P Global warned that the UK faces another year of “stagflation” as high interest rates, designed to bring inflation under control, hold back growth.
So far, inflation has fallen from a peak of 11.1pc in October 2022 to 4.6pc last month, when a drop in the energy price cap pulled the headline rate down from September’s 6.7pc.
Financial markets are betting that the first rate cut, to 5pc, will come in the summer of 2024.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
