French President Emmanuel Macron is “eating the UK’s lunch” when it comes to attracting global investment, shadow chancellor Rachel Reeves has said.
Reeves today told City A.M. that France was stealing investment away from British start-ups post-Brexit, with the shadow chancellor promising to help pension funds unleash billions of pounds of long-term capital into the economy.
Reeves and Sir Keir Starmer will launch Labour’s start-up review at a Canary Wharf event tomorrow morning, with the party promising a “radical plan to make Britain the high growth, start-up hub of the world”.
The Labour Business Conference is being attended by some of Britain’s biggest firms – with executives from Aviva, HSBC and Microsoft speaking – and comes as a part of Starmer and Reeves’ efforts to win over UK business leaders.
“Macron is trying in his country’s national interest to get more Venture Capital (VC) money into his country. The US through the US Inflation Reduction Act is trying to get investment into the green industries of the future in their country,” Reeves told City A.M.
“This is not a static environment – it’s a dynamic one and we have to compete globally for our share of investment.
“We find ourselves at a crossroads – we can go down the route of managed decline or we can set ourselves to the task of making this the best place to start and grow a business.”
Labour’s probe was called to address the UK’s stagnating levels of VC investment into British start-ups, which review chair Lord Jim O’Neill previously called “dreadful”.
The UK attracted around $15bn of VC funding in 2020, compared to $144bn in the US and $44.6bn in China.
London is also falling further behind New York in attracting new Initial Public Offerings (IPO), with many British start-ups now listing overseas.
The review includes calls to imitate Macron’s Tibi technology financing scheme, which sees France’s state investment bank help facilitate capital flows, and to promote start-ups incubated in British universities.
This would include using the state-owned British Business Bank (BBB) to act as a conduit between VC investors and British start-ups.
Reeves said the best way for the City to ensure more British firms list in London was to ensure they can access long-term capital funding while they are growing.
“What start-ups are saying to us is the problem is the lack of the long-term patient capital in London and in the UK, which is encouraging them to look elsewhere,” she said.
“If you find your investors elsewhere, you end up listing elsewhere.”
Mayor of London Sadiq Khan will also speak at tomorrow’s conference and will tell businesses that City Hall is “on your side, not in your way”.
“Good governments lay the foundations for businesses to thrive, so our people can too,” he will say.
“You create the wealth that sustains our communities and the jobs – that not only give Londoners an income – but a sense of dignity, of pride and of purpose.”