LONDON (Reuters) -British finance minister Rachel Reeves will urge company bosses to invest in the UK when she travels to Davos this week, seeking their help to lift slow national economic growth that contributed to a market selloff this month.
Reeves and Prime Minister Keir Starmer were elected in July on a pledge to boost living standards and rebuild British infrastructure and public services after 14 years of often chaotic Conservative government.
But a move to raise 25 billion pounds ($30.7 billion) through payroll taxes has prompted howls of protest from employers and a surge in borrowing costs emphasised how Reeves could be forced to cut already stretched government spending or hike taxes again, further dampening growth.
In the government’s latest bid to reassure business, Reeves said Britain was one of the most exciting places for companies to invest, “with a history of innovation, a skilled workforce and a stable government that backs business”.
“The time to invest in Britain is now,” she said in a statement.
She is expected to talk up her plans to cut regulation and ease planning rules when she meets business leaders including JPMorgan CEO Jamie Dimon and Goldman Sachs boss David Solomon.
‘DEATH SPIRAL’?
The meeting of the World Economic Forum at the Swiss town of Davos comes after the International Monetary Fund last week bumped up its British growth forecast for 2025, while a PwC survey on Monday ranked Britain as the second most investible country after the United States.
But the surge in borrowing costs – part of a global market selloff – focused attention on Britain’s stubborn inflation, high debt levels and reliance on international investors.
Ray Dalio, the billionaire founder of hedge fund Bridgewater, told the Financial Times on Tuesday that Britain could be heading for a debt “death spiral” in which it has to borrow more to cover its rising interest costs.
“When you get to the point that you have to borrow money to service the debt and interest rates are rising, so that debt service payments rise, so you need to borrow more money to pay them, you’re in what the markets call a death spiral,” he said.
“As those risks increase, everybody looks at that need to borrow more money at higher interest, which creates [a] self-reinforcing debt deterioration cycle.”
The Davos meeting this year comes as global leaders are bracing for looming tariffs from U.S. President Donald Trump, who was sworn in to office on Monday.
($1 = 0.8155 pounds)
(Reporting by Muvija M and Kate Holton; editing by Elizabeth Piper and Andrew Cawthorne)
