New foreign investment in the UK is frequent, and the road to economic recovery is long

The British government recently announced that it will host an international investment summit on October 14, which is aimed at injecting new vitality and growth into the sluggish economy by increasing efforts to attract foreign investment. The summit, as an important economic diplomacy activity after the new government came to power, not only brought together the executives of Google, Wayve autonomous driving company and Bofeng Financial and other well-known global enterprises, but also carried the deep expectations of the British government to reshape the investment environment and promote economic recovery.

Jonathan Reynolds, business secretary, has publicly expressed concern that the UK has lagged behind countries such as France and Spain in attracting foreign investment in recent years and vowed to reverse that with an upcoming industrial strategy to restore the country's position as a global investment destination. He stressed that the new government will be committed to building a more open, transparent and attractive investment environment to meet the challenges of global economic recovery in the post-pandemic era and provide solid fiscal support for investment in public services.

The reality, however, is grim. At present, the UK faces a number of macroeconomic challenges, including weak economic growth, lack of leadership in emerging industrial sectors and unresolved domestic budget issues, which have increased the difficulty of attracting foreign investment to varying degrees. Industry experts pointed out that although the holding of the investment summit will undoubtedly send a positive signal to the outside world, in the short term, the UK still faces many obstacles and uncertainties in order to significantly boost the economy and attract a large number of foreign investment.

In particular, the overriding challenge for the UK government is how to balance fiscal pressures with investment incentives. As the "painful" budget on October 30 approaches, it is widely expected that the government will have to raise taxes and other means to plug a £22bn deficit in the public finances. This fiscal tightening will undoubtedly pose some resistance to foreign capital inflows, as investors tend to prefer long-term investments in a favorable tax, stable and supportive policy environment.

In addition, vacancies in key government positions further aggravate the difficulty of attracting capital. The position of investment minister, in particular, is still unsettled, not only affecting the development and implementation of the government's industrial strategy, but also raising questions about the government's ability to meet economic challenges. As a number of business leaders have said, the UK needs to take more decisive and robust action to attract foreign investment to reassure investors and boost market confidence.

It is worth noting that despite the challenges, the UK has shown some competitiveness in attracting foreign investment in the tech sector. Amazon Web Services (AWS) has announced that it will invest around £8 billion in data centers in the UK over the next five years, which not only demonstrates the UK's strong position in the digital economy, but also sets a good example for the government to attract more technology investment. In the future, the British government is expected to continue to make efforts in this field, by providing more preferential policy support and more complete industrial supporting services, to attract more global leading technology companies to settle in the UK.

However, to truly achieve full economic recovery and growth, the British government needs to make efforts on a number of fronts. First, the government should speed up the formulation and publication of a clear industrial strategy and investment policy to provide investors with clear and stable policy expectations. Secondly, the government should increase investment in infrastructure construction, especially in the upgrading and expansion of infrastructure in key areas such as transportation, communication and energy, so as to improve the investment environment and reduce the operating costs of enterprises. In addition, the government should strengthen cooperation and exchanges with the international community, actively participate in the reform and improvement of the global economic governance system, and provide more opportunities and platforms for British enterprises to expand overseas markets and attract foreign investment.

Although the International Investment Summit hosted by the British Government provides an important opportunity and platform for boosting the economy and attracting foreign investment, there are still many difficulties and challenges to overcome in order to truly achieve this goal.