LORD Jitesh Gadhia, an investment banker and Member of the House of Lords since 2016, spoke on the significance of Foreign Direct Investment (FDI) in the country during a recent House of Lords debate.
His speech addressed the country's current investment landscape ahead of the upcoming International Investment Summit and the budget.
Commending Lord Harrington for securing the debate, Lord Gadhia referenced the Harrington Review’s recommendations, describing them as "necessary hygiene measures to revive investment."
He also highlighted the need for the reinstatement of the Industrial Strategy Council, and expressed hope that the current government will fully embrace this agenda. "Global investors do not care much for domestic political tribalism," he said, stressing that predictability, certainty, and consistency are key factors in maintaining investor confidence.
Lord Gadhia identified three key challenges affecting FDI in the UK. The first was the impact of Brexit, which, he noted, has caused a significant drop in FDI projects. "Since 2016-17, we have seen a 30 per cenrt drop in the number of FDI projects," he said, adding that the situation would be worse without greenfield investments in renewables, particularly offshore wind.
Secondly, he raised concerns over the tax regime. While the permanent full expensing of capital expenditure could have a positive effect, he noted that changes to the non-dom tax regime may have discouraged high-net-worth individuals from investing in the UK.
He questioned whether the Treasury’s assumptions regarding the economic impact were accurate and asked whether the projected £2.7 billion annual revenue by 2028-29 would be met. Lord Gadhia also warned that upcoming changes to the capital gains tax regime could further harm FDI, calling the politics of envy "economically destructive."
The third issue raised was general investor sentiment towards the UK. Lord Gadhia pointed out that sentiment is influenced by even small factors, such as planning delays and grid connections. He also suggested improving experiences for incoming investors, particularly at Heathrow Airport, which he described as "the UK’s shop window."
Bobby Bawa