British companies need to take more risks investing abroad, according to the Lord Mayor of the City of London, who said he was “haranguing” bosses to seize opportunities in booming overseas economies.
Alastair King told the Financial Times on a visit to Mumbai that overly cautious UK financial and legal firms needed to “get on with it” and do “large amounts of business with dynamic, growing markets, such as India”.
“We have got to get back into the habit of starting to take risk again,” said King, who leads the City of London Corporation, the local government of the UK’s financial district.
He added in an interview that he was trying to “raise the horizons of British businesses” and “do some haranguing to the home team and say: ‘Get on with it, get out there, bang on doors, jump on planes’.”
King’s call comes as the UK government pushes to boost economic growth, including by reshaping the country’s regulatory landscape, and relaunches talks with India over a long-awaited trade deal.
The world’s most populous country is going through a broad economic slowdown but still has the fastest GDP growth rate of any major country. Last month the IMF forecast that the UK economy would grow by 1.6 per cent in 2025, compared with growth of 6.5 per cent for India.
The Covid-19 pandemic, Brexit and the crisis in the UK pensions market in September 2022 after then prime minister Liz Truss’s “mini” Budget had led to heightened “risk aversion” in Britain’s financial, legal, professional and maritime service industries, King said in an interview.
While those sectors were “still world class, the missing ingredient is a bit of confidence”, said King, whose official theme for his year as the City’s figurehead is “growth unleashed”. “It just needs a little bit of push to get it back out.”
King, founder and chair of Naisbitt King Asset Management, last year hit out at a culture of “safetyism” in the Square Mile, saying “regulatory reform and mindset reform” were needed to encourage risk-taking.
King, who previously ran an infrastructure fund in India for almost a decade, said strong domestic competition and local currency controls meant “it was not [always] easy” to invest in the country.
But his experience showed “I know what I’m talking about” and “it can be done”, he added.
The UK’s direct investment to India has dwindled from a high of more than $10.5bn in 2016 to $2.2bn last year. Many foreign and local companies privately complain about perennial difficulties doing business in India, including suffocating red tape, bureaucratic inertia and graft, and opaque and onerous tax regulation.
Prime Minister Narendra Modi has made removing investor bottlenecks one of his top priorities, with his government recently pledging to slim down tax and regulatory burdens.
“My perception is that it’s easier to do business now as a foreign investor than it was when I was doing it,” King said, citing a new coastal road easing Mumbai’s infamous congestion and the growing offshore GIFT City financial hub in Gujarat.
His visit came days before Jonathan Reynolds, UK business secretary, arrived in New Delhi for two days of discussions with Indian commerce minister Piyush Goyal over a bilateral trade deal. Talks over an accord were stalled by elections in India and the UK last year.
Advanced manufacturing, clean energy, financial services, and professional and business services are among the sectors in which UK officials believe a trade agreement could bolster opportunities for British businesses and consumers in India, which has a population of 1.4bn.
But people briefed on the talks said a final pact remained stuck on a small set of points, such as social security payments and UK visas for short-term Indian workers.
“It’s going to be a tough set of negotiations,” King said of the talks. “I’ve got every confidence in the negotiators to try and thrash out [a deal], but I don’t think there’s any desire to come up with a free trade agreement for the sake of a FTA.”
