Business demands green investment boost for Britain: Bosses call for UK version of Joe Biden’s £300bn Inflation Reduction Act
Britain needs its own version of Joe Biden’s Inflation Reduction Act (IRA) to boost investment and compete with the United States, a leading business lobby has warned.
The Institute of Directors (IoD) described the bill, which offers more than £300billion of subsidies to firms investing in green industries in the US rather than countries like the UK, as a ‘game-changer’.
The lobby group warned the European Union ‘is also raising the stakes’ with its own green industrial plan.
Incentives: Joe Biden’s Inflation Reduction Act offers more than £300bn of subsidies to firms investing in green industries in the US rather than countries like the UK
And in a warning to Rishi Sunak and Jeremy Hunt ahead of the Budget next week, it said the UK risks being left behind unless it introduces its own version.
Roger Barker, IoD director of policy, cautioned Downing Street against letting ‘short-term budgetary concerns’ override crucial investment.
‘It’s imperative that government and the private sector work together, otherwise the UK will find itself left behind in the accelerating race to lead the green economy,’ he said.
‘The UK deserves nothing less than its own version of the IRA to ensure that the UK becomes the global location of choice for all forms of green investment.’
But speaking to the Mail in Tel Aviv, Business Secretary Kemi Badenoch played down the idea of big subsidies.
‘If we’re subsidising one industry that means someone else isn’t getting something,’ she said. ‘So I never lean into trying to make promises to any particular industry.’
Passed by US Congress in August, the IRA has spurred hundreds of billions of green deals and increased investment in sectors such as the oil and gas industry.
Investors cash in £962m
Investors pulled £962million from UK-focused equity funds in February, the third-largest monthly outflow ever, as the FTSE 100 hit a record high, says funds network Calastone.
UK equity funds have seen net selling for 21 months in a row, it said, but investors withdrawing their cash piles pressure on the London stock market as firms worried about valuations in the UK look to the US.
Edward Glyn, head of global markets at Calastone, said: ‘The general air of pessimism over UK economic decline, weak Government finances, political chaos and rising corporate taxes seems to have accelerated a trend with consistent outflows from UK funds and inflows to global ones.’
British companies are looking to move to the US to take advantage of the subsidies.
Heavy equipment rental firm Ashtead yesterday said it will raise capital spending in the US, its largest market, as it bets the act will boost construction there.
Chief executive Brendan Horgan said: ‘Our business is performing well enhanced by the increasing number of mega projects and recent US legislative acts.’
Building materials giant CRH last week said it plans to move its primary stock market listing to New York from London.
Irish-based CRH, valued at £30billion, is increasingly focused on America, where it supplies major infrastructure projects.
It comes as the UK tries to compete for its share of the ‘green economy’ and become a world leader in battery and hydrogen production.
Last week Jaguar Land Rover’s owner, Tata Motors, asked the Government for more than £500million in subsidies to build a battery factory in Somerset.
The IoD’s Barker said: ‘The IRA is an absolute game-changer and will transform the whole US economy. This is a moment of truth now for the Government.’