Rachel Reeves, the Chancellor, has made attracting foreign investment a priority as she seeks to upgrade Britain’s infrastructure and boost economic growth.
However, business leaders have accused Ms Reeves of talking down the economy, while widespread speculation that she will change Britain’s debt rules to borrow more have helped to drive an increase in UK borrowing costs and mortgage rates.
Fears are also growing over a capital gains tax (CGT) raid, despite warnings that increasing the rate by too much would backfire and lose the Treasury vital revenue.
Analysts said that a bounceback for the economy in August risked being short-lived as fears of tax rises in the Budget hit confidence.
The Office for National Statistics (ONS) said on Friday the economy grew by 0.2pc in August, after flatlining for two months.
Ms Reeves described the boost to the economy as “welcome news” and insisted she was “not wasting any time on delivering on the promise of change”.
But analysts said the rest of the year looked more uncertain, with Sir Keir Starmer’s warnings of a “painful” Budget blamed for plunging consumer and business confidence in September.
Ben Jones, at the Confederation of British Industry, said: “Our surveys suggest that businesses may have tapped the brakes again in September amid speculation over potential Budget announcements. Anecdotally it’s clear that some firms have paused hiring and investment decisions pending more clarity over the direction of the new Government’s economic policies.”
The summit in the City of London is due to be attended by hundreds of business chiefs, including representatives of private equity and sovereign wealth funds, and aims to raise billions of pounds.
Kevin Hollinrake, the shadow business secretary, said DP World’s reversal was a damning indictment of the Government’s performance so far.
He said: “On the eve of this much-vaunted inward investment event, this is a body blow for the Government and shows that Labour cabinet ministers have never been in business, don’t understand business and don’t know how to talk to business. They just haven’t got a clue.”
