Natwest chair: Boost investment in UK or risk ‘inter-generational crisis’

The chair of Natwest, Rick Haythornthwaite, has warned that the UK is facing a "moment of national crisis" that can only be resolved through increased investment in the country's struggling economy. Haythornthwaite, who has previously chaired the boards of Mastercard and Ocado, stated that years of political instability, poor decision-making, and inadequate investment have hindered the UK's growth potential, putting the nation on a path to a "very, very difficult national debt situation" and creating "inter-generational crisis."

The warning comes in the form of a new report called "Neglect," the first of five papers in a series by the 2030 Prosperity Alliance, which Haythornthwaite co-chairs. The report highlights that over the past 30 years, the average G7 economy has invested £2 trillion more in its economy compared to the UK. The alliance, which also includes the chairs of Diageo, National Grid, Barratt Redrow, and Reckitt, points to factors such as an abundance of rules and regulations, risk-averse attitudes, inconsistent political messaging, and a proliferation of watchdogs and legal processes as the main reasons for the lack of investment in the UK.

Even if investment levels were to increase by 4% annually, Haythornthwaite estimates it would still take a century to close the £2 trillion investment gap between the UK and its peers, including the US, France, and Japan. The report suggests that the government's Public Financial Institutions (PuFins), such as the British Business Bank and National Wealth Fund, could play a crucial role in bridging this gap.

However, Haythornthwaite emphasizes that the majority of investment should come from businesses themselves, as recent macroeconomic shocks, such as the pandemic and the Iran war, have led many firms to postpone their investment plans.

While acknowledging the challenges, Haythornthwaite stresses that businesses must step up and partner with the government to create an environment with the stability and predictability necessary for successful investment. British firms have historically invested more in branding and market research than in research and development, he notes.

He concludes that addressing the UK's investment gap requires a collaborative effort between the government and the private sector, given the current unstable and unpredictable political climate.