Is Britain on the cusp of a scientific and technological revolution? Simon Carter, the boss of the property giant British Land, appears to believe that it is.
The company surprised the commercial world last month by swooping in to buy Life Sciences REIT, an investment group specialising in backing laboratories and innovation.
It was a sudden change of direction away from British Land’s traditional investments in City of London offices and retail parks such as Bluewater. And it reflects Carter’s conviction that this country is set to become Europe’s Silicon Valley, with big tech queuing up to invest here.
Which can only be good news. Because tech, AI and life sciences could unleash a period of extraordinary growth for Britain.
And whisper it, but there are signs of that boom already beginning to emerge. London’s commercial property market is flourishing, not just with tech firms queuing up for office space in the City and the West End, but with financial groups, consultants, and international law firms too. And at a pace not seen since the uncertainty of the Brexit vote in 2016.
Despite the pain caused by Labour’s mismanagement of the economy, despite the relentless tax rises, the high inflation and interest rate levels that have trashed the housing market, there are green shoots of hope.
Because of the pain, there has been what economists term ‘consolidation’ –households and businesses drawing in their horns and paying down their debts. And history shows us when this happens there is usually a recovery as the entrepreneurial and aspirational skills of Middle England and commerce are again unleashed and foreign investment accelerates.
Companies and Britons have hugely reduced their exposure to debt since the 2008 financial crisis, giving them the flexibility to spend and invest after almost two decades of caution.
Consumer debt (including mortgages) has plummeted from an average of 156 per cent of income to a more modest 121 per cent.
Companies have also been cleaning up their balance sheets. Where non-financial firms are concerned, debt in 2008 stood at 90 per cent of capital. Since then, it has been reduced to 64 per cent. This means there is considerably more spending power among those firms.
It is too early to pull out the bunting quite yet. This woeful Labour government is dangerously anti-business and public debt at close to 100 per cent of national output are deeply alarming, writes Alex Brummer
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What will it really take for Britain to fulfil its big-tech potential and boost living standards for all?
The energy, enterprise and entrepreneurship of Britain’s free market economy never went away, despite two of the most savage tax-raising budgets in the nation’s history under Labour.
It all means that far from being doomed, Britain could see a surge in growth that lifts prosperity and living standards.
This week the Standard & Poor’s purchasing managers’ index reported that manufacturing output in Britain had rocketed to its highest level in 17 months. And that after a dire period following the election, new orders for exports climbed for the first time in four years. Business optimism is at its highest level since before Rachel Reeves’s first budget in October 2024. ‘Rates of output and order book growth accelerated, while new export business rose for the first time in four years with Europe, China and the US, the main recipients,’ said Rob Dobson, S&P’s head of global market intelligence.
The S&P index also shows that services, which comprise 80 per cent of Britain’s output, experienced the fastest increase in five months with a notable jump in investment sentiment.
Lloyds Bank’s business barometer is similarly upbeat about Britain’s prospects, reporting that the confidence of companies in their own trading prospects has jumped to a three-month high of 59 per cent. And even though the labour market has stalled since Reeves’s first budget, more than half the firms monitored by Lloyds say they are preparing to increase their headcount.
‘Businesses start the year with renewed confidence to deliver for customers and capture growth opportunities,’ said Paul Kempster, Lloyds’s managing director for commercial banking.
The resilience of the British economy, as it emerges from under the dark cloud of Labour’s £60billion of tax raising, is something of a miracle. As a City Editor, who monitors the finances of our greatest companies, it comes as no surprise. Yes, pubs and hospitality are suffering under misplaced and ill-informed government policies.
But industry-leading companies such as pharmaceutical group AstraZeneca, engineering groups Rolls-Royce and Babcock, and firms using AI such as Relx, are quietly going great guns.
When I talk to the leaders of these firms, they are surprisingly optimistic about the future of Britain as it recovers from a period of unprecedented political and economic turmoil and embraces an AI future.
Similarly, the British retailers that have managed to navigate the online economy – companies such as Next, Tesco and Marks & Spencer – are expanding rapidly. M&S food, for example, gained half a million new shoppers over the past three months.
Then there’s the raft of financial tech firms such as Revolut and Monzo that are transforming money choices for consumers and commanding valuations –
$75billion (£56billion) for Revolut, for instance – which would spring them straight into the top echelons of the FTSE100 were they to seek London listing.
One of the reasons Britain has the capacity to prosper right now is the finances of the nation’s private firms and the public sector are in better shape than most of our competitors. The triple blows of the great financial crisis, Covid-19 and the Ukraine war disrupted the international economy and were a combined setback for Britain. But we were quicker to accept the economic pain and recover.
It is too early to pull out the bunting quite yet, of course. This woeful Labour government is dangerously anti-business and Britain’s levels of public debt at close to 100 per cent of national output are deeply alarming.
But even on debt there is a scintilla of hope – because compared with most of our national competitors it remains relatively modest. Debt in Japan stands at 237 per cent of national output, in Italy it is 135 per cent, and in Trump’s America it sits at 120 per cent.
Rachel Reeves’s tax raids on Middle Britain and business have, admittedly, begun to make an impact. Public borrowing in December tumbled to £11.6billion, well below 2024 as swingeing tax increases took hold.
The improving state of public finances gives Britain the flexibility to invest in big infrastructure projects such as new nuclear power plants and runways at Gatwick and Heathrow – if only we could be assured that the Government was capable of delivery.
After a decade of political and economic turmoil, Britain is ready for a leap forward to escape a doom-loop and climb the cycle of growth. Business investment, the key to future growth, is beginning to fire up.
We may have a government that fails to understand commerce and the economy. But we should never underestimate Britain’s vibrant private sector and the power of an upswing in the economic cycle.
