Blow to No 10’s investment summit as port giant pulls £1bn announcement over P&O row
The government’s Investment Summit has suffered a major blow after ports and logistics giant DP World pulled a scheduled announcement of a £1bn investment of its London Gateway container port, following criticism by a member of Sir Keir Starmer’s cabinet.
Sky News understands the Dubai-based company’s investment was due to be a centrepiece of Monday’s event, which is intended to showcase Britain’s appeal to investors and will be attended by the prime minister and Chancellor Rachel Reeves.
DP World’s investment in the port is now under review however, following criticism by Transport Secretary Louise Haigh and Deputy Prime Minister Angela Rayner of its subsidiary P&O Ferries.
In March 2022, P&O caused huge controversy by sacking 800 British seafarers and replacing them with cheaper, largely foreign workers, a move it said was required to prevent the company collapsing.
Announcing new legislation to protect seafarers on Wednesday, Ms Haigh described P&O as a “rogue operator” and said consumers should boycott the company.
In a press release issued with Ms Rayner, Ms Haigh said P&O’s actions were “a national scandal” and Ms Rayner described it as “an outrageous example of manipulation by an employer”.
While Ms Haigh has previously criticised P&O’s actions, the strength and timing of the ministers’ language undermined efforts by the Department for Business and Trade to make the Investment Summit a turning point for the government and the economy.
Transport Secretary Louise Haigh. Pic: PA
Hundreds of business leaders and investors, including representatives of US private capital and sovereign wealth funds, will attend the event in the City of London, as the government tries to drum up billions of pounds in foreign investment to fund its plans.
The event is seen by Downing Street as an attempt to reset Sir Keir’s premiership after a faltering first 100 days mired in rows about his advisers and acceptance of freebies.
As well as losing for now a £1bn investment in the UK’s key strategic infrastructure, the apparent lack of coordination between ministers will again focus attention on the competence of government operations.
Ms Haigh suggested consumers should boycott P&O Ferries. Pic: PA
It is understood the decision to pull the announcement and review an investment that has been in negotiations for months was made personally by DP World’s chairman Sultan Ahmed bin Sulayem.
He had been due to attend the Investment Summit on Monday, but will now not travel to London.
Read more from business:
UK economy returns to growth
US national debt heading for historic highs
Government ‘using Post Office as shield’
Mr Sulayem has previously refused to apologise for P&O’s actions, saying the summary sackings were a decision made by local management and ultimately ensured the survival of the company and thousands of jobs that were retained.
The £1bn investment was intended to expand the London Gateway facility, adding two new berths to the four that already exist and a second rail terminal. The expansion would have seen it become the UK’s largest port by volume.
DP World generated global revenues of almost £14bn in 2023 and operates in more than 60 countries. It has already invested £2bn in London Gateway, and also owns and operates Southampton’s container port.
A DP World spokesman told Sky News: “The investment is under review.”
Downing Street and the Department for Business have been approached for comment.
Blockchain gaming platform Immutable says it received a Wells notice from the SEC over alleged securities law violations within “hours” of its first interaction with the regulator.
Victims of ‘Hong Kong’s FTX’ take aim at $29M seized by police, central bankers bash stablecoins, crypto scammers busted over luxury condo.
The pound has fallen sharply after the chancellor announced the biggest tax rises in a generation.
Over the last three days, sterling has dropped by 1.2% (in trade weighted terms) – the biggest fall in 18 months.
Between around 1.30pm and 5.30pm today, versus the dollar, it dropped from about 129.9c to the pound to about 128.6c. In the same period, against the euro, it went from 119.3c to the pound to about 118.4c.
In addition, yields for 10-year UK bonds – the cost or interest rate charged for long-term government borrowing – have gone past 4.5% for the first time in a year.
Ed Conway, Sky News’s economics and data editor, said those yields are “pretty much halfway towards the danger zone” – a zone identified by the Office for Budget Responsibility (OBR).
However, he said other European bonds had risen, too. “But the UK does seem to be moving faster than most of the others,” he added.
While cautioning that the budget is still very new, Conway said the “upshot” is that Rachel Reeves’s “room for manoeuvre” is already diminishing “because of market moves”.
Markets are reacting in “quite a violent way”, Conway said.
“It’s really unusual to see this after a budget, and that will have a bearing on how much this government will be able to afford in the future,” he added.
Please use Chrome browser for a more accessible video player
‘Raising taxes was not an easy decision’
A sudden rise in the yields of 10-year UK bonds followed Liz Truss’s disastrous “mini-budget” of September 2022, which led to a surge in the cost of borrowing for ordinary consumers, while the pound slumped to a 37-year low against the dollar.
It is “certainly not like that at the moment”, Conway said.
Nonetheless, market movements will be “enough to really concern people at the Treasury”, he added, “because it suggests that a lot of traders are looking at how much money this government is borrowing, and they’re saying: ‘Hang on, maybe we’re going to charge you more’.”
Please use Chrome browser for a more accessible video player
The pound has weakened and gilt yields – the cost of borrowing by the UK government – has increased in response to the budget, which saw Rachel Reeves introduce the biggest tax hike in a generation.
While Conway said it does not feel like a “crisis point”, he said the “calculus for this government” may be changing.
Jack Meaning, UK chief economist at Barclays, said market reaction was “materially different” to what happened in 2022.
Bond yields since Ms Reeves’s budget are up by about 0.3%, while in 2022 the rise was about 1.5%, he said.
Please use Chrome browser for a more accessible video player
Reeves acting like ‘compulsive liar’
The conversation Barclays is having with its customers is also different to that in 2022, Mr Meaning added.
At that time, people were wondering whether a “big crisis point” had been reached.
This time, he said the focus is on comments from the OBR about a potential rise in inflation, and the potential knock-on effect as the Bank of England makes decisions on interest rates in the next few months.
Read more:
Chancellor defends £40bn tax rises
Is the farmers’ inheritance tax the new pasty tax?
The prime minister’s official spokesperson refused to talk about bond prices.
“We don’t comment on market movements,” they said.
“The chancellor has been very clear that first and foremost, this budget has been about restoring fiscal stability, and she’s outlined two new robust fiscal rules, which put public finances on a sustainable path.”
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports7 months agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway