How can Britain use the next decade

FREE Unlock Editor’s Digest

Roula Khalaf, editor of FT, chooses her favorite stories in this weekly newsletter.

Welcome readers. This week I am on my backpack in Vietnam and Laos, so I prepared something a little different.

As readers know, the goal of free Lunch on Sunday is to present an analysis that opposes the established opinion. For each part, this often involves discussing positions with economists and market strategists that are not necessarily their home views.

Therefore, for this edition, instead of the usual synthesis of my discoveries, I wanted to share more than what analysts told me. I asked the experts to sketch a bull’s scenario for the British economy in the next decade and what would be necessary to achieve there. Here’s what they said.

First, global background. Labor large parliamentary majority means that the UK now stands out for its (relative) stability. France has an unstable coalition, and Germany faces elections in February. Political attitudes in the EU are divided. In the US, President Donald Trump seems to be more interested in encouraging uncertainty.

In terms of trade disorders, British Services Services-and Position outside the EU-puts it less on the fire of the Trump of Trump’s tariff plans. The US president is more focused on commodity trade, especially with China and European trade block.

In their autumn budget, the Labor has already eaten this “dividend stability” with high -tax bulky companies. However, Marko Papic, the main strategist at BCA Research, believes that the autonomy that Britain has to be less restrained by internal politics and trade wars could be a blessing:

“The United Kingdom should be guided by independent trade policy. The advantage outside the EU will be reduced if the UK simply adopts an American attitude towards China. The mulipolar world is the one in which geopolitically promiscuous countries surpass. ”

Construction of this advantage would require a target approach to the conclusion of the agreement. Services trade arrangements could enable Britain to further export its comparative advantage in high -value services. And the reduction of bureaucracy included in the EU trade, the largest trade partner of the United Kingdom, would encourage supply chains.

A smaller exposure to Trump is also a reason why some of them The largest institutions of Wall Street It is betting that British shares will surpass the shares in the rest of Europe this year. They believe that banks and energy companies-which have large stakes on the London Stock Exchange-could experience an incentive from Trump’s deregulation and pro-naphne policies. Low values ​​also look attractive.

But British shares will still need a catalyst to increase stock values. I asked Hugh Gimbera, a global market strategist in JPMORGAN Asseta Management, where can this come from:

“Over the last decade, the technological shares of the developed market have had better results. But the United Kingdom has malnutrition in this sector, which is why it is almost impossible to keep up. If investors start finding more evidence that the capital investments associated with artificial intelligence will unlock the productivity increase in the entire economy, we would expect to see a wide range of sectors that will suggest a recent technological leadership. This would certainly help to equalize the conditions for the United Kingdom. ”

Indeed, Britain is in third place in Capital Economics Index Advanced economies that can best benefit from adopting artificial intelligence, given the large sector of services and a flexible labor market.

The efforts to get rid of the huge British pension capital – the largest in Europe – could support larger investments in public and private shares, both at home and abroad. But Gimber suggests that there are better withdrawal levers:

“The tax on shares trading taxes have collected £ 3.2 billion in the last fiscal year, but for the stock market there is a clear competitive disadvantage compared to other regions. Not only is the participation of small investors, but also reduces incentives to new companies to include a stock market in the United Kingdom.

Key, successful policy changes must create greater incentives for individuals and institutions to invest money in working in the United Kingdom, restoring confidence and removing obstacles. “

Several studies proposes to reduce marks on shares could increase income in the long run by encouraging growth.

And with tight public finances, “removal of obstacles” is a place where I am Dumitria, a policy manager at Britain Remade, believes that the United Kingdom can get the greatest benefit for his money.

“The British narrow threat is the construction of things. It is simply too difficult to build new homes on our most productive places, it is too difficult to build a new energy infrastructure and to have a hard time building new traffic connections. Hinkley Point C, which should be the most expensive nuclear power plant ever built, has included a six -year dispute eye Inclusion of a ‘fish disk’.

We know what to do. Reform the planning system so that no longer forbids new investments in everyone, from homes to industry. ”

The proposal of the Labor Planning Act and infrastructure is expected in the coming months. If it manages to simplify the regulations, speed up approval and release more land for development, investment could jump.

The Government Industrial Strategy, which should be published this spring, should reveal the possibilities of attracting private investment in key infrastructure projects. He should also outline plans to strengthen the existing Britain’s existing forces in high demand growth sectors. These include financial and professional services, university research and education, renewable energy sources (wind, capture and storage of carbon), life science, airline technology, artificial intelligence and creative industry. (Less bureaucracy, wider incentives for investment and improved training approach and highly qualified talents would help.)

The fact that Britain is doing quite well with these complex things, but it is struggling with simpler tasks is the reason for optimism, adds Kallum Pickering, the chief economist Peel Hunta.

“Britain they just need correct policies to get back on the right path, not a complete institutional overhaul. It is so lagging for the average in things such as basic infrastructure, housing and energy that only the reach of average for the advanced world would include the material life standard and improvement of productivity. ”

Indeed, until the last few years Britain has struggled with political stability. Now that there is, it has come back. Add a few shopping agreements, a plan for strengthening comparative advantages and reform planning – and things can only be better.

Dumitri added, “If we stay good in what we are good at and we are less bad in what we are very bad in, then the next decade could be very good for Britain.”

thoughts? Refutation? Send me a message to freelunch@ft.com or on x @tejparikh90.

Food for thinking

Grenland is in the spotlight. Trump wants to buy an ice island because of its obvious treasure trove of rare countries. But Available wealth of Danish territory Maybe they are not all they represented. It could be better for America to make miners at home.