Reeves should unlock the magic of AI if she needs to satisfy her development targets, says ALEX BRUMMER

Here is an idea for Keir Starmer and Rachel Reeves if they are to have any realistic chance of achieving their growth mission.

In the disparaged October 30 Budget, among the scraps of encouragement for business, amid the torrent of £40billion of tax increases, was a commitment to make permanent the Tory policy of ‘full expensing’ for companies investing in new plant and equipment.

This is all very fine and dandy, but it shows a 20th Century rather than 21st Century mindset at the Treasury.

Reeves must recognise by now, given surveys from the CBI, Institute of Directors and the S&P purchasing managers, that instead of boosting confidence, her Budget has had a baleful effect on investment and new orders. 

This despite the fact that the UK is an island of political stability compared to Continental rivals Germany and France.

If Britain is to have any prospect of outperforming or keeping up with the best in class of the G7, it needs to embrace more strongly what the country does well and technologies which will turn on the boosters.

Growth boost: One of the few positive parts of the budget was a commitment to make permanent the Tory policy of ‘full expensing’ for companies investing in new plant and equipment

That means extending full expensing to innovations which will speed manufacturing processes, advertising and all manner of professional services. 

The UK is a pioneer in artificial intelligence (AI). Indeed, Reeves is known to refer to DeepMind, now part of Google parent Alphabet, as a British success story.

The way then to boost productivity would be to bring AI investment, software, cybersecurity, connectivity and design costs (yes, even the new pink Jaguar) under the full expensing umbrella. 

It is not an accident that two of the most admired FTSE 100 companies are Relx and software group Sage, which have both pioneered AI in the UK. 

Among the reasons why the Elizabeth Line provides a tangible lift to output is that it is fully wired.

Driving output through construction and house building is a slow burn, whereas tech, as the US and Israel show, brings much quicker payback. Britain’s second-class broadband, despite the efforts of Openreach, is not good enough.

The sooner that Reeves and other members of a misfiring government recognise this, the more able Britain will be to escape Labour’s despond.

NatWest redux

As a pre-financial crisis shareholder in NatWest, who foolishly bought into disgraced banker Fred Goodwin’s last-ditch fund raising in 2008, one can only breathe a sigh of relief that the extraordinary lengthy period of part-government ownership is ending.

Speaking to the FT’s banking conference, the current chief executive Paul Thwaite (they don’t usually last very long) predicted that, barring an economic shock, it will be back in private hands in 2025.

It has been a long haul, and one cannot but think that if successive governments had not been scared of taking a loss, NatWest would have been on the road to recovery much earlier. 

It would not have suffered the slings and arrows which have held it back over a range of issues.

It has been sad to watch promising enterprises such as fintech champion Worldpay ditched, at a low valuation, when it could have been a profit centre for the bank. 

NatWest has huge reach into Britain’s smaller- and medium-sized businesses and farms, but has long looked like a bank looking for a role. 

Services such as stock broking and document keeping have been slashed along with a vast branch network which could have been a great asset as it seeks to build-on wealth management.

Some comfort can be drawn from a recovery in a sub-octane share price which is up 88 per cent this year. Along the way, NatWest has weathered the storm over debanking Nigel Farage at Coutts.

The obsession with do-gooding is still rampant. Each time clients log on to online banking, they are greeted with the appearance of an ad for the DEC Middle East Humanitarian Appeal. That is a turn-off for many customers and needs a re-think.

Bottoms-up

Is the hospitality sector in danger of crying wolf?

After the Budget, it seemed as if every pub in the country might be heading for the knacker’s yard.

If that is the case, Marston’s, which operates 1,339 outlets, against all odds managed to record a 64.5 per cent jump in annual profits. It also revealed that the National Insurance increase was ‘manageable’.

How curious.