The UK needs its own version of the Joe Biden Inflation Reduction Act (IRA) to spur investment and compete with the United States, the leading business lobby warns.
The Institute of Directors (IoD) has described the bill, which offers more than £300bn of subsidies to firms investing in green industries in the US rather than countries like the UK, as “game-changing”.
The lobby group has warned that the European Union is “also upping the ante” with its own green industry plan.
Incentives: Joe Biden’s Inflation Reduction Act offers more than £300bn of subsidies to firms investing in green industry in the US, not in countries like the UK.
And Rishi Sunaka and Jeremy Hunt’s warning ahead of next week’s budget says the UK risks being left behind if it doesn’t come up with its own version.
Roger Barker, director of IoD policy, cautioned Downing Street against “short-term budgetary concerns” not prioritizing important investments.
“It is imperative that government and the private sector work together or the UK will fall behind in the accelerating race to lead the green economy,” he said.
“The UK deserves nothing less than its own version of the IRA to ensure the UK becomes the global destination of choice for all forms of green investment.”
But speaking to the Mail in Tel Aviv, business secretary Kemi Badenoch downplayed the idea of big subsidies.
“If we subsidize one industry, it means that someone else gets nothing,” she said. “So I never try to make promises to any particular industry.”
Passed by the US Congress in August, the IRA has facilitated hundreds of billions of green deals and increased investment in sectors such as the oil and gas industry.
Investors received £962m
In February, investors withdrew £962m from UK-focused equity funds in the third-biggest monthly outflow ever as the FTSE 100 index hit a record high, Calastone Funds Network said.
UK equity funds saw 21 consecutive months of net sales, but investors withdrawing their cash are putting pressure on the London stock market as firms worried about UK valuations turn their attention to the US.
Edward Glyn, head of global markets at Calastone, said: “General pessimism about the UK economic downturn, weak public finances, political chaos and rising corporate taxes appear to have accelerated the trend of continued outflows from UK funds and inflows into global funds. .’
British companies are looking to move to the US to take advantage of subsidies.
Heavy equipment rental firm Ashtead said yesterday it will increase capital spending in the US, its biggest market, as it bets the law will speed up construction there.
Chief Executive Officer Brendan Horgan said, “Our business is doing well thanks to a growing number of mega-projects and recent US legislation.”
Building materials giant CRH last week said it plans to move its primary listing on the New York Stock Exchange from London.
Irish company CRH, valued at £30bn, is increasingly focused on America, where it delivers major infrastructure projects.
It comes as the UK tries to compete for its share of the green economy and become the world leader in batteries and hydrogen.
Last week, Jaguar Land Rover owner Tata Motors asked the government for more than £500m in subsidies to build a battery plant in Somerset.
IoD’s Barker said, “The IRA is a complete game changer and will change the entire US economy. Now is the moment of truth for the government.”
Credit: www.thisismoney.co.uk /