In a bold declaration at the annual World Economic Forum in Davos, Switzerland, UK Business Secretary Peter Kyle has announced an "activist" approach to industrial policy, centred on "betting big" and "picking winners" to accelerate economic growth. Speaking alongside Chancellor Rachel Reeves, who has been promoting Britain's prospects, Kyle emphasised a muscular strategy to ensure the benefits of growth are felt more swiftly across the nation.
A Shift in Economic Philosophy
The phrase "picking winners" is historically linked to Conservative Prime Minister Margaret Thatcher's critiques of Labour's 1970s strategies, where she argued that the private sector should determine which companies thrive. However, Kyle is unapologetic in reclaiming this term, asserting that a proactive government role can drive faster economic expansion. He pointed to the UK's predicted growth rate of 1.5% this year, stating it is insufficient and requires more direct intervention.
Investing in Scale-Up Companies
Kyle highlighted recent government moves, such as empowering the state-owned British Business Bank—valued at £26 billion—to acquire equity stakes in promising firms. A notable example is last week's £25 million investment in Kraken, a software spin-off from the energy supplier Octopus. Visiting Octopus's London headquarters, which employs 1,500 people, Kyle underscored the potential of scale-up companies to create thousands of jobs and generate wealth that circulates rapidly through the economy.
"The most potential in our economy, in the short and medium term, is scale-up companies," Kyle explained. "We can find other companies on that trajectory and expedite their growth. This will create enormous amounts of wealth, recycling through the economy in a really fast way."
Navigating Global Uncertainties
The Davos summit has been overshadowed by international tensions, including former US President Donald Trump's threats of tariffs on European countries. Despite this backdrop of global economic shifts, Kyle insists that uncertainty should not deter Labour's agenda. He sees a "wave of opportunity" in technology and life sciences, warning that distraction from domestic or global challenges could cause the UK to miss a lifetime opportunity.
"If we are too intimidated by global challenges or distracted by domestic political to and fro, we will take our eye off the ball," Kyle said. "That means real things to real people—kids growing up like me might not become successful, and poor communities may never prosper. I won't stand for it."
Attracting Global Talent and Investment
Kyle announced enhancements to the government's "global talent taskforce," aiming to capitalise on instability from Trump's policies to attract jobs and investment to the UK. He emphasised the need to draw innovators, noting that while America is disruptive with tariffs, it may not be the most favourable environment for scientific endeavours. Kyle touted the UK's regulatory strengths in life sciences and other sectors.
"I will suck the best talent in from wherever it exists," Kyle stated. "Talent goes both ways across the Atlantic, and I want a good balance because for too long it's been in one direction." He added that public scepticism about migration does not extend to wealthy entrepreneurs, who are welcome to invest and create businesses in the UK.
Personal Background and Political Stance
Peter Kyle, the 55-year-old MP for Hove and Portslade, became Business Secretary in September after a reshuffle by Prime Minister Keir Starmer, replacing Jonathan Reynolds. Despite his political closeness to Health Secretary Wes Streeting—a potential challenger to Starmer—Kyle has remained publicly loyal. He recently rejected the idea of a customs union with the EU, calling it a "foolish" simple solution.
Kyle's personal journey includes overcoming dyslexia and leaving state school without usable qualifications, later earning a PhD and working in the charity sector before entering politics. As a former Technology Secretary, he is an AI evangelist and regular user of ChatGPT, often seen in casual "tech bro" attire. He has negotiated deals for digital infrastructure in poorer regions and insists that investors benefiting from the UK must also contribute to it.
Addressing AI and Employment Concerns
At Davos, where AI's impact on jobs is a hot topic, Kyle acknowledged anxieties about potential mass layoffs. He compared the adoption of AI to the painful deindustrialisation of the 1980s, vowing that Labour will intervene to ensure a less detrimental outcome for poorer communities.
"Waves of industrial change have always gone badly when governments stand on the sidelines," Kyle said. "I will not allow that to happen. As tech secretary, I insisted on investment in digital infrastructure in poorer parts of the country. I'm the gatekeeper for investors, and if they want to benefit from our country, they can contribute to it as well."
In summary, Peter Kyle's Davos address marks a significant shift towards an activist industrial policy, focusing on strategic investments, global talent attraction, and equitable growth to propel the UK economy forward amidst global uncertainties.
