Starmer exit deepens UK investment uncertainty

Starmer’s resignation extends a period of political instability that has followed Brexit and reinforced the UK’s low-investment, low-growth cycle. Since 2016, companies have struggled to read the country’s policy direction, while the Institute for Public Policy Research warned in April 2026 that Britain suffers from chronic under-investment.

British companies invest about 11.1 per cent of the GDP, trailing every other G7 country except Canada, according to the think-tank’s analysis. Foreign direct investment has not collapsed, with renewables still drawing major commitments, but the UK has largely missed the reshoring and onshoring activity seen elsewhere in Europe and north Americas. Tata’s £4bn gigafactory in Somerset stands out as a rare exception.

AI raises the stakes. The UK has capital, research strength and start-ups, but expensive electricity and pressure on the power system threaten the physical infrastructure needed for data centres, grids, cooling, robotics and automation. A lighter regulatory approach than the EU’s AI Act may help, but policy clarity on energy and decarbonisation is presented as essential to prevent leading companies such as ARM or DeepMind from flourishing overseas.