Prime Minister was wrong to allow Labour to steal the show at Davos

With so many problems at home, it may have seemed that the very worst thing the Prime Minister Rishi Sunak could have done this week was fly off to Davos to spend the week sipping champagne with the world’s plutocrats. But the UK needs to be sold to investors and corporate bosses, and Sunak has made a big play out of all the incentives for investment he is offering. Sure, Davos can be nauseating at times, but a British prime minister should still be there pitching the case for locating factories, warehouses and offices in the UK – because if he doesn’t do it, no one will.

It has been wrong about globalisation, about the pandemic, and indeed about almost everything. The themes of the World Economic Forum, which gathers in Davos every January, have become almost as reliable as covers of The Economist for getting everything completely upside down. The issues it says are vital turn out to be irrelevant, and the trends it ignores turn out to be important. Even worse, it has come to symbolise the kind of smug, complacent virtue signalling that now passes for political leadership in most of the Western world. Yet despite its repeated failure to identify anything of significance, Davos survives. In reality, what is said doesn’t matter very much. It is important because lots of very important people are there. Except, in this case the British Prime Minister.

Sunak may have figured that as a very wealthy, public school-educated former banker, he may already look a little too like the identikit Davos man. And of course, there are multiple challenges back at home that require his attention. Even so, he should have gone.

First, the UK badly needs investment. Davos may not have attracted so many major global leaders as in the past, with President Joe Biden giving it a miss this year. It remains, however, a major draw for corporate and financial heavyweights, with the likes of JP Morgan’s Jamie Dimon, Openai’s Sam Altman, Pfizer’s Albert Bourla and Microsoft’s Satya Nadella all in attendance, along with hundreds of others.

The Prime Minister has made a huge play of his policy of “full expensing”, a tax break that allows companies to set off the full cost of investment against the new higher corporate tax rate of 25pc. It is one of the most generous tax policies in the world, so long as you are a big company with lots of plans for new factories and research centres, and might well drive down the effective tax rate to just a few percentage points. And yet, so far we haven’t noticed the rush of new projects announced for the UK. The global business community has not really noticed yet. It needs to be sold, and the most effective person to do that would be its main champion, the Prime Minister, and there would have been no better place than at the bars and conference rooms of Davos.

Second, the UK still needs to explain the benefits of Brexit to the global business elite, to explain that Britain is still trading successfully with the rest of Europe. The Prime Minister is the only person who can make a convincing case for the post-brexit British economy. Finally, he is leaving the stage to everyone else. President Emmanuel Macron of France was at Davos, and so was Pedro Sánchez, the Spanish prime minister, along with dozens of global leaders. The UK was nowhere to be seen. However, Rachel Reeves, the shadow chancellor, was there, telling everyone who would listen that Labour was now the party of business. While that claim may be slightly implausible, to put it mildly, busy executives will have been impressed by the charm offensive. Other people will be filling the space Sunak has left empty, and that will damage the UK.

Davos, for all its faults, remains the best networking event in the world. Sunak made a mistake by skipping it.