The author is head of macro-strategy at FIM Partners and author of The Time-Travelling Economist.

Like most (57%) people in my UK constituency, I voted for Labour candidate David Lammy in the July election, electing the MP who became the UK’s newest foreign secretary. But what policies did we actually vote for, and how are they relevant to FDI in the Middle East and Africa? 

Unctad figures show the UK had the fourth-biggest FDI stock in Africa in 2022, worth $46bn. In Saudi Arabia, which generates half the Gulf Cooperation Council’s gross domestic product, the UK FDI stock that year was $16bn, second only to the US. 

Back in 2023, Mr Lammy explained that one of his top foreign policy priorities was to “put pragmatism over ideology”. This is a sea-change from the last Labour landslide government of 1997, when then foreign secretary Robin Cook prioritised an ethical foreign policy, which threatened UK arms exports and foreign investment projects.

From a business perspective, it seems good news that the UK government is primarily concerned with jobs and prosperity. But for which businesses?

Mr Lammy says foreign policy choices must put “the consumer before the fossil fuel company, the small business owner before the hedge fund manager.” That doesn’t sound so great for my sector, finance, nor energy companies like BP or Tullow Oil, which have recently invested heavily in Egypt, Ghana, Senegal and Uganda.

But 38% of UK FDI capital expenditure in Africa since 2003 is in extraction, and the second-biggest sector by project number is financial services, according to fDi Markets. The latter is also the second-biggest sector for UK FDI flows into the Middle East, by project number. 

On fossil fuels, the Labour party may well be less supportive than past UK governments. But it would do well to learn from the downfall of those they took power from. What the Reform party did to the Conservatives in July could be what the Green party does to Labour in the future. The Greens came second to Labour in my constituency, and in many others across inner London. Overall, they won 7% of the votes, although under the country's first past the post system that equated to only 0.6% of the MPs (six in total).

The key message is that UK foreign policy will be focused on prosperity. As rejoining the EU is off the agenda, that must mean supporting FDI in Africa and the Middle East. If that’s what materialises, Mr Lammy may get my vote next time, too. 

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This article first appeared in the August/September 2024 print edition of fDi Intelligence.