UK plc must shoot for growth this year, says ALEX BRUMMER
Starting 2026 in fine fettle, the FTSE 100 has zoomed past 10,000 for the first time in its history amid optimism of a year of subsiding inflation and lower interest rates.
Fiscal policy, after two years of eye-watering tax rises, will hopefully be becalmed. So all that is needed now is a growth spurt!
Changes at many of Britain’s top listed companies could help, with one in seven replacing chief executives last year.
Among the most closely watched will be behemoths Diageo and BP, where bosses were peremptorily shown the door after sub-par performances.
A second layer of chief executives – including Emma Walmsley at GSK and Liv Garfield at Severn Trent – voluntarily left the field of battle after lengthy and tumultuous stints at the top.
The focus this year will be on the share price performance of the successors. There is a faulty short-term tendency in the City to view corporations through the lens of quarterly results rather than economic players contributing to productivity, innovation, growth and exports.
Milestone: The FTSE 100 has zoomed past 10,000 for the first time in its history
Diageo’s new boss – ‘Drastic’ Dave Lewis, veteran of Tesco and Unilever – and BP chief executive Meg O’Neill will command centre stage because of the critical importance of the companies not just to the stock market but Britain’s commercial presence in the world.
Leadership is critical. There are few better examples than the arrival of ‘Turbo’ Tufan Erginbilgic as chief executive of Rolls-Royce in January 2023.
It signalled a new era for Britain’s flagship engineering group, the nation’s industrial capacity and investors. A dramatic transformation in operations and a lift in the company’s ambition saw the shares soar ten times, lifting its market value to £100bn.
Walmsley remodelled Glaxo from a misfiring pharma and consumer health care group into a focused vaccine and oncology innovator outpacing rivals with blockbusters such as Shingrix. She leaves a great opportunity for successor Luke Miels.
At Britain’s leading grocer Tesco, Lewis put the group back on track by refocusing on the UK and the supply chain.
Challenges at Diageo are considerable. Changing tastes and a younger generation less keen on alcohol have undermined confidence.
Lewis should recognise the value of great consumer brands and Diageo’s powerful presence in North America, where it earns some 50 per cent of income.
The easy answer at Diageo would be to sell off or split out Guinness to pay down debt and boost the share price.
That would be a disservice to Britain and Ireland. It would be an enormous loss were Guinness to fall into the hands of private equity owners with no interest in heritage and quality.
Lewis might want to be careful about diluting Diageo’s presence as a luxury spirits player in the fast-growing Indian market. Brands such as Johnnie Walker are a terrific cash export asset for Britain.
It would be easy to disregard BP’s strengths. But it is a real UK presence in the world at a time when American majors, such as Exxon Mobil, are doubling down on North and Central America rather than staying global.
O’Neill needs to resist pressure from activist Elliott to cut investment, and must make sure that finds such as the Bumerangue well, off Brazil, are brought home.
A new group of corporate leaders will be judged on financial performance. But it shouldn’t be done by sacrificing great brands, services, pioneering discoveries and industries on the altar of quick gains.
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