Britain Needs Additional Investment to Boost Economy

By Carolyn Cohn

LONDON (Reuters) – Britain needs an additional one trillion pounds ($1.3 trillion) in investment in the next decade to grow the economy, a report said on Friday.

New British Prime Minister Keir Starmer said he wants the economy to achieve annual growth of 2.5%, a rate not consistently reached since before the 2008 financial crisis.

An annual growth rate of 3% would necessitate an extra investment of 100 billion pounds per year over the next 10 years, primarily in energy, housing, and venture capital, according to the report from UK financial services lobby group Capital Markets Industry Taskforce.

The funding could come from the six trillion pounds in long-term capital within Britain’s pensions and insurance sector, stated the report’s lead author Nigel Wilson, former boss of Legal & General.

“We’ve underinvested in the UK for such a long time, there’s a massive gap between the other G7 countries and ourselves,” he emphasized.

“We have the long-term capital in the UK; it needs to be reallocated.”

The report outlines the necessity for an additional 50 billion pounds annually in energy investments to meet net zero targets, alongside 30 billion pounds in housing, and 20-30 billion pounds in venture capital.

The government should consider investment incentives such as tax reductions on shares for retail investors.

According to another report released by think tank New Financial, UK pensions allocate a “significantly lower” percentage to domestic and unlisted equities compared to most developed market pension systems.

UK pensions could potentially double their allocations while remaining consistent with the pensions industry in other advanced markets.

The UK government has initiated a review of the nation’s pension system to stimulate investment in domestic startups.

UK pensions minister Emma Reynolds remarked at a CMIT conference,

“UK pension schemes could play a greater role in UK capital markets than they currently do.”

Reynolds highlighted the successful investment strategies of Canadian and Australian pension schemes in growth companies, stating,

“I am particularly keen to learn from them.”

($1 = 0.7594 pounds)