Britain Requires Additional $1.3 Trillion Investment for Economic Growth, Report States

By Carolyn Cohn

LONDON – A report released on Friday indicates that the United Kingdom requires an additional one trillion pounds in investment over the next decade to stimulate economic growth.

New British Prime Minister Keir Starmer has expressed his ambition for the economy to achieve an annual growth rate of 2.5%, a level that has not been consistently experienced since before the 2008 financial crisis.

To reach an annual growth rate of 3%, the report, produced by the Capital Markets Industry Taskforce, suggests that an annual investment of 100 billion pounds is necessary in key areas such as energy, housing, and venture capital over the next ten years.

According to Nigel Wilson, the report’s lead author and former CEO of Legal & General, this investment could be mobilized from the six trillion pounds in long-term capital available within the UK’s pension and insurance sectors.

"We’ve underinvested in the UK for such a long time, there’s a massive gap between the other G7 countries and ourselves," Wilson mentioned. "We have the long-term capital in the UK, it needs to be reallocated."

The report outlines that the British economy requires an additional 50 billion pounds annually for energy investments to achieve net zero targets, 30 billion pounds for housing, and 20 to 30 billion pounds for venture capital. It also suggests that the government should consider incentives for investment, such as tax reductions on shares for retail investors.

Additionally, a separate report released on the same day by think tank New Financial indicates that UK pension funds have a significantly lower allocation to domestic and unlisted equities compared to most developed markets. It suggests that UK pensions could potentially double their investments in these areas while remaining in line with the pensions industry standards observed in other advanced economies.

The UK government is currently reviewing the pension system with the aim of increasing investment in domestic startups. UK pensions minister Emma Reynolds stated at a CMIT conference, "UK pension schemes could play a greater role in UK capital markets than they currently do," commending the investment successes of Canadian and Australian pension schemes in growth companies.

"I am particularly keen to learn from them," she added.