CashNews.co
The “slow lane” British economy needs a £1 trillion investment turbo-charge over the next decade if is to have a chance to getting back to higher growth rates of around 3%, a major new report concludes today.
The Capital Markets of Tomorrow report commissioned by a high powered group of City grandees and led by former Legal and General boss Sir Nigel Wilson said a new model was needed to deliver long term growth to the UK.
It identifies the additional level of investment needed at £100 million a year for a decade. Areas where extra investment was urgently needed include housing, which requires an additional £20 to £30 billion per year; energy (£50 billion) and water (£8 billion.)
There is also a need for £20 to £30 billion of venture capital investment “which will be crucially important as it provides the flow of growth companies maturing through start-up, to scale-up, to grown-up.”
The report says: “In the UK, we have world-class universities and the potential to create large technology-driven growth businesses in areas such as renewables, financial services, AI, Quantum Computing and Life Sciences. But the UK hasn’t developed an Apple ($3.4 trillion) or a Microsoft ($3 trillion). Indeed, each of these companies has a market capitalisation bigger than all of the FTSE 100 combined. The challenge is therefore to make the UK a competitive market into which to invest.”
The report identifies four priority areas to drive the required investment boom forward.
They are the transition to net zero requiring investment of £35 to £50 billion a year until 2030; greater “patriotic” investment by major City institutions into UK companies; a cultural change to restore Britain’s risk taking entrepreneurial mindset; and persuading British individual investors to rediscover the share ownership habit.
Sir Nigel said: “I was honoured to be asked by CMIT to chair the Capital Markets Of Tomorrow report to create a model which will help long term growth for the UK economy. This goal we collectively set ourselves closely aligned with the previous government’s capital market reforms and also with the new Labour Government’s growth plans.
“We hope this report gives an honest appraisal of both the challenges and the opportunities, demonstrating that we are at a turning point – away from a cycle of negativity and towards a future where our capital markets can once again deliver their true potential.
“There has never been such a large amount of money globally available and seeking investment opportunities. Capital pools include domestic and international capital sources such as sovereign wealth funds, retail investment, private equity ‘dry powder’, and the UK is fortunate in that we have £6 trillion of long-term capital within our pension and insurance industries. In other words, the supply of capital for growth is available.”
Dame Julia Hoggett, CEO, LSE plc, and Chair of Capital Markets Industry Taskforce, said: “We welcome the findings of the Capital Markets Of Tomorrow report and thank those, in particular Sir Nigel, who were involved in producing it. It is vital that we continuously consider how best to develop the UK’s capital markets to ensure that great companies can start, grow, scale and stay here, and that our capital markets provide our pension and policy holders and savers with good returns and a prosperous old age.
“As the report sets out, we have a great base in the UK on which to build, including world-leading universities and a highly regarded financial services sector. But the opportunities need to be seized, and we will give ourselves the best chance of doing so if we work collaboratively across the capital markets spectrum towards our same goal of growth.”