A new report highlights that Britain requires an additional £1 trillion ($1.3 trillion) in investment over the next decade to drive economic growth. British Prime Minister Keir Starmer has set a target of achieving annual growth of 2.5%—a rate the UK has not consistently met since before the 2008 financial crisis.

The report, authored by the Capital Markets Industry Taskforce, suggests that to reach an annual growth rate of 3%, an extra £100 billion per year is needed, with significant investments required in energy, housing, and venture capital. Nigel Wilson, the report’s lead author and former CEO of Legal & General, indicated that this investment could potentially be sourced from the £6 trillion in long-term capital held within the UK’s pensions and insurance sector.

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

Specifically, the report calls for an additional £50 billion annually in energy investments to meet net-zero targets, £30 billion in housing, and £20-30 billion in venture capital. It also suggests that the government consider incentives, such as tax reductions on shares for retail investors, to boost these investments.

A separate report by think tank New Financial indicates that UK pensions have a significantly lower allocation to domestic and unlisted equities compared to their counterparts in other developed markets. The study suggests that UK pensions could potentially double their allocations while remaining in line with global pension industry standards.

In response, the UK government is reviewing the pension system to increase domestic startup investments and address the underinvestment issue.

By sanya

I’m a finance writer with  three years of experience in investment analysis. At Investorwelcome , I translate complex financial concepts into clear, actionable insights to help investors navigate the market with confidence. Combining my solid academic background with practical industry knowledge, I’m dedicated to providing readers with accurate and timely information. My goal is to empower both new and seasoned investors by simplifying intricate data and offering strategic advice. When I’m not writing, I stay engaged with market trends and investment innovations to ensure my content remains relevant and valuable.

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