According to a report released on Friday, Britain’s economy will require an extra one trillion pounds ($1.3 trillion) in investment over the next ten years.
During his campaign for the July 4th election, newly appointed British Prime Minister Keir Starmer announced his goal of 2.5% annual economic growth. The country has not consistently achieved this level since before the 2008 financial crisis.
Energy, housing, and venture capital need an additional 100 billion pounds of annual investment to reach a 3% growth rate over the next decade. A report by the UK financial services advocacy group Capital Markets Industry Taskforce highlighted this requirement.
The investment may originate from the six trillion pounds in long-term capital found in the insurance and pension sectors in Britain, according to lead author Nigel Wilson, a former Legal & General executive, who spoke with Reuters.
“We’ve underinvested in the UK for such a long time, there’s a massive gap between the other G7 countries and ourselves,” he remarked.
“We have the long-term capital in the UK, it needs to be reallocated.”
The analysis suggests the British economy must invest an extra £50 billion annually in energy to achieve net zero ambitions. It also calls for £30 billion in housing and £20–30 billion in venture capital.
The research also suggested that the government consider measures to encourage investment, such as lowering share taxes for individual investors.
In a separate analysis released on Friday by think tank New Financial, it was found that UK pensions have a “significantly lower” exposure to domestic and unlisted equities than most developed market pension systems abroad.
According to the analysis, UK pensions could double their allocations and still match those of other developed economies.
A reform of the UK pension system has been demanded by the government in an effort to boost pension funds’ involvement in homegrown entrepreneurs.
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