A recent report has revealed that the UK will need to attract £1 trillion in investment over the next decade to achieve its ambitious economic growth targets. This significant influx of capital is essential to meet the government’s goal of 3% annual growth, according to a taskforce led by Sir Nigel Wilson, former CEO of Legal & General.
To meet these targets, the Capital Markets of Tomorrow report estimates that the UK must secure £100 billion annually, with key sectors like housing, energy, and water infrastructure requiring substantial financial support. Specifically, the housing sector alone will need between £20 billion and £30 billion each year, while the energy sector demands around £50 billion. The report also calls for £20 billion to £30 billion in venture capital funding to support growing businesses transitioning from the startup phase to sustainable growth.
Attracting Investment to Boost Growth
For the UK to remain competitive in global markets, the taskforce has highlighted the importance of creative initiatives and incentives to attract investors. While several measures are already in motion to stimulate investment, the report stresses the need for the government and regulators to foster a more favourable environment for both domestic and international investors. Sir Nigel Wilson pointed out that there is no shortage of available capital globally, with investment pools including sovereign wealth funds, private equity, and retail investments.
The UK also benefits from a vast amount of long-term capital—around £6 trillion—within its pension and insurance industries. The challenge lies in directing this capital into growth opportunities in sectors like tech and life sciences. One suggestion from the report is to encourage investment by creating new funds under the Long-Term Investment for Technology and Life Sciences (Lifts) initiative.
Encouraging Consumer Investment
The report urges the government to develop a culture where UK consumers are more inclined to invest in British businesses. One way to achieve this is by removing stamp duty on share purchases, which could make investing in the stock market more attractive. Another proposal is to nudge people with large cash savings towards investing in UK stocks, which would help channel more funds into growing companies.
Additionally, the report calls for the introduction of a “streamlined” UK ISA (Individual Savings Account) that allows tax-free investments in British stocks. However, this idea faces uncertainty, as recent reports suggest that Chancellor Rachel Reeves may scrap the proposal ahead of the upcoming budget in October.
Improving the UK’s Capital Markets
Since its inception in 2022, the UK Capital Markets Industry Taskforce (CMIT) has been pushing for regulatory reforms to boost investment and close the gap between the UK and the US in terms of capital markets development. The taskforce has also expressed concern over the increasing number of companies opting to leave the London Stock Exchange in favour of foreign markets, particularly in the US.
Dame Julia Hoggett, CEO of the London Stock Exchange and head of the taskforce, emphasised that the UK already has a strong foundation to build upon, with world-class universities and a highly regarded financial services sector. However, she stressed that the opportunities for growth must be seized.
