The Government will not achieve its ambition of delivering the highest growth in the G7 unless it undertakes sweeping reforms to Britain’s investment institutions, the Business and Trade Committee has warned.
In a major new report, the Committee concludes that Britain suffers from a deep investment paradox.
The UK is home to one of the world’s leading financial centres, pension funds managing £3 trillion in assets, at least £264 billion of undeployed investment capital and world-class universities that have created more than 1,300 spin-out companies in the last twelve years – But an estimated 380,000 businesses that want finance cannot get it.
Decades of individually defensible policy decisions have collectively weakened the institutions that should connect British savings with British enterprise. And so Britain exports capital, sells promising scale-ups too early, and struggles to finance the growth companies that could power higher living standards.
The report concludes that Britain must mobilise an additional £180–200 billion of investment every year to match the investment performance of the strongest economies in the G7.
Liam Byrne MP, Chair of the Business and Trade Committee, said: “Britain is not short of money. We are short of institutions capable of putting that money to work.
“We have £3 trillion in pension assets, £264 billion of undeployed investment capital, £610 billion sitting in cash savings accounts and one of the world’s great financial centres. Yet 380,000 businesses that want finance cannot get it.
“For too long we have exported our savings and sold our scale-ups and watched other countries capture the rewards.
“If Britain wants the highest growth rate in the G7, we need the best system in the G7 for turning savings into investment and ideas into world-leading companies.”
