Ministers are asking big institutional investors to consider long-term investments in UK assets to help the economy bounce back following the pandemic. They want investors such as pension funds to consider switching their strategy to put more money into UK start-ups rather than listed securities such as shares traded on the London Stock Exchange.
“It’s time we recognised the quality that other countries see in the UK, and back ourselves by investing more money into the companies and infrastructure that will drive growth and prosperity across our country,” the letter said.
“We want to see UK pension savers benefitting from the fruits of UK ingenuity and enterprise, being given the opportunity to back British success stories, and secure higher returns and better retirements.”
Officials say the Government is already taking action to help rip up roadblocks holding back investment in UK assets.
Work is underway with regulators to help boost long-term investment.
Illiquid assets such as start-up firms often require longer-duration investments.
They can often be difficult to sell, holding back many from investing in them.
As part of its wide push to back Great British businesses, ministers have also set up the UK Infrastructure Bank, providing finance for businesses that can help support regional and local economic growth.
“We recognise the responsibility of the Government to remove obstacles and costs to making long-term, illiquid investments in the UK,” Mr Johnson and Mr Sunak wrote.
“The Government is doing everything possible – short of mandating more investment in these areas as some have advocated – to encourage a change in mindset and behaviour among institutional investors, and we remain open to addressing further barriers where they are identified.”
They added: “We are challenging you this summer to begin to invest more in long-term UK assets, giving pension savers access to better returns and enabling them to see their funds support an innovative, healthier, greener future for their country.
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“We know that this will require a change in mindset for many investors that won’t happen overnight, but that is why this change needs to start now.”
Mr Johnson and Mr Sunak said that ministers would explain more about their plans in the coming weeks.
They said: “We need an investment big bang, to unlock the hundreds of billions of pounds sitting in UK institutional investors and use it to drive the UK’s recovery.”
The letter comes ahead of the Government’s Investment Summit in Downing Street in October.
Mr Johnson and Mr Sunak’s intervention has been welcomed by business leaders.
Chris Cummings, Chief Executive of the Investment Association, said: “Opening up access for investors to long term projects such as infrastructure and new technologies is a positive move that will benefit pension savers, while at the same time boosting the supply of much needed productive finance for the UK economy.
“It is welcome news that the Government sees this opportunity and is working to make it easier for institutional investors to invest in the country’s long-term growth.”
Andy Briggs, Group CEO of the Phoenix Group, added: “We welcome the challenge letter issued by the Prime Minister and the Chancellor of the Exchequer today.
“Phoenix remains supportive of directing substantial long-term investment into infrastructure and housing, as well as providing early stage capital for companies, across all regions of the UK.”