The Government has this week “challenged” UK investors to consider investing a greater proportion of their capital in UK assets.
The call comes after research revealed that UK institutional investors were “under-represented in owning UK assets”.
In an open letter to the financial services sector, Prime Minister Boris Johnson and Chancellor of the Exchequer Rishi Sunak said domestic investment will unlock industries, benefit pension savers, and support an “innovative, greener future” for the UK in the wake of the coronavirus pandemic.
But recent research suggests it is global funds that are benefitting from the opportunities that UK long term investments afford. For example, over 80 per cent of UK defined contribution pension funds’ investments are in mostly listed securities, which represent just 20 per cent of the UK’s assets.
Related research also revealed that equity investment in small UK businesses increased by nine per cent in 2020 to £8.8 billion – the highest on record since records began. But the overall value of investment still falls behind the US, with UK tech businesses receiving, on average, just half the level of investment of similar-sized US businesses.
Commenting on the letter, the Prime Minister and Chancellor said: “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.
“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.”
Welcoming the challenge, Andy Briggs, CEO of investment firm Phoenix Group, added: “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.
“We will continue to seek the best possible outcomes for our customers and our shareholders, and believe that investing in a sustainable long-term manner across a range of asset classes delivers this whilst also supporting the UK to build back better and greener.”
The letter comes after the launch of the Future Fund: Breakthrough scheme. The initiative – designed to support research & development (R&D) intensive firms grow in the wake of the coronavirus pandemic – combines Government and private investment to help bring new and innovative products to market.
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