Politicians need to prioritise and capitalise on the power of financial and professional services, writes Chris Hayward
As the Labour Party Conference kicks off this week, the City of London Corporation is calling on the government to tap into the power of the financial and professional services (FPS) sector to drive economic growth. With Labour emphasising the critical role of public-private partnerships for sustained progress, we believe the FPS are uniquely positioned to boost the UK’s global competitiveness.
Our latest research reveals a clear path forward: the government must adopt a comprehensive FPS strategy that could unlock £7.7bn in foreign sovereign investment by 2030.
Our findings show over the past decade that sovereign investors with a UK presence have collectively poured £119.5bn into the British economy. It also revealed that sovereign wealth and public pension funds who have opened a UK office have more than doubled (2.2x) their UK investments compared to the five years preceding their presence in the country. This has led to an additional £13.4bn investment across the UK in key growth areas such as infrastructure, innovative tech sectors and renewable energy with 92 investments by these firms spread across 36 different cities and towns outside London.
Take British Columbia Investment Management Corporation (Canada) which increased its UK investments by £4.7bn after opening an office in 2016, including funding key UK infrastructure such as the National Grid. Or Temasek (Singapore), which invested a further £2.2bn after opening its UK office in 2014. These include UK tech companies, such as AI drug discovery Benevolent AI, wealth management firm FNZ, and fintech company Thought Machine.
These are just some examples of the catalysing power on FPS of foreign direct investment (FDI) helping to unlock growth around the country.
FDI will not only boost the UK economy, but it will provide more high-skilled jobs and increase funding for public services.
We know over the past few years uncertainty in Britain has concerned investors. To provide the confidence needed to invest, an FPS strategy will allow us to target businesses and entrepreneurs alike – and convey that the UK remains an attractive place to set up, scale and grow.
The strategy that we propose will be overseen by an FPS council that will provide a streamlined and organised system supporting foreign investors who are seeking to invest capital in the UK.
Building on the Harrington Review of FDI, the strategy will convene the best of government and industry to forge a path that places FPS at the heart of the UK’s inward investment, streamlining our approach and setting the foundations for a cross-sector National Investment agency.
With the inaugural International Investment Summit due to take place in October, the government must continue to show its commitment to ensuring the UK remains at the forefront of growth and an FPS strategy will help to move this forward.
It is also vital an investment minister is found to steer this much-needed summit and show it places inward investment as a major priority.
The road to economic growth passes through the City. Therefore we must have a plan to both prioritise and capitalise on the contribution of financial services to foreign investment.