The Lord Mayor is right: funds must be encouraged to invest in Britain - Reaction Life - 01.12.22
Forget all the fanfare over Rishi Sunak’s so-called new “robust but pragmatic” approach to China set out at the prestigious Lord Mayor’s Banquet at the Guildhall earlier this week by Maggie Pagano.
Of far more importance were the words of the new Lord Mayor himself whose speech was completely overshadowed by Sunak’s latest version of the UK’s China policy, which, let’s admit it, left most of us more confused than before.
Step forward, then, Nicholas Lyons, the 694th Lord Mayor of the City of London, who had some extremely important things to say on several fronts that really matter to the health of the City and potentially, to the growth of the wider economy.
He started well, softening up his audience, setting out why the City – and the UK – is such a great magnet for investment and talent. As he reminded his audience from the great and good of business and politics, the UK has so much going for it: seven of the world’s top 20 universities, the biggest number of fintech companies and unicorns in Europe by far.
And it is still – despite all the recent hullabaloo- Europe’s biggest equity market and the world’s second financial centre. (He didn’t say that as such by the way, that’s me.)
Then came his but, and it was a big one. “Businesses, intellectual property and people are leaving our shores, as they are being acquired by the world’s most sophisticated and well-capitalised asset owners in other global centres such as New York.”
And he’s right. Which is why Lyons was also spot on in calling for the need for regulatory reform and the removal of “structural obstacles” to growth in sectors such as fintech and other high-tech growth companies.
“We need to do more to support the high growth companies that attract talent, grow our economy and will lead this country in future wealth creation – at every stage of their development. To back our science and tech sectors who are so vital for the growth economy.”
Top of the Lord Mayor’s list would be regulatory change so there is an incentive for all investors – private individuals, corporate pension schemes and international asset owners – to invest in British companies. He also called for the setting up of a UK Growth Fund of at least £50 billion to invest in long-term asset classes, enabling investment in infrastructure and the growth economy.
As he has pointed out before, the UK has the second largest pension savings pot in the world after the US yet only 7% of pension assets are invested in these real economy asset classes. That is in contrast to an average of 19% for the economies with the seven biggest pension pots globally. If the UK’s pension industry was to move up a gear from 7% to 10%, some £40 billion would be unleashed for new investment.
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Maggie Pagano is editor of Reaction and heads up our Young Journalists Programme. She is one of the UK's leading business journalists and has held senior positions at the Guardian, the Times, the Daily and Sunday Telegraph and the Independent on Sunday. As well as writing about business, she likes to start them too and was one of the founding editors of the Financial News, the highly successful City print and online newspaper which is now owned by Dow Jones. She is a regular columnist for the Daily Mail's City & Business section.
Lord Mayor of London, Nicholas Lyons, speaking during the annual Lord Mayor's Banquet at the Guildhall in central London (via PA Images / Alamy)