The City of London Corporation has unveiled a report suggesting that Britain could potentially attract up to £7.7 billion ($10.2 billion) in additional foreign sovereign investment by 2030. This projection hinges on the implementation of a long-term strategy aimed at enticing such funds.
As Prime Minister Keir Starmer prepares to host his inaugural international investment summit in October 2023, the City of London Corporation has reiterated its call for a comprehensive financial and professional services plan. This initiative aims to transform interest in British assets into tangible investments.
Chris Hayward, Policy Chairman of the City of London, emphasized the need for a "streamlined and organized system" led by a public-private council. He proposed that this council should be chaired by the Chancellor of the Exchequer, Britain's finance minister.
The report highlights the significant impact of sovereign wealth and public pension funds establishing offices in the UK. These entities have more than doubled their investments in Britain during the five years following the opening of their UK offices, compared to the preceding five-year period. This surge resulted in an additional £13.4 billion of investment, encompassing 92 deals in crucial sectors such as innovative technology, infrastructure, and renewable energy.
"The road to economic growth passes through the City, therefore there must be a plan to both prioritize and capitalize on the contribution of financial services to foreign investment."
This proposal comes at a time when the UK's financial services sector, which contributes approximately 7% to the country's GDP, is seeking to bolster its global position. London, with its rich history as a financial hub dating back centuries, hosts more than 250 foreign banks - more than any other city worldwide.
The City of London, often referred to as the "Square Mile" due to its approximate size, has been a cornerstone of global finance since the 19th century. Its unique governance structure, where businesses have voting rights, sets it apart from other financial centers.
Foreign direct investment (FDI) in the UK reached £1.8 trillion in 2021, underscoring the country's attractiveness to international investors. The UK has consistently been a net recipient of FDI since the 1970s, with its financial services industry employing over 1 million people and generating exports worth £82 billion in 2021.
Sovereign wealth funds, which globally managed assets worth over $9 trillion as of 2023, often focus on long-term investments in infrastructure and real estate. The UK's first sovereign wealth fund, the British Business Bank, was established in 2010, marking a significant step in the country's investment landscape.
As Britain seeks to capitalize on its financial expertise and global connections, the proposed strategy aims to leverage the City of London's unique position. With its own police force and a history dating back to Roman times, the City continues to play a crucial role in shaping Britain's economic future.