Strategy recommendation: Creating the conditions to drive investment across the UK

To deliver on this, the government should focus on:

Building an investment and growth culture – ensuring policy and regulation is designed and implemented with careful consideration of risk and growth trade-offs.

Revitalising capital markets to better serve savers and companies – making British equity investment more attractive, supporting better outcomes for everyday savers, helping people be better prepared for retirement, and supporting more British businesses to list in the UK.

Driving growth through technology and information – seeking international standards and alignment in the regulation of technologies such as AI and digital assets; adopting a proportionate approach towards regulation to protect consumers and ensure financial stability without impeding the pace of innovation, investment and development; and ensuring the population is able to meet the changing skills needs in line with technological advancements.

Supporting legal services – a unique asset for Britain – preserving the UK’s status as a leading global centre for legal services, justice and the rule of law, and recognising the sector’s major contribution to the economy and job creation right across the country.

Develop a strategic plan to drive investment and economic growth to ensure that the UK has the level of longterm savings and investments (whether in private pensions and savings or state funds) necessary to meet pensions, care, health and other societal needs.

• Develop a strategic plan to drive investment and economic growth to ensure that the UK has the level of long-term savings and investments (whether in private pensions and savings or state funds) necessary to meet pensions, care, health and other societal needs.
• Work with industry to incentivise greater UK investment in shares in UK companies, to bolster the economy, boost liquidity and deliver better returns to UK savers.
• Deliver policies to better support the journey of companies from start-up to scale-up to maturity, including consideration of how incentive schemes operate between markets, removing barriers to the smooth passage of companies from growth to main markets, and extending the Enterprise Investment Scheme (EIS) from start-up to scale-up markets.
• Implement the whole suite of proposed reforms at pace, including finalising reform of the listing rules and the Secondary Capital Raising Review.
• Review the future of stamp duty on trading to incentivise greater UK institutional and retail investment into UK equities - as a direct tax on liquidity, it places the UK at a competitive disadvantage.
• Publish clear strategies for technologies that are key to securing the UK’s future economic resilience. While the announcement of an industry-led open finance taskforce is welcome, a government strategy is needed to enhance innovation in open banking and open finance to help small businesses better access credit and grow export opportunities for FinTechs. An updated AI strategy is also required.
• Develop a modern digital infrastructure for share ownership that aligns with – and then leapfrogs – other international jurisdictions.
• Commit to protecting and enhancing the UK’s reputation for upholding and advancing the rule of law and legal services excellence, while making meaningful efforts to continue to improve access to justice for all.

• Ensure that the UK has a stable, proportionate and predictable but agile regulatory environment, with clear focus on swiftly implementing all aspects of the Financial Services and Markets Act 2023; delivering a Smarter Regulatory Framework tailored to the UK; and ensuring coherence between the different financial and related professional services regulators to drive investment and economic growth.
• Provide appropriate scrutiny of how the regulators deliver their statutory objectives and functions, including their new secondary competitiveness and growth objective. With the predictability and efficiency of our regulatory environment a key component of UK competitiveness, speedy regulator decisions on applications to invest capital, appoint new leaders, start new businesses, or create new products are important factors for companies considering where to locate business activities and investments.
• Work with regulators and industry to ensure that the regulators’ metrics to measure the delivery of their secondary objective on competitiveness and growth are refined over time to remain relevant; and a framework is developed to track the competitiveness of the UK regulatory environment against those of other international financial centres. Effective reporting, scrutiny and accountability will help to ensure the UK maintains high standards that support its competitiveness, and inform where regulatory adaptation and operational enhancements are needed to boost regulatory efficiency and competitiveness.
• Work with industry to deliver and continue to refine the plan on incentivising greater UK investment in shares in UK companies. This should consider both Defined Benefit (DB) and Defined Contribution (DC) pension pools of capital and complete the work of the Bank of England’s Productive Finance Working Group by stimulating more take-up of the Long-Term Asset Fund (LTAF) by DC pension funds. More ambitious attempts should be made to consolidate DC pension funds, alongside improving contribution rates to those funds, to build on the success of auto-enrolment.
• Take a more holistic and considered approach to delivering British equity investment from British households, including a comprehensive review of the ISA regime to understand what public policy goals it is striving to achieve and how it can be best streamlined to deliver on this. There should also be consideration of the boundary between ‘advice’ and ’guidance’, open data and AI solutions.
• Design targeted incentives for institutional investors/DC funds to put money to work at each stage of the company funding continuum (venture capital, private equity, quoted and listed equity). The multiplier effect on economic growth of even small changes in allocation of institutional capital to UK listed and quoted equities would be significant.
• Seek international standards and alignment in the regulation of technologies, such as AI and digital assets to ensure global firms don’t apply the ‘highest watermark’, which may challenge any potential gains from the UK’s pro-innovation approach.
• Encourage innovation by continuing to develop clusters for technologies such as AI across all parts of the UK and assigning additional research funding for universities. Creating a fertile ground for collaboration between academia, industry and startups is essential to support innovation, attract investment, and drive economic growth across the country.
• Reskill and upskill the population to future proof talent, while providing education about emerging technologies and the opportunities they present.
• Deliver additional investment to improve the justice system, including upgrading the physical and digital infrastructure of the courts, tackling backlogs and adequately funding legal aid services for citizens. The international commercial success of the UK’s legal sector is dependent on the continued functioning of the UK’s wider domestic legal system.