LONDON (Reuters) – Britain’s new government took a first step on Tuesday to boost public and private investment to modernise the economy, placing a National Wealth Fund to sit atop the existing state-owned British Business Bank and UK Infrastructure Bank.
Prime Minister Keir Starmer and his finance minister Rachel Reeves hope to attract investment in new and growing industries as part of their push to speed up Britain’s economy and meet the challenge of net zero.
“Britain is open for business – and the work of change has begun,” Reeves said as she unveiled the new structure of the state entities charged with increasing investment.
Starmer has rejected Labour’s long-held image as a “tax and spend” party and has pledged to channel more private investment to fix problems in Britain’s economy.
Business investment in the country has been weak since the 2016 Brexit vote which triggered years of political instability and much of the country lags behind London in terms of productivity.
Labour plans to allocate an additional 7.3 billion pounds ($9.35 billion) of public money via the existing UK Infrastructure Bank so investments can be launched immediately.
The government hopes to attract three times as much from private capital to invest in areas such as ports, hydrogen, automotives and steel.
Officials say the new fund will serve as a sovereign-backed green catalytic fund and will not resemble sovereign wealth funds operated by resource-rich countries such as Norway and Saudi Arabia.
The government will bring forward new legislation to cement the fund in statute, making it a permanent institution, the finance ministry said.
($1 = 0.7811 pounds)