Seize the opportunity for economic growth
Britain’s start-ups are genuinely world-beating; in 2022 our fast-growing tech companies raised more than their French and German rivals combined. Yet our ability to match innovative origins with the support necessary to turn start-ups into scale-ups is sadly lacking. As Sir Nigel Wilson, chief executive of Britain’s biggest asset manager, Legal & General, puts it, “The degree of entrepreneurship in our universities is off the scale”, but “we haven’t got a capital system that is set up for these people to become successful in the way that the United States has”.
Too often, British founders discover that they must turn to America to find the investment necessary to fuel their continued growth and turn ingenious ideas into commercial juggernauts. In turn, they are tempted overseas, with their companies and the associated economic benefits disappearing from these shores. London’s rivals in New York and San Francisco are often the beneficiaries. Sir Nigel’s summary of the problems facing British innovators is depressingly familiar: a toxic cocktail of “planning policy and regulation” mixed with “de-equitisation” of pension fund investments limiting the cash available to innovative firms.
This tale is particularly frustrating given this country’s remarkable promise. Our research sector punches well above its weight globally, and London is still a major financial centre. As Sherelle Jacobs notes opposite, we ought to be uniquely placed to take advantage of the coming industrial revolution. If we cannot, we will have squandered a starting hand other nations can only envy.
Yet squander it we may. Consistently, Britain has shunned opportunities to lower the burden of taxation, slim the book of regulation and create the environment in which innovation and investment can flourish. Charles Krauthammer once said that decline is a choice; it is one that has unfortunately become habitual to successive governments. The 2016 vote offered a singular chance to change this, to start from a blank slate and make the United Kingdom one of the best places in the world to form and grow businesses. Sadly, as Sir Nigel’s comments highlight, it has yet to be seized.
In the coming days, this paper will run a series of articles on the problems plaguing British pension funds, and in particular their failure to invest in the economy. As we face a new technological epoch, these issues cannot be allowed to derail economic growth for much longer.