NEWPORT, WALES – UK Chancellor of the Exchequer Jeremy Hunt attends the Welsh Conservative Party Spring 2023 Conference in Newport, Wales, April 28, 2023.
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Britain has announced plans to ensure that billions of pounds worth of pension fund money is invested in early-stage businesses in a quest to boost economic growth as it emerges as an unattractive country for technology.
In a speech on Monday evening, Chancellor of the Exchequer Jeremy Hunt outlined a set of reforms that he said would enable pensioners to reap long-term returns from investing in private start-ups, adding £1,000 a year ( $1,283).
Among the steps taken by the government is an agreement among the country’s largest defined contribution pension providers to allocate 5% of assets in their default funds to unlisted shares by 2030.
If all other defined contribution pension schemes followed suit, it could lead to up to 50 billion pounds ($64 billion) of investment in high-growth businesses, Hunt said.
At the same time, he added that pensions for the average wage earner could increase by 12% to £16,000 as defined contribution pension schemes work towards more efficient investments.
The UK has the largest pensions market in Europe, worth over £2.5 trillion.
“We want to be the world’s next Silicon Valley and scientific superpower, embracing new technologies like artificial intelligence, and bringing together the skills of our financiers, entrepreneurs, and scientists to make our country a force for good in the world while leading the way.” … in a speech at Mansion House, according to prepared remarks the Treasury Department shared with CNBC.
“It means making sure our traditionally nimble financial services industry has the right structures, provides the best security for investors, provides capital for businesses and has the best talent in the UK to make it happen.”
Hunt also pledged to create an “intermittent trading venue” that would allow public market investors to trade shares in unlisted companies. It would serve as a halfway house for private companies looking for alternative ways to raise capital through public listings.
UK tech record under criticism
It follows criticism from prominent figures in the tech world that the UK is becoming less attractive for tech companies to do business in.
Microsoft Confidence in technology in the UK has been “seriously shaken” after regulators blocked the company’s takeover of video game publisher Activision Blizzard, chief executive Brad Smith said. Meanwhile, Nikolay Storonsky, chief executive of fintech firm Revolut, said he would “never” list in London due to an unfavorable tax regime and bureaucratic regulations.
Separately, chip designer Arm chose to list in the US rather than the UK after heavy lobbying by British officials. That dealt a major blow to China’s ambitions to become the IPO destination for the world’s biggest technology companies.
“On a personal level, I very much see the potential upside for the UK tech industry,” Will Wynne, co-founder of Smart, an online workplace pensions platform, told CNBC. Opportunities for others to be supported to achieve similar success.”
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