UK sets up National Wealth Fund to turn investment into growth

Chancellor Rachel Reeves reveals companies pledged £63bn of investment in Britain at summit on Monday

Eric Schmidt, left, former head of Google, talks to UK Prime Minister Keir Starmer at the International Investment Summit at the Guildhall in London. EPA

An International Investment Summit in London was told on Monday the country would set up a National Wealth Fund to unleash a new wave of capital projects across the UK as top global businesses announced deals worth billions.

Keir Starmer, the Prime Minister, said his government was marking 100 days in power by making growth and wealth creation the number one priority of his team. "We will rip out the bureaucracy that blocks investment," he said.

Chancellor Rachel Reeves told the meeting an era of instability was over and said the UK would use a sovereign wealth fund model to create infrastructure and other long-term assets for the economy.

Officials said a total of £63 billion ($82.2 billion) of investment was announced at the event, a figure that more than doubled the £29.5 billion committed at last year’s Global Investment Summit. The assembly of scores of corporate business leaders and finance magnates was designed to herald the change promised by the Labour government after 14 years of Conservative rule. Among those attending were leaders of Google, BlackRock and GlaxoSmithKline, the pharmaceutical giant.

Yasir Al Rumayyan, head of Saudi Arabia's Public Investment Fund, was among the attendees. Sultan Ahmed bin Sulayem, chairman of DP World, was also in attendance after the firm put out an announcement of a £1 billion investment project that would see two massive container berths built outside London that will house Europe's highest cranes, as high as Big Ben.

Sir Nicholas Lyons, chairman of the insurance group Phoenix, said bond market investors agreed with the government that it should borrow to invest through the National Wealth Fund. He said with a properly constituted arms-length investment board the fund could win the confidence of the market.

Goldman Sachs gave a further boost to the government ahead of Ms Reeves's budget at the end of the month, saying that demand for government debt would recover strength as she announces increases. The Chancellor is believed to be plotting tax rises on the wealthiest and business on October 30.

Plans are also believed to be advanced to change the debt rule governing budget powering by switching the target from gross to net borrowings. This could allow the Chancellor to opt for what Goldman Sachs called a cautious increase in public investment through spending of more than £10 billion a year.

Mr Starmer used his address not only to talk about his youthful ambitions to play the flute as a professional musician but promised a less lyrical drive to rip up regulations holding back innovation and new project developments.

“This is an age of great possibility – huge revolutions in digital technology, in clean energy, medicine, life sciences, each with a competitive potential to fundamentally change the way we live and the way that we work,” he said.

Ms Reeves said the National Wealth Fund would "crowd-in" private investment and act as a catalyst for growth industries. "We want businesses here not just to start up but to scale up," she said.

The executives from the world's biggest banks, investment groups and insurers ended the day at St Paul's Cathedral in the City of London with King Charles III, featuring a performance by Sir Elton John.