The City of London Corporation has urged the government to set a national strategy to encourage more sovereign-owned funds to establish offices in the country, claiming it could attract a further £7.7bn-worth of FDI across the UK by 2030. 

In a report released on September 19, the Square Mile’s governing body cites fresh data showing that sovereign wealth funds (SWFs) and public pension funds that have opened offices in the UK over the past decade have gone on to double their investment in the country over the following five years. 

To fully capitalise on this, the report recommends the establishment of a nationwide financial and professional services strategy, echoing calls by former investment minister Lord Johnson to encourage more foreign pension funds and SWFs to set up shop in the UK. 

“The UK’s financial and professional services are the engine in the country’s economy. It is therefore essential that the UK positions itself as the premier destination for overseas investors,” said Chris Hayward, policy chairman of the City of London Corporation, in a statement. 

The report points to examples including Canadian pension fund British Columbia Investment Management Corporation, which increased its UK investments by £4.7bn after opening an office in 2016. Singapore SWF Temasek also increased its UK investments by £2.2bn after opening in the UK in 2014.

To implement the national strategy and target sovereign investors, the City of London recommends establishing a council consisting of the public and private sectors, and chaired by the chancellor. “This will provide a streamlined and organised system that supports foreign investors seeking to invest capital in the UK,” stated Mr Hayward.

The report comes as the role of sovereign investors in driving FDI is increasing globally. Two months ago, the UK’s new Labour government launched the country’s first SWF, the National Wealth Fund, which will be seeded with £7.3bn-worth of capital. This year Spain’s SWF, Cofides, has also worked on launching a SWF-style fund to derisk inbound investment into innovative industries. 

Over the past decade, some £119.5bn has been invested domestically by sovereign investors with a UK presence, according to the City of London. These have stretched from Aberdeen in Scotland to Poole in southern England.

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