IDEAS home Printed from https://ideas.repec.org/p/ngi/dpaper/24-09.html
   My bibliography  Save this paper

The UK’s New Sovereign Wealth Fund: Some Preliminary Observations

Author

Listed:
  • Guanie Lim

    (National Graduate Institute for Policy Studies, Tokyo, Japan)

  • Chen Li

    (The Chinese University of Hong Kong, Hong Kong)

  • Wellington N.K Aweke

    (Ministry of Finance, Ghana)

Abstract

The newly elected Labour government of the United Kingdom (UK) introduced the National Wealth Fund (NWF) in July 2024, a £7.3 billion ($9.34 billion) initiative aimed at bolstering investment in key infrastructure projects, particularly in industries crucial for the green energy transition. The NWF is intended to attract private sector investment, with the government partly sharing the financial risk of costly projects with long gestation period. Chancellor Rachel Reeves describes the fund as a ‘concierge’ for investors, designed to streamline investment into the UK. However, there is debate about whether the NWF is an orthodox sovereign wealth fund found in countries with budget and/or trade surpluses such as Norway and Singapore. Instead, it appears more akin to a development or strategic sovereign wealth fund, channelling capital towards industries critical to the UK’s long term economic health. The fund’s initial budget, although significant in and of itself, pales in comparison to the world’s largest sovereign wealth funds and may fall short of the estimated £50-60 billion ($64-77 billion) needed annually to meet the UK’s net zero goals. Additionally, concerns have been raised about the fund’s sustainability and whether it can effectively address the UK’s underinvestment malaise, which stems from structural factors such as a blocker-friendly planning system and post-Brexit political uncertainties.

Suggested Citation

  • Guanie Lim & Chen Li & Wellington N.K Aweke, 2024. "The UK’s New Sovereign Wealth Fund: Some Preliminary Observations," GRIPS Discussion Papers 24-09, National Graduate Institute for Policy Studies.
    • Handle: RePEc:ngi:dpaper:24-09
    as

    Download full text from publisher

    File URL: https://grips.repo.nii.ac.jp/record/2000103/files/DP24-9.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Linda Yin-nor Tjia, 2022. "Kazakhstan’s leverage and economic diversification amid Chinese connectivity dreams," Third World Quarterly, Taylor & Francis Journals, vol. 43(4), pages 797-822, April.
    2. Edwin M. Truman, 2010. "Sovereign Wealth Funds: Threat or Salvation?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4983, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Borisova, Ginka & Fotak, Veljko & Holland, Kateryna & Megginson, William L., 2015. "Government ownership and the cost of debt: Evidence from government investments in publicly traded firms," Journal of Financial Economics, Elsevier, vol. 118(1), pages 168-191.
    2. I. A. Leonov & A. K. Moiseev, 2018. "The Role of Sovereign Funds in Stabilizing the World’s Financial Architecture," Studies on Russian Economic Development, Springer, vol. 29(1), pages 56-61, January.
    3. Mardi Dungey & Renee Fry-McKibbin & Verity Linehan, 2014. "Chinese resource demand and the natural resource supplier," Applied Economics, Taylor & Francis Journals, vol. 46(2), pages 167-178, January.
    4. Olusegun Ayodele Akanbi & Rashid Sbia, 2018. "Investigating the twin-deficit phenomenon among oil-exporting countries: Does oil really matter?," Empirical Economics, Springer, vol. 55(3), pages 1045-1064, November.
    5. Jeffrey Frankel, 2012. "The Natural Resource Curse: A Survey of Diagnoses and Some Prescriptions," Growth Lab Working Papers 36, Harvard's Growth Lab.
    6. Cooper, Richard N., 2011. "Reform of the International Monetary System: A Modest Proposal," Scholarly Articles 13581009, Harvard University Department of Economics.
    7. Warren Clarke, 2016. "Sovereign Patent Funds: Sovereign Wealth Funds 2.0?," Global Policy, London School of Economics and Political Science, vol. 7(4), pages 577-583, November.
    8. Allie Bagnall & Edwin M. Truman, 2011. "IFSWF Report on Compliance with the Santiago Principles: Admirable but Flawed Transparency," Policy Briefs PB11-14, Peterson Institute for International Economics.
    9. Larissa Nawo & Désiré Avom & Kyle McNabb & Luc Nembot, 2019. "Unofficial sovereign wealth funds and duration in power in Africa," WIDER Working Paper Series wp-2019-57, World Institute for Development Economic Research (UNU-WIDER).
    10. Edwin M. Truman, 2011. "Sovereign Wealth Funds: Is Asia Different?," Working Paper Series WP11-12, Peterson Institute for International Economics.
    11. Aktoty Aitzhanova & Shigeo Katsu & Johannes F. Linn & Vladislav Yezhov (ed.), 2014. "Kazakhstan 2050: Toward a Modern Society for All," Books, Emerging Markets Forum, edition 1, number kazakh2050, July.
    12. Ghouma, Hatem H. & Ouni, Zeineb, 2022. "The sovereign wealth funds risk premium: Evidence from the cost of debt financing," Journal of Corporate Finance, Elsevier, vol. 76(C).
    13. Jeffrey B. Nugent & Sara Bazoobandi, 2017. "Political Economy of Sovereign Wealth Funds in the Oil Exporting Countries of the Arab Region and Especially the Gulf," Working Papers 1143, Economic Research Forum, revised 10 May 2003.
    14. Jostein Tvedt, 2012. "Sovereign wealth funds, portfolio choice and corrective taxes," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 5(2), pages 187-196, December.
    15. Kamiński, Tomasz, 2017. "Sovereign Wealth Fund investments in Europe as an instrument of Chinese energy policy," Energy Policy, Elsevier, vol. 101(C), pages 733-739.
    16. C. Fred Bergsten, 2014. "Addressing Currency Manipulation Through Trade Agreements," Policy Briefs PB14-2, Peterson Institute for International Economics.
    17. Di Wang & Quan Li, 2016. "Democracy, Veto Player, and Institutionalization of Sovereign Wealth Funds," International Interactions, Taylor & Francis Journals, vol. 42(3), pages 377-400, May.
    18. Linda Calabrese, 2024. "Diversifying Away from Extractives: The Belt and Road Initiative, Chinese Capital and Industrialisation in the Kyrgyz Republic," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(3), pages 601-638, June.
    19. Amar, J. & Lecourt, C., 2023. "Sovereign wealth fund governance: A trade-off between internal and external legitimacy," International Business Review, Elsevier, vol. 32(6).
    20. Allie Bagnall & Edwin M. Truman, 2013. "Progress on Sovereign Wealth Fund Transparency and Accountability: An Updated SWF Scoreboard," Policy Briefs PB13-19, Peterson Institute for International Economics.

    More about this item

    Keywords

    Sovereign Wealth Funds; United Kingdom; Net Zero; Public Investment; Market Failure; Critical Industries;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ngi:dpaper:24-09. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/gripsjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.