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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

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    File URL: https://grips.repo.nii.ac.jp/record/2000103/files/DP24-9.pdf
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    References listed on IDEAS

    as
    1. Edwin M. Truman, 2010. "Sovereign Wealth Funds: Threat or Salvation?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4983.
    2. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Sovereign Wealth Funds; United Kingdom; Net Zero; Public Investment; Market Failure; Critical Industries;
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