The U.K. government wants pension funds to provide long-term investment as part of plans to develop "innovative firms," said Philip Hammond, chancellor of the exchequer.
Announcing the 2017 autumn budget, Mr. Hammond said the government is publishing "an action plan to unlock over £20 billion ($26.4 billion) of new investment in U.K. knowledge-intensive scale-up businesses including … by facilitating pension fund access to long-term investments."
The move forms part of a plan to unlock "patient capital" over the next decade "so that innovative high-growth firms can achieve their full potential," said a budget document on the government website.
The budget document said the government will give "pension funds confidence that they can invest in assets supporting innovative firms as part of a diverse portfolio."
To help with this, the U.K. Pensions Regulator is to clarify guidance on investments with long-term investment horizons. "With over £2 trillion in U.K. pension funds, small changes in investment have the potential to transform the supply of capital to innovative firms," the document said.
The government also said in the document that it will publish a new long-term strategy "to ensure that the U.K. asset management industry continues to thrive and deliver the best possible outcomes for investors and the U.K. economy."
This will include taking steps to improve skills, harness financial technology solutions, bring innovative investment strategies into the mainstream and "continuing a coordinated programme of international engagement," the document said. These steps will be developed in collaboration with the money management industry.
The budget announcement also referenced new Office for Budget Responsibility figures for U.K. growth. The OBR expects lower gross domestic product growth over the coming years, with a revision downward for 2017 to 1.5%. In its March statement, the OBR forecast 2% growth for the U.K.
For 2018, GDP growth was revised to 1.4%, from 1.6% in the March forecast; and for 2019 and 2020, growth is projected at 1.3%. In the March forecast, GDP growth was projected at 1.7% for 2019, and 1.9% for 2020. Mr. Hammond said the OBR forecast for 2021 GDP growth was 1.5%, vs. 2% in the March forecast.
The U.K. exit, or Brexit, from the European Union was also addressed in the budget announcement and the document. "The government is approaching the EU exit negotiations anticipating success," the document said. "The government does not want or expect to leave without a deal, but while it seeks a new partnership, it is planning for a range of outcomes, as is the responsible thing to do."
To support preparations Mr. Hammond said almost £700 million of additional funding has been provided to date, and announced a further £3 billion to ensure the government can prepare effectively for leaving the EU.