The Business and Trade Committee’s inquiry into Financing the Real Economy comes at a critical time for addressing the UK’s chronic underinvestment. Despite being home to one of the world’s largest financial centres, the sector has a poor record of supporting UK businesses and meeting long-term national priorities. UK pension funds still direct only 18% of assets to UK productive investment, and as little as 4% to the net zero transition. Meanwhile, SMEs and infrastructure projects struggle to access affordable finance, while stock markets prioritise dividends and buybacks over new capital. The submission argues that government policy has prioritised international competitiveness over domestic needs, missing opportunities to shape finance in support of industrial strategy and green growth. Alongside expert organisations and civil society networks, we call for reforms that align finance with the UK’s economic and climate goals, including stronger roles for the National Wealth Fund, new credit guidance tools, and targeted incentives for green investment.
