Stumbling Start for the British National Wealth Fund: Cuts and Criticisms

The British government has significantly scaled back the original plans for the National Wealth Fund (NWF): Instead of the promised 7.3 billion pounds, only 5.8 billion pounds of new funds will now flow into the fund, which is intended to support the expansion of the green economy. Despite the government's rhetoric about the importance of additional investments in decarbonization, a gap of 1.5 billion pounds remains, which, according to the Treasury, will be spent in other ways on ports, gigafactories, clean steel, carbon capture, and green hydrogen. On Monday, the finance minister announced that the UK Infrastructure Bank (UKIB) will be rebranded as the NWF to mobilize private investment amounting to "tens of billions of pounds." The decision was based on a report led by Mark Carney, the former Governor of the Bank of England, which suggested integrating the fund into an existing institution rather than establishing a new one. However, not everyone is convinced: Sir Nicholas Lyons, chairman of the pensions group Phoenix, criticized the NWF as being undersized compared to global asset management standards. "Seven billion pounds is not a competitive amount when looking at the largest asset owners worldwide," said Lyons. At the same time, Business Minister Jonathan Reynolds announced the creation of the British Growth Partnership, which aims to channel private capital into UK growth companies through the British Business Bank. This new vehicle is expected to raise hundreds of millions of pounds, while Prime Minister Keir Starmer assured global investors of resolving bureaucratic hurdles and prioritizing growth. A green strategic shift is imminent: As part of a new Green Paper, fresh impulses for the industrial strategy will soon be formulated with the involvement of businesses and other stakeholders.