Vision for Economic Growth

a roadmap to prosperity

In partnership with: Vision for Economic Growth — a roadmap to prosperity

Vision for Economic Growth — a roadmap to prosperity 3 Contents Foreword 4 Introduction 6 Industry leads for this report 7 Executive summary 8 1. Support the conditions for growth 14 2. Raise investment levels 20 3. Become a digital-ﬁrst economy 26 4. Anchor the UK as a leader in sustainable ﬁnance 32 5. Pursue world-class promotion and interconnectivity 38 Conclusion 44

Vision for Economic Growth — a roadmap to prosperity 5 Foreword Foreword\ Nicholas Lyons Christopher Hayward The Rt. Hon The Lord Mayor of the City of London Policy Chairman of the City of London Corporation The UK has enjoyed numerous periods of strong the world’s pre-eminent 昀椀nancial centre under Britain needs strong economic growth. A growing We must demonstrate how 昀椀nancial markets can help economic growth in the past. After World War Two, increasing threat. The London Stock Exchange economy means more investment, more jobs, and deliver the world’s transition to net zero. The UK has 1 the nation saw a sustained period of economic growth raised £16.3bn in 2017 — but, in 2021 the 昀椀gure more funding for public services. With the right made the early running and now we need to solidify 2 7 and near-full employment until the 1970s. But there’s was just £10.5bn. Meanwhile, London was not conditions, FPS can help drive economic growth that lead, becoming the go-to partner for green 昀椀nance. nothing preordained about growth: a peak won’t the clear leader in the City of London Corporation’s across the country. necessarily follow this trough we 昀椀nd ourselves in, annual benchmarking report for the 昀椀rst time ever We must think bigger on exports. Financial services post-Covid. And while the City has for so long supported this year — instead ranking joint 昀椀rst with New York. The sector is already one of the United Kingdom’s great 11 By the exports were worth £91bn to UK plc in 2022. 8 the UK’s prosperity, there’s no guarantee that will success stories. Not only does it provide 2.5 million jobs, end of the decade they can be worth even more, a 9 but £100bn in tax contributions each year; that’s more always be the case. The right conditions must prevail — These challenges are a wake-up call, and we cannot potential additional £24bn over 6 years, if we take action 10 than we spend on defence and policing combined. keep hitting the “snooze” button. to promote our exporting 昀椀rms. More exports will create good levels of investment, digital infrastructure, agile more income for UK companies, meaning more money regulation, a coherent 昀椀scal regime, a supportive I’m happy to say that change is already underway to But with international competition growing — from for our public services. political environment — or the sector will not be able New York in the west to Singapore in the east — our to fuel our economy in the way it must to support 21st boost the FPS sector. Recent reviews including Hill, century industries. Kalifa, Austin and Kent have set wheels in motion. past success is no guarantee of our future. We must make sure we operate on solid ground: being a great place to do business, being competitive on tax Organisations like TheCityUK, UK Finance, the Association If we want the UK to thrive, if we want FPS to remain the and drawing in talented people from across the globe. At the moment, there are three key challenges of British Insurers, the Investment Association, the engine of our economy, driving economic growth and Financial Services Skills Commission, and the Capital hampering the UK economy and the 昀椀nancial and helping to fund the public services we all rely on, we professional services (FPS) sector in particular. Markets Industry Taskforce — to name just a few — Our shared aim must be for our FPS sector to be the best- must take action. in-class, driving UK plc, creating the wealth and jobs that are helping create real momentum. And the Financial support the economy and supporting public services for GDP growth rates and labour productivity are not what Services and Markets Act and Mansion House Reforms We must take action so that growing 昀椀rms can get the remainder of this decade and beyond. they once were. Between 1995 and 2005, GDP growth are tangible products of this work. But we need to have the 昀椀nancing they need to grow and succeed here in and average wages grew by 29% and 30% respectively a long-term strategy for FPS towards which we in the in real terms. But between 2010 and 2020, they grew by City can all work to boost the UK’s competitiveness. Britain, and not have to cast their nets further a昀椀eld. Vision for Economic Growth has been produced with 3 Between 2008 and 2020, the UK saw Small 昀椀rms that grow here today are the big employers the input of more than 300 stakeholders from across just 8% and 4%. productivity growth of just 0.4% per year, compared to of tomorrow. This “roadmap” builds on all of this — focusing on the FPS. It outlines the sector as it can be. A roadmap for 4 an average of 0.9% in the 25 richest OECD countries. policymakers and politicians to strengthen the sector “Big Moves” we need to make over the ensuing months and years to catalyse further change. There’s no quick We must take action to lead in the adoption of new right across the country, so that together, our economy One study suggests GDP growth booms are nine times technology, not follow on behind. We must give our can grow and our future can 昀氀ourish. We now have an 昀椀x for sustained growth, prosperity and international 5 more likely with a higher level of business investment. regulators the licence to operate at the cutting edge opportunity to back British success, promote our world- competitiveness. So, this is a long-term approach But UK business investment as a proportion of GDP and to lead on arti昀椀cial intelligence (AI), machine leading sectors, and drive economic growth. We can that will extend well beyond my term as Lord Mayor remains lower than in almost all other G7 economies — learning, and other technologies. By setting global and we must take it. and across the next Parliament. I’m con昀椀dent if all and it’s been this way for decades.6 the key stakeholders pull together and follow these standards, we can lead the way, providing a competitive recommendations, we will have an FPS sector that is 昀椀t boost to our companies. If the FPS sector is the engine of the UK economy, it’s in to 昀椀nance our future. urgent need of a service. Meanwhile, our competitors are revving their own engines — putting the UK’s role as

Vision for Economic Growth — a roadmap to prosperity 5 Foreword Foreword\ Nicholas Lyons Christopher Hayward The Rt. Hon The Lord Mayor of the City of London Policy Chairman of the City of London Corporation The UK has enjoyed numerous periods of strong the world’s pre-eminent 昀椀nancial centre under Britain needs strong economic growth. A growing We must demonstrate how 昀椀nancial markets can help economic growth in the past. After World War Two, increasing threat. The London Stock Exchange economy means more investment, more jobs, and deliver the world’s transition to net zero. The UK has 1 the nation saw a sustained period of economic growth raised £16.3bn in 2017 — but, in 2021 the 昀椀gure more funding for public services. With the right made the early running and now we need to solidify 27 and near-full employment until the 1970s. But there’s was just £10.5bn. Meanwhile, London was not conditions, FPS can help drive economic growth that lead, becoming the go-to partner for green 昀椀nance. nothing preordained about growth: a peak won’t the clear leader in the City of London Corporation’s across the country. necessarily follow this trough we 昀椀nd ourselves in, annual benchmarking report for the 昀椀rst time ever We must think bigger on exports. Financial services post-Covid. And while the City has for so long supported this year — instead ranking joint 昀椀rst with New York.The sector is already one of the United Kingdom’s great 11 By the exports were worth £91bn to UK plc in 2022. 8 the UK’s prosperity, there’s no guarantee that will success stories. Not only does it provide 2.5 million jobs,end of the decade they can be worth even more, a 9 but £100bn in tax contributions each year; that’s more always be the case. The right conditions must prevail — These challenges are a wake-up call, and we cannot potential additional £24bn over 6 years, if we take action 10 than we spend on defence and policing combined. keep hitting the “snooze” button. to promote our exporting 昀椀rms. More exports will create good levels of investment, digital infrastructure, agile more income for UK companies, meaning more money regulation, a coherent 昀椀scal regime, a supportive I’m happy to say that change is already underway to But with international competition growing — from for our public services. political environment — or the sector will not be able New York in the west to Singapore in the east — our to fuel our economy in the way it must to support 21st boost the FPS sector. Recent reviews including Hill, century industries.Kalifa, Austin and Kent have set wheels in motion. past success is no guarantee of our future.We must make sure we operate on solid ground: being a great place to do business, being competitive on tax Organisations like TheCityUK, UK Finance, the Association If we want the UK to thrive, if we want FPS to remain the and drawing in talented people from across the globe. At the moment, there are three key challenges of British Insurers, the Investment Association, the engine of our economy, driving economic growth and Financial Services Skills Commission, and the Capital hampering the UK economy and the 昀椀nancial and helping to fund the public services we all rely on, we professional services (FPS) sector in particular.Markets Industry Taskforce — to name just a few — Our shared aim must be for our FPS sector to be the best- must take action. in-class, driving UK plc, creating the wealth and jobs that are helping create real momentum. And the Financial support the economy and supporting public services for GDP growth rates and labour productivity are not what Services and Markets Act and Mansion House Reforms We must take action so that growing 昀椀rms can get the remainder of this decade and beyond. they once were. Between 1995 and 2005, GDP growth are tangible products of this work. But we need to have the 昀椀nancing they need to grow and succeed here in and average wages grew by 29% and 30% respectively a long-term strategy for FPS towards which we in the in real terms. But between 2010 and 2020, they grew by City can all work to boost the UK’s competitiveness.Britain, and not have to cast their nets further a昀椀eld. Vision for Economic Growth has been produced with 3 Between 2008 and 2020, the UK saw Small 昀椀rms that grow here today are the big employers the input of more than 300 stakeholders from across just 8% and 4%. productivity growth of just 0.4% per year, compared to of tomorrow. This “roadmap” builds on all of this — focusing on the FPS. It outlines the sector as it can be. A roadmap for 4 an average of 0.9% in the 25 richest OECD countries. policymakers and politicians to strengthen the sector “Big Moves” we need to make over the ensuing months and years to catalyse further change. There’s no quick We must take action to lead in the adoption of new right across the country, so that together, our economy One study suggests GDP growth booms are nine times technology, not follow on behind. We must give our can grow and our future can 昀氀ourish. We now have an 昀椀x for sustained growth, prosperity and international 5 more likely with a higher level of business investment.regulators the licence to operate at the cutting edge opportunity to back British success, promote our world- competitiveness. So, this is a long-term approach But UK business investment as a proportion of GDP and to lead on arti昀椀cial intelligence (AI), machine leading sectors, and drive economic growth. We can that will extend well beyond my term as Lord Mayor remains lower than in almost all other G7 economies — learning, and other technologies. By setting global and we must take it. and across the next Parliament. I’m con昀椀dent if all and it’s been this way for decades.6 the key stakeholders pull together and follow these standards, we can lead the way, providing a competitive recommendations, we will have an FPS sector that is 昀椀t boost to our companies. If the FPS sector is the engine of the UK economy, it’s in to 昀椀nance our future. urgent need of a service. Meanwhile, our competitors are revving their own engines — putting the UK’s role as

Vision for Economic Growth — a roadmap to prosperity 7 Introduction Industry leads for this report The City of London Corporation is particularly grateful to the expertise and commitment of the industry leads who helped to shape the chapters and overall report throughout the project. Vivienne Artz Lisa Quest John Romeo Senior Data Strategy and Privacy Policy Advisor to the Centre for Information Policy Leadership Managing Partner, Oliver Wyman Partner and Head of UK & Ireland, and CEO, Oliver Wyman Forum Oliver Wyman Katharine Braddick Group Head of Strategic Policy and Advisor to the Group CEO, Barclays It can be easy to take the UK’s 昀椀nancial centre for granted, 15 In 2020, 43% of 昀椀nancial and outside of London. or even criticise its in昀氀uence, as many did in the wake related professional services exports originated Rebekah Clement 16 Corporate A昀昀airs Director, Lloyd’s of the Global Financial Crisis. But if we hope to revive from other regions and nations across the UK. Britain’s growth rate, extend prosperity across the UK, Huw Evans We cannot rest on our laurels, though. Rival centres and build a sustainable economy that will deliver for from Europe, Asia, and the Americas are elevating Partner, KPMG future generations, we need to celebrate our 昀椀nancial centre and empower it to play a leading role in meeting their game, and new challenges are knocking at the the biggest challenges of our time. door. The world needs to raise massive sums of Danny Lopez money in the coming years to combat climate change CEO, Glasswall and green the economy. And the UK must be able to The UK 昀椀nancial centre embodies so many of the qualities Neylin Mutlu that make Britain great. It is a magnet for the best and keep up as countries around the world experiment with Global Business Manager, Center for Carbon Transition and Sustainable Solutions, J.P. Morgan new technologies that have the potential to transform the brightest talent in a wide variety of professions, from banking and insurance, to asset management and the 昀椀nancial system and make it more accessible. consulting, to the law and accounting. The density of Sheila Nicoll Senior Public Policy Advisor, Schroders these skills in and around the City of London make it This report provides a roadmap to build on the UK’s existing strengths and bolster our 昀椀nancial centre to an attractive place to do business and facilitate easy Chris Woolard collaboration with policymakers, business leaders and meet these challenges. We propose nine big moves, Partner, Chair Global Regulatory Network, EY civil society representatives. including developing a long-term growth strategy for 昀椀nancial and professional services based on partnership With additional thanks to Baroness Kay Swinburne for her contribution in the early stages of the report between government and the industry; implementing We have a truly global 昀椀nancial centre. Our openness, legal and business traditions, and time zone and global regulatory and structural reforms to unleash greater prior to her ennoblement. domestic investment by UK pension and insurance funds; connectivity make the UK a place where the world comes We are also grateful to Allen & Overy for providing legal advisory services. Special thanks to James Roe, Bob Penn, to do business. The UK is home to the largest share of becoming a digital 昀椀rst economy by forging internationally 12 and the Nikki Johnstone, Matthew Townsend, Jane Finlayson-Brown, Damian Carolan, Jonathan Benson, Tom Roberts, international bank lending and borrowing, competitive data standards and promoting digital 13 This Jessica Kerslake, and Tamara Cizeika. largest centre for foreign exchange trading. veri昀椀cation, asset tokenisation, and arti昀椀cial intelligence; openness, in turn, helps drive innovation in our 昀椀nancial and aligning policy and industry standards on climate ecosystem. The UK attracts more 昀椀ntech investment to accelerate 昀椀nancing for the transition to a low- than the next ten European countries combined, and carbon economy. 14 This ability to globally ranks second only to the US. attract money and talent is an asset few rival centres The opportunity is there for the taking. It’s time for can match. government and industry to join together and unleash the power of 昀椀nance to create a more prosperous and These strengths extend bene昀椀ts far beyond London. sustainable future for all of us. Financial and related professional services employ one in every 13 workers in this country, two thirds of them

Vision for Economic Growth — a roadmap to prosperity 7 Introduction Industry leads for this report The City of London Corporation is particularly grateful to the expertise and commitment of the industry leads who helped to shape the chapters and overall report throughout the project. Vivienne Artz Lisa Quest John Romeo Senior Data Strategy and Privacy Policy Advisor to the Centre for Information Policy Leadership Managing Partner, Oliver Wyman Partner and Head of UK & Ireland, and CEO, Oliver Wyman Forum Oliver Wyman Katharine Braddick Group Head of Strategic Policy and Advisor to the Group CEO, Barclays It can be easy to take the UK’s 昀椀nancial centre for granted, 15 In 2020, 43% of 昀椀nancial and outside of London. or even criticise its in昀氀uence, as many did in the wake related professional services exports originated Rebekah Clement 16 Corporate A昀昀airs Director, Lloyd’s of the Global Financial Crisis. But if we hope to revive from other regions and nations across the UK. Britain’s growth rate, extend prosperity across the UK, Huw Evans We cannot rest on our laurels, though. Rival centres and build a sustainable economy that will deliver for from Europe, Asia, and the Americas are elevating Partner, KPMG future generations, we need to celebrate our 昀椀nancial centre and empower it to play a leading role in meeting their game, and new challenges are knocking at the the biggest challenges of our time.door. The world needs to raise massive sums of Danny Lopez money in the coming years to combat climate change CEO, Glasswall and green the economy. And the UK must be able to The UK 昀椀nancial centre embodies so many of the qualities Neylin Mutlu that make Britain great. It is a magnet for the best and keep up as countries around the world experiment with Global Business Manager, Center for Carbon Transition and Sustainable Solutions, J.P. Morgan new technologies that have the potential to transform the brightest talent in a wide variety of professions, from banking and insurance, to asset management and the 昀椀nancial system and make it more accessible. consulting, to the law and accounting. The density of Sheila Nicoll Senior Public Policy Advisor, Schroders these skills in and around the City of London make it This report provides a roadmap to build on the UK’s existing strengths and bolster our 昀椀nancial centre to an attractive place to do business and facilitate easy Chris Woolard collaboration with policymakers, business leaders and meet these challenges. We propose nine big moves, Partner, Chair Global Regulatory Network, EY civil society representatives.including developing a long-term growth strategy for 昀椀nancial and professional services based on partnership With additional thanks to Baroness Kay Swinburne for her contribution in the early stages of the report between government and the industry; implementing We have a truly global 昀椀nancial centre. Our openness, legal and business traditions, and time zone and global regulatory and structural reforms to unleash greater prior to her ennoblement. domestic investment by UK pension and insurance funds; connectivity make the UK a place where the world comes We are also grateful to Allen & Overy for providing legal advisory services. Special thanks to James Roe, Bob Penn, to do business. The UK is home to the largest share of becoming a digital 昀椀rst economy by forging internationally 12 and the Nikki Johnstone, Matthew Townsend, Jane Finlayson-Brown, Damian Carolan, Jonathan Benson, Tom Roberts, international bank lending and borrowing,competitive data standards and promoting digital 13 This Jessica Kerslake, and Tamara Cizeika. largest centre for foreign exchange trading. veri昀椀cation, asset tokenisation, and arti昀椀cial intelligence; openness, in turn, helps drive innovation in our 昀椀nancial and aligning policy and industry standards on climate ecosystem. The UK attracts more 昀椀ntech investment to accelerate 昀椀nancing for the transition to a low- than the next ten European countries combined, and carbon economy. 14 This ability to globally ranks second only to the US. attract money and talent is an asset few rival centres The opportunity is there for the taking. It’s time for can match. government and industry to join together and unleash the power of 昀椀nance to create a more prosperous and These strengths extend bene昀椀ts far beyond London. sustainable future for all of us. Financial and related professional services employ one in every 13 workers in this country, two thirds of them

Vision for Economic Growth — a roadmap to prosperity 9 representatives from industry alongside government Executive summary Government Pension Schemes (LGPS) increase their and regulators, could help design and implement allocation to unlisted equities to 10% (which the the strategy. government is consulting on at time of publication), and if UK DC schemes allocate at least 5% of their Raise investment levels 17 Reforms to Solvency default funds to unlisted equities. For greater prosperity and growth, the UK needs II could potentially unlock £100bn from the insurance higher long-term returns for savers and more and long-term savings sector over the coming decade 18 Capital will only 昀氀ow if these regulatory investment in its 昀椀rms and infrastructure to from 2024. create high quality jobs. The UK’s FPS 昀椀rms are reforms are accompanied by profound cultural change. leaders in providing capital to 昀椀rms and projects In addition, there will need to be a signi昀椀cant increase in savings levels into DC retirement schemes. globally. Deploying this expertise more consistently at home will pay dividends. It has the potential Big move #3: maximise the eﬀectiveness of every to improve returns for long-term savers, provide capital for businesses to pursue new opportunities, pound of government support for growth companies. Government deploys 昀椀nancial support across the and create compelling investment options for international investors. economy, nationally and locally. Clarifying how these disparate funding schemes align to major strategic Big move #2: fully implement a programme of change outcomes would provide strong signalling. The clearer These objectives are delivered through a series of Nearly everyone in the UK interacts with 昀椀nancial for UK pension and insurance funds. These reforms the priorities, the greater the chance of leveraging in and professional services (FPS) on a daily basis. For “big moves”, or strategic reforms, that are designed private capital. Operationally, 昀椀rms also 昀椀nd it di昀漀cult will bene昀椀t long-term savers while also supporting some consumers, those dealings may consist of daily to create transformational change over time. Often growth companies, infrastructure, and the wider to navigate the opportunities. This could be made much purchases using a credit/debit card or keeping money they amplify existing recommendations and calls for economy. Government should progress the reforms more user-friendly with a “product and institution-neutral” securely in current accounts. For others, it is about change that have been brought forward by various for which there is strong and broad ranging support. advisory team and portal that would help 昀椀rms navigate milestone events such as taking out insurance for a new industry bodies, government reviews, and civil society the choices available to them. There is also an opportunity This includes Solvency II reform and a new Value for car, a mortgage for a new home, or a savings product to organisations. We expect these big moves to deliver to explore creating investment vehicles that could provide Money framework for de昀椀ned contributions (DC) 19 prepare for retirement. Individuals and businesses may even bigger impact than the numbers suggest as the a destination for long-term capital. schemes. Government has indicated that up to £75bn seek investment advice, legal expertise, or other forms bene昀椀ts they will provide reach far beyond FPS. Through in private capital could be unlocked by 2030 if Local of professional services. FPS supports UK businesses the role of FPS as an enabler, we believe these initiatives to stay on top of their 昀椀nances, invest in order to drive will deliver a signi昀椀cant knock-on impact on overall productivity, manage risk, and create jobs in the UK and growth for the UK economy. abroad. Regardless of the speci昀椀c interaction, FPS boils down to ensuring people can get through good times Support the conditions for growth Government, regulators, and the industry must support and bad, and plan for the future. It is vital that we have an industry that supports consumers and businesses the conditions for growth. This is about getting the basics right across the country and through all stages in right. Some conditions, such as world-class infrastructure, their lives. apply to the whole economy. Others are speci昀椀c to the FPS sector and can be far more e昀昀ectively implemented This report highlights 昀椀ve critical objectives as part of a wider FPS strategy (see below). to strengthen UK-based FPS as a driver of jobs and prosperity: Big move #1: develop a long-term strategy for UK- • Support the conditions for growth based FPS to support growth (an “FPS strategy”). • Raise investment levels The strategy should outline the policy priorities that • Turn the UK into a digital-昀椀rst economy government, regulators and industry will focus on to support a competitive FPS industry to drive growth. • Anchor the UK as a leader in This would include how FPS can best support the sustainable 昀椀nance growth of potential areas of competitive advantage • Develop world-class promotion such as sustainable 昀椀nance, and emerging technologies and interconnectivity such as tokenisation. Clear timelines and routine Leeds Docks, Leeds reporting will be key. An FPS Partnership Council, with

Vision for Economic Growth — a roadmap to prosperity 9 representatives from industry alongside government Executive summary Government Pension Schemes (LGPS) increase their and regulators, could help design and implement allocation to unlisted equities to 10% (which the the strategy. government is consulting on at time of publication), and if UK DC schemes allocate at least 5% of their Raise investment levels 17 Reforms to Solvency default funds to unlisted equities. For greater prosperity and growth, the UK needs II could potentially unlock £100bn from the insurance higher long-term returns for savers and more and long-term savings sector over the coming decade 18 Capital will only 昀氀ow if these regulatory investment in its 昀椀rms and infrastructure to from 2024. create high quality jobs. The UK’s FPS 昀椀rms are reforms are accompanied by profound cultural change. leaders in providing capital to 昀椀rms and projects In addition, there will need to be a signi昀椀cant increase in savings levels into DC retirement schemes. globally. Deploying this expertise more consistently at home will pay dividends. It has the potential Big move #3: maximise the eﬀectiveness of every to improve returns for long-term savers, provide capital for businesses to pursue new opportunities, pound of government support for growth companies. Government deploys 昀椀nancial support across the and create compelling investment options for international investors. economy, nationally and locally. Clarifying how these disparate funding schemes align to major strategic Big move #2: fully implement a programme of change outcomes would provide strong signalling. The clearer These objectives are delivered through a series of Nearly everyone in the UK interacts with 昀椀nancial for UK pension and insurance funds. These reforms the priorities, the greater the chance of leveraging in and professional services (FPS) on a daily basis. For “big moves”, or strategic reforms, that are designed private capital. Operationally, 昀椀rms also 昀椀nd it di昀漀cult will bene昀椀t long-term savers while also supporting some consumers, those dealings may consist of daily to create transformational change over time. Often growth companies, infrastructure, and the wider to navigate the opportunities. This could be made much purchases using a credit/debit card or keeping money they amplify existing recommendations and calls for economy. Government should progress the reforms more user-friendly with a “product and institution-neutral” securely in current accounts. For others, it is about change that have been brought forward by various for which there is strong and broad ranging support. advisory team and portal that would help 昀椀rms navigate milestone events such as taking out insurance for a new industry bodies, government reviews, and civil society the choices available to them. There is also an opportunity This includes Solvency II reform and a new Value for car, a mortgage for a new home, or a savings product to organisations. We expect these big moves to deliver to explore creating investment vehicles that could provide Money framework for de昀椀ned contributions (DC) 19 prepare for retirement. Individuals and businesses may even bigger impact than the numbers suggest as the a destination for long-term capital. schemes. Government has indicated that up to £75bn seek investment advice, legal expertise, or other forms bene昀椀ts they will provide reach far beyond FPS. Through in private capital could be unlocked by 2030 if Local of professional services. FPS supports UK businesses the role of FPS as an enabler, we believe these initiatives to stay on top of their 昀椀nances, invest in order to drive will deliver a signi昀椀cant knock-on impact on overall productivity, manage risk, and create jobs in the UK and growth for the UK economy. abroad. Regardless of the speci昀椀c interaction, FPS boils down to ensuring people can get through good times Support the conditions for growth Government, regulators, and the industry must support and bad, and plan for the future. It is vital that we have an industry that supports consumers and businesses the conditions for growth. This is about getting the basics right across the country and through all stages in right. Some conditions, such as world-class infrastructure, their lives.apply to the whole economy. Others are speci昀椀c to the FPS sector and can be far more e昀昀ectively implemented This report highlights 昀椀ve critical objectives as part of a wider FPS strategy (see below). to strengthen UK-based FPS as a driver of jobs and prosperity:Big move #1: develop a long-term strategy for UK- • Support the conditions for growthbased FPS to support growth (an “FPS strategy”). • Raise investment levelsThe strategy should outline the policy priorities that • Turn the UK into a digital-昀椀rst economygovernment, regulators and industry will focus on to support a competitive FPS industry to drive growth. • Anchor the UK as a leader in This would include how FPS can best support the sustainable 昀椀nancegrowth of potential areas of competitive advantage • Develop world-class promotion such as sustainable 昀椀nance, and emerging technologies and interconnectivitysuch as tokenisation. Clear timelines and routine Leeds Docks, Leeds reporting will be key. An FPS Partnership Council, with

Vision for Economic Growth — a roadmap to prosperity 11 Becoming a digital-ﬁrst economy to do so, would be another critical change. This can A truly digital-昀椀rst economy is one in which build on the digital regulatory reporting pilot already organisations and individuals have the capacity to underway by the Financial Conduct Authority (FCA) 22 innovate and drive growth. This requires reforms to The interventions can and the Bank of England (BoE). allow secure data sharing and an enabling mindset also help to ensure that the FCA and the Prudential across government and regulators. Regulatory Authority (PRA) deliver on their secondary competitiveness and growth objective. Big move #4: be internationally competitive on data and digital. The 昀椀rst step is to create a di昀昀erentiated Anchor the UK as a leader in sustainable ﬁnance approach to data policy and regulation that combines The transition to a sustainable economy represents Big move #7: scale innovative approaches to high standards with pragmatism. Another priority the great transformation growth opportunity of the if the hub could contribute an average additional uplift of sustainable 昀椀nance. The UK has a history of pioneering 21st century. There are vast investment and 昀椀nancing approximately 0.9% compound annual growth on top of is digital veri昀椀cation. Government must scale the sustainable 昀椀nance. There is an opportunity for it to deployment of the robust standards it has been needs to achieve global net zero emissions and nature- the forecasted growth of UK goods and services exports, cultivate high-integrity voluntary carbon markets, high- related commitments. UK FPS can work with the this would result in an increase of up to £24bn in FS developing. The UK government estimates that integrity nature markets and approaches for natural 28 exports to be achieved between 2024-2030. widespread adoption of digital veri昀椀cation solutions UK Government as it delivers its own sustainability 24 capital. The 昀椀nancing need, and opportunity, is vast. goals. It can also be a “go-to” partner for 昀椀rms and could deliver about £800m per annum to the UK Big move #9: create innovative networks across the economy, amounting to a potential £4.8bn in value countries across the world seeking to transition, One estimate suggests that closing the 昀椀nance gap to 20 Finally, government should world. The UK should 昀氀ip its trade policy to focus on protect biodiversity and deliver on other impact achieve nature-related outcomes targeted in UK policy added from 2024-2030. 25 The size consider emulating the US’s Electronic Data Gathering, services, as much as goods. Trade negotiators should and sustainability-related objectives. will require a minimum of £44-97bn by 2032. of voluntary carbon markets has also begun to grow. Analysis, and Retrieval (EDGAR) system of machine- use the full “trade toolbox” including digital and, readable company 昀椀lings to make it easier for investors Big move #6: create the conditions to scale and One estimate put the total market size at nearly US$2bn where appropriate, mutual recognition agreements of to assess information about public companies at the end of 2021. This marked an almost fourfold professional quali昀椀cations or regulatory frameworks. accelerate 昀椀nancing for a just transition towards when making investment decisions, building on a low-carbon economy. Financial and professional increase from 2020. Continued growth at this pace It should create mechanisms for partnership across 21 would see the the market expand exponentially by the recommendations from Rachel Kentʼs review. government, regulators, and industry to discuss trade services already play an important role in supporting 26 the transition and will continue to do so. However, the the end of the decade. priorities, better incorporating industry views. One Big move #5: invest in an innovation and growth enabling conditions must be in place for the 昀椀nancial such mechanism could be the FPS Partnership Council mindset across government, regulatory agencies, Pursue world-class promotion and interconnectivity sector to be able to provide the supporting 昀椀nance and described as part of big move #1. Finally, government and industry. Digital transformations of the next The future success of UK-based FPS depends on bringing investment. A crucial need is for the UK Government to should look to establish international forums for few years will require agile responses that cut across a compelling oﬀer to the world. That requires world- provide clarity and commitment around sector-speci昀椀c collaboration. One such mechanism could be multi- class promotion. It also rests on a network of strong existing regulatory boundaries. Government should transition policies that deliver on its net zero strategy as jurisdictional sandboxes, building on the work of relationships within a robust international framework. provide an even stronger mandate to the Digital part of predictable and durable energy and industrial the Global Financial Innovation Network (GFIN). The Regulation Cooperation Forum (DRCF) to enable policy foundations. With the right enabling conditions, sandboxes could develop interoperable regulatory Big move #8: showcase the UK’s FPS 昀椀rms like never collective leadership on regulatory approaches towards the signs are positive that the Government can mobilise approaches in response to emerging technologies and, before through the creation of an FPS Knowledge and emerging technologies such as digital veri昀椀cation, su昀漀cient private capital at pace to achieve the £100bn potentially, authorisation in multiple jurisdictions. Support Hub. The international promotion of the UK’s arti昀椀cial intelligence (AI), and tokenisation. Deploying it has said it will leverage as part of its Net-Zero Strategy 23 machine-readable regulation, and tasking regulators and British Energy Security Strategy. 昀椀nancial industry relies on a network of promotion Conclusion agencies at home and abroad. With targeted support, Strengthening the UK’s world-class 昀椀nancial centre these organisations could have far stronger impact. to meet today’s challenges is a goal worth 昀椀ghting An FPS Knowledge and Support Hub could support for, but it requires long-term commitment and international messaging and promotion by highlighting determination. It is time for the FPS sector to come compelling narratives, messaging and collateral of together in partnership with regulators and government existing promotion e昀昀orts; supporting the coordination to implement a roadmap that targets growth across and advocacy e昀昀orts of others (via their own direct the UK, turns up UK international competitiveness, and advocacy); and providing further industry research. This takes that o昀昀ering to the world. would help to increase FPS foreign direct investment (FDI) into the UK and exports abroad, in turn supporting The prize for getting this right is immense. We believe the broader economy’s growth. An illustrative estimate these big moves will enable the sector to create jobs and demonstrates the potential bene昀椀ts. For example, if the growth across the country and help customers prosper, hub could achieve an uptick of FPS FDI worth up to 6% of in the UK and around the world. These interventions 2022 levels, then up to £0.7bn additional FPS FDI could be could deliver an additional £225bn in investment for 27 29 As another example, captured between 2024 and 2030. the UK economy. The Garden at 120 Fenchurch, London

Vision for Economic Growth — a roadmap to prosperity 11 Becoming a digital-ﬁrst economyto do so, would be another critical change. This can A truly digital-昀椀rst economy is one in which build on the digital regulatory reporting pilot already organisations and individuals have the capacity to underway by the Financial Conduct Authority (FCA) 22 innovate and drive growth. This requires reforms to The interventions can and the Bank of England (BoE). allow secure data sharing and an enabling mindset also help to ensure that the FCA and the Prudential across government and regulators.Regulatory Authority (PRA) deliver on their secondary competitiveness and growth objective. Big move #4: be internationally competitive on data and digital. The 昀椀rst step is to create a di昀昀erentiated Anchor the UK as a leader in sustainable ﬁnance approach to data policy and regulation that combines The transition to a sustainable economy represents Big move #7: scale innovative approaches to high standards with pragmatism. Another priority the great transformation growth opportunity of the if the hub could contribute an average additional uplift of sustainable 昀椀nance. The UK has a history of pioneering 21st century. There are vast investment and 昀椀nancing approximately 0.9% compound annual growth on top of is digital veri昀椀cation. Government must scale the sustainable 昀椀nance. There is an opportunity for it to deployment of the robust standards it has been needs to achieve global net zero emissions and nature- the forecasted growth of UK goods and services exports, cultivate high-integrity voluntary carbon markets, high- related commitments. UK FPS can work with the this would result in an increase of up to £24bn in FS developing. The UK government estimates that integrity nature markets and approaches for natural 28 exports to be achieved between 2024-2030. widespread adoption of digital veri昀椀cation solutions UK Government as it delivers its own sustainability 24 capital. The 昀椀nancing need, and opportunity, is vast. goals. It can also be a “go-to” partner for 昀椀rms and could deliver about £800m per annum to the UK Big move #9: create innovative networks across the economy, amounting to a potential £4.8bn in value countries across the world seeking to transition, One estimate suggests that closing the 昀椀nance gap to 20 Finally, government should world. The UK should 昀氀ip its trade policy to focus on protect biodiversity and deliver on other impact achieve nature-related outcomes targeted in UK policy added from 2024-2030. 25 The size consider emulating the US’s Electronic Data Gathering, services, as much as goods. Trade negotiators should and sustainability-related objectives.will require a minimum of £44-97bn by 2032. of voluntary carbon markets has also begun to grow. Analysis, and Retrieval (EDGAR) system of machine- use the full “trade toolbox” including digital and, readable company 昀椀lings to make it easier for investors Big move #6: create the conditions to scale and One estimate put the total market size at nearly US$2bn where appropriate, mutual recognition agreements of to assess information about public companies at the end of 2021. This marked an almost fourfold professional quali昀椀cations or regulatory frameworks. accelerate 昀椀nancing for a just transition towards when making investment decisions, building on a low-carbon economy. Financial and professional increase from 2020. Continued growth at this pace It should create mechanisms for partnership across 21 would see the the market expand exponentially by the recommendations from Rachel Kentʼs review. government, regulators, and industry to discuss trade services already play an important role in supporting 26 the transition and will continue to do so. However, the the end of the decade. priorities, better incorporating industry views. One Big move #5: invest in an innovation and growth enabling conditions must be in place for the 昀椀nancial such mechanism could be the FPS Partnership Council mindset across government, regulatory agencies, Pursue world-class promotion and interconnectivity sector to be able to provide the supporting 昀椀nance and described as part of big move #1. Finally, government and industry. Digital transformations of the next The future success of UK-based FPS depends on bringing investment. A crucial need is for the UK Government to should look to establish international forums for few years will require agile responses that cut across a compelling oﬀer to the world. That requires world- provide clarity and commitment around sector-speci昀椀c collaboration. One such mechanism could be multi- class promotion. It also rests on a network of strong existing regulatory boundaries. Government should transition policies that deliver on its net zero strategy as jurisdictional sandboxes, building on the work of relationships within a robust international framework. provide an even stronger mandate to the Digital part of predictable and durable energy and industrial the Global Financial Innovation Network (GFIN). The Regulation Cooperation Forum (DRCF) to enable policy foundations. With the right enabling conditions, sandboxes could develop interoperable regulatory Big move #8: showcase the UK’s FPS 昀椀rms like never collective leadership on regulatory approaches towards the signs are positive that the Government can mobilise approaches in response to emerging technologies and, before through the creation of an FPS Knowledge and emerging technologies such as digital veri昀椀cation, su昀漀cient private capital at pace to achieve the £100bn potentially, authorisation in multiple jurisdictions. Support Hub. The international promotion of the UK’s arti昀椀cial intelligence (AI), and tokenisation. Deploying it has said it will leverage as part of its Net-Zero Strategy 23 machine-readable regulation, and tasking regulators and British Energy Security Strategy.昀椀nancial industry relies on a network of promotion Conclusion agencies at home and abroad. With targeted support, Strengthening the UK’s world-class 昀椀nancial centre these organisations could have far stronger impact. to meet today’s challenges is a goal worth 昀椀ghting An FPS Knowledge and Support Hub could support for, but it requires long-term commitment and international messaging and promotion by highlighting determination. It is time for the FPS sector to come compelling narratives, messaging and collateral of together in partnership with regulators and government existing promotion e昀昀orts; supporting the coordination to implement a roadmap that targets growth across and advocacy e昀昀orts of others (via their own direct the UK, turns up UK international competitiveness, and advocacy); and providing further industry research. This takes that o昀昀ering to the world. would help to increase FPS foreign direct investment (FDI) into the UK and exports abroad, in turn supporting The prize for getting this right is immense. We believe the broader economy’s growth. An illustrative estimate these big moves will enable the sector to create jobs and demonstrates the potential bene昀椀ts. For example, if the growth across the country and help customers prosper, hub could achieve an uptick of FPS FDI worth up to 6% of in the UK and around the world. These interventions 2022 levels, then up to £0.7bn additional FPS FDI could be could deliver an additional £225bn in investment for 27 29 As another example, captured between 2024 and 2030. the UK economy. The Garden at 120 Fenchurch, London

Vision for Economic Growth — a roadmap to prosperity 13 Figure 1: Key recommendations Figure 2: Impacts and illustrative beneﬁts Outcome Big move Short term Medium term — 2 to 7 years Long term Illustrative estimates suggest that these interventions have the opportunity to unlock billions in investment into and for the UK Today 2030 #01 Outcome Target impact Illustrative bene昀椀ts between 2024 and 2030 Develop a UK FPS Determine the priority focus Track progress against the strategy Strategy and FPS areas and sectors Track progress against the strategy Support the Partnership Council Government's clearly de昀椀ned strategy conditions to support it Potential £100bn investment from the Establish an FPS for UK-based FPS maximises the sector’s for growth Partnership Council insurance and long-term savings industry... contribution to UK jobs and growth. Support the into productive 昀椀nance, including for UK social conditions for growth #02 infrastructure and green energy supply, over the i, vii Fully implement a coming decade from 2024. programme of change Continue planned reforms which will contribute needed structural and regulatory change Up to £75bn in pension capital... for UK pension and Long-term savers in the UK are better Support cultural change across the investment value chain, if LGPS increase allocation to unlisted equities to insurance funds prepared for retirement. More businesses using regulatory and structural changes as key enablers 10% and DC schemes to 5%. Much of which will be can access the capital they need. More ii, vii Raise invested into the UK. Raise investment levels investment #03 international investors are attracted to the levels Maximise the UK. More high quality jobs are created. Clarify how disparate funding Support 昀椀rms to identify suitable government funding eﬀectiveness of schemes align to strategic opportunities that will best suit their needs every pound of government priorities government support Potential £4.8bn value added to the UK economy... Support the BBB as it tests proposals to open its pipeline of growth There is a lift in inclusive growth and Through widespread adoption of digital veri昀椀cation company investment opportunities to crowd in more investment prosperity for citizens and a rise in UK solutions which will transform digital services and Become a digital- 昀椀rms' international competitiveness. iii mitigate fraud losses. #04 昀椀rst economy Be internationally competitive on data Di昀昀erentiate the UK on data and digital and digital Accelerate the adoption of Develop a machine-readable £100bn of private sector capital leveraged... UK-based FPS has a strong track record digital veri昀椀cation company 昀椀ling system for the UK The right enabling conditions can unlock the capital Become a #05 in supporting businesses globally that government has said it will leverage as part of its to decarbonise and reach other digital-昀椀rst Anchor the UK economy Net-Zero and British Energy Security strategies.iv, vii Invest in driving sustainability-related goals. as a leader in an innovation and Enable the regulators to Streamline approaches to creating regulatory reform growth mindset provide collective leadership on sustainable 昀椀nance cross-sectoral priorities such as digital veri昀椀cation, data, and AI Task regulators with deploying machine-readable and machine-executable regulation, building on Up to £0.7bn additional FPS FDI... e昀昀orts underway by the FCA and the BoE if the proposed FPS Knowledge and Support hub is UK-based FPS accelerates growth and #06 assumed to contribute an annual uptick in FPS FDI prosperity across the UK through v Create the conditions worth up to 6% of 2022 levels. increased FDI into FPS; increased FPS Provide further clarity and commitment around sector-speci昀椀c to scale and Up to £24bn increase in FS exports... policies to deliver on existing net zero commitments exports; and leadership in setting if the proposed FPS Knowledge and Support Hub is accelerate 昀椀nance Pursue world-class for the transition robust and pragmatic international assumed to contribute an average additional uplift promotion and Support the scale-up of private 昀椀nance and de-risking of projects in support of the transition standards around new technologies interconnectivity of approximately 0.9% compound annual growth and sustainable 昀椀nance. on top of the forecasted growth of UK goods and Create con昀椀dence among 昀椀nancial institutions that they can vi support 昀椀nancing the transition without jeopardising their own Anchor Paris-aligned or net zero targets services exports. the UK as a leader in #07 i. The Association of British Insurers (ABI) estimates that from 2024 Solvency II reforms will create “the potential for the industry to invest over £100bn in the next ten years sustainable Scale new, high-integrity in productive 昀椀nance, such as UK social infrastructure and green energy supply.” The value of private insurer investment that could be achieved is highly dependent on the 昀椀nance markets and be at Develop an all-encompassing high-integrity voluntary carbon nature of the Solvency II reforms and, speci昀椀cally, the changes to the matching adjustment and how they will be implemented. The PRA is consulting on this later this year. the forefront of new markets (VCM) ecosystem ii. As highlighted by the Chancellor in his Mansion House speech on 10th July. Re昀氀ects £50bn for DC schemes with a 5% allocation to unlisted equities, and £25bn for LGPS with investment opportunities Scale up other high-integrity nature markets and support approaches to protect natural capital a 10% allocation to unlisted equities. The former estimate mirrors the objectives of 昀椀rms in the Mansion House Compact. Government plans to consult on the allocation of the latter estimate for LGPS. Bene昀椀ts are accrued by 2030, with no speci昀椀cation of beginning or end of year. #08 iii. The UK government estimates “widespread use of digital identity products would be worth around £800m per year to the UK economy.” Calculated over 6 years, from 2024- 2030. See UK Goverment digital attributes and trust framework consultation (2022) for more details. Showcase the Establish an FPS iv. Originally published by the Department for Business, Energy and Industrial Strategy, since replaced by the Department of Energy Security and Net Zero and the Department UK’s 昀椀nancial and Knowledge and Support Hub for Business and Trade. professional services on the international v. Illustrative estimate only to indicate bene昀椀t potential and does not re昀氀ect a projection. Corresponds to a range of approximately to £0.5-0.7bn. Re昀氀ects a base case of 5% stage like never before uplift (+/- 20% range applied) using 2022 levels, which equates to up to 6%. For context, FPS FDI in the past four years (2019-2022) has grown by a compound annual growth Pursue rate of 12%, with strong recovery since 2020. FPS FDI data per fDi Markets and as published by the City of London Corporation in their 2023 report on FPS FDI. See 昀椀gure 14 world-class #09 for further detail. promotion vi. Illustrative estimate only to indicate bene昀椀t potential and does not re昀氀ect a projection. We estimate an additional uplift on forecasted growth rates associated with the Create innovative bene昀椀ts of having an FPS strategy and the role of the Hub in reinvigorating promotional e昀昀orts. Corresponds to a range of approximately ~£19-29bn, rounded to the nearest and inter- Flip trade policy to focus on Create international forums for collaboration, such as multi- networks across services as much as goods billion. Calculated over 6 years from 2024-2030. Assumption of a 50% uplift on the compound annual growth rate for UK goods and services exports from IMF forecasts connectivity jurisdictional sandboxes that build on the work of the GFIN the world results in a range of ~0.8-1.2% additional uplift, rounded to the nearest tenth of a percent. Adjusted for in昀氀ation based on CPI in昀氀ation forecasts. FS export data from UNCTAD Create mechanisms for (worth ~US$117bn in 2022). Forecast of export growth and CPI in昀氀ation from IMF World Economic Outlook — April 2023. government-regulatory- vii. £225bn in total additional investment estimated as an aggregation of the £100bn in insurance and long term savings capital unlocked through Solvency II reforms, the industry partnership to £75bn in pension capital for investment announced in the Chancellorʼs Mansion House speech, and a portion of the £100bn in private capital leveraged as part of the net create and advise on the full zero transition, as stated by the UK Government. We estimate a portion of the net zero capital leveraged will overlap with the unlocked pension capital and insurance and trade toolbox long-term savings capital. We have applied a 50% discount rate on the net zero capital leveraged to account for this overlap. See references 17, 18, and 23 for additional information for each estimate. Supporting recommendation All statistics re昀氀ect rounded values. These estimates may not be mutually exclusive and may involve double counting of some bene昀椀ts if aggregated.

Vision for Economic Growth — a roadmap to prosperity 13 Figure 1: Key recommendations Figure 2: Impacts and illustrative beneﬁts OutcomeBig moveShort termMedium term — 2 to 7 yearsLong term Illustrative estimates suggest that these interventions have the opportunity to unlock billions in investment into and for the UK Today2030 #01 Outcome Target impact Illustrative bene昀椀ts between 2024 and 2030 Develop a UK FPS Determine the priority focus Track progress against the strategy Strategy and FPS areas and sectorsTrack progress against the strategy Support the Partnership Council Government's clearly de昀椀ned strategy conditions to support it Potential £100bn investment from the Establish an FPS for UK-based FPS maximises the sector’s for growthPartnership Council insurance and long-term savings industry... contribution to UK jobs and growth. Support the into productive 昀椀nance, including for UK social conditions for growth #02 infrastructure and green energy supply, over the i, vii Fully implement a coming decade from 2024. programme of change Continue planned reforms which will contribute needed structural and regulatory change Up to £75bn in pension capital... for UK pension and Long-term savers in the UK are better Support cultural change across the investment value chain, if LGPS increase allocation to unlisted equities to insurance funds prepared for retirement. More businesses using regulatory and structural changes as key enablers 10% and DC schemes to 5%. Much of which will be can access the capital they need. More ii, vii Raise invested into the UK. Raise investment levels investment #03 international investors are attracted to the levelsMaximise the UK. More high quality jobs are created. Clarify how disparate funding Support 昀椀rms to identify suitable government funding eﬀectiveness of schemes align to strategic opportunities that will best suit their needs every pound of government priorities government support Potential £4.8bn value added to the UK economy... Support the BBB as it tests proposals to open its pipeline of growth There is a lift in inclusive growth and Through widespread adoption of digital veri昀椀cation company investment opportunities to crowd in more investment prosperity for citizens and a rise in UK solutions which will transform digital services and Become a digital- 昀椀rms' international competitiveness. iii mitigate fraud losses. #04 昀椀rst economy Be internationally competitive on data Di昀昀erentiate the UK on data and digital and digitalAccelerate the adoption of Develop a machine-readable £100bn of private sector capital leveraged... UK-based FPS has a strong track record digital veri昀椀cation company 昀椀ling system for the UK The right enabling conditions can unlock the capital Become a #05 in supporting businesses globally that government has said it will leverage as part of its to decarbonise and reach other digital-昀椀rst Anchor the UK iv, vii economy Net-Zero and British Energy Security strategies. Invest in driving sustainability-related goals. as a leader in an innovation and Enable the regulators to Streamline approaches to creating regulatory reform growth mindsetprovide collective leadership on sustainable 昀椀nance cross-sectoral priorities such as digital veri昀椀cation, data, and AI Task regulators with deploying machine-readable and machine-executable regulation, building on Up to £0.7bn additional FPS FDI... e昀昀orts underway by the FCA and the BoE if the proposed FPS Knowledge and Support hub is UK-based FPS accelerates growth and #06 assumed to contribute an annual uptick in FPS FDI prosperity across the UK through v Create the conditions worth up to 6% of 2022 levels. increased FDI into FPS; increased FPS Provide further clarity and commitment around sector-speci昀椀c to scale and Up to £24bn increase in FS exports... policies to deliver on existing net zero commitments exports; and leadership in setting if the proposed FPS Knowledge and Support Hub is accelerate 昀椀nance Pursue world-class for the transition robust and pragmatic international assumed to contribute an average additional uplift promotion and Support the scale-up of private 昀椀nance and de-risking of projects in support of the transition standards around new technologies interconnectivity of approximately 0.9% compound annual growth and sustainable 昀椀nance. on top of the forecasted growth of UK goods and Create con昀椀dence among 昀椀nancial institutions that they can vi support 昀椀nancing the transition without jeopardising their own Anchor Paris-aligned or net zero targets services exports. the UK as a leader in #07 i. The Association of British Insurers (ABI) estimates that from 2024 Solvency II reforms will create “the potential for the industry to invest over £100bn in the next ten years sustainable Scale new, high-integrity in productive 昀椀nance, such as UK social infrastructure and green energy supply.” The value of private insurer investment that could be achieved is highly dependent on the 昀椀nancemarkets and be at Develop an all-encompassing high-integrity voluntary carbon nature of the Solvency II reforms and, speci昀椀cally, the changes to the matching adjustment and how they will be implemented. The PRA is consulting on this later this year. the forefront of new markets (VCM) ecosystem ii. As highlighted by the Chancellor in his Mansion House speech on 10th July. Re昀氀ects £50bn for DC schemes with a 5% allocation to unlisted equities, and £25bn for LGPS with investment opportunities Scale up other high-integrity nature markets and support approaches to protect natural capitala 10% allocation to unlisted equities. The former estimate mirrors the objectives of 昀椀rms in the Mansion House Compact. Government plans to consult on the allocation of the latter estimate for LGPS. Bene昀椀ts are accrued by 2030, with no speci昀椀cation of beginning or end of year. #08 iii. The UK government estimates “widespread use of digital identity products would be worth around £800m per year to the UK economy.” Calculated over 6 years, from 2024- 2030. See UK Goverment digital attributes and trust framework consultation (2022) for more details. Showcase the Establish an FPS iv. Originally published by the Department for Business, Energy and Industrial Strategy, since replaced by the Department of Energy Security and Net Zero and the Department UK’s 昀椀nancial and Knowledge and Support Hubfor Business and Trade. professional services on the international v. Illustrative estimate only to indicate bene昀椀t potential and does not re昀氀ect a projection. Corresponds to a range of approximately to £0.5-0.7bn. Re昀氀ects a base case of 5% stage like never before uplift (+/- 20% range applied) using 2022 levels, which equates to up to 6%. For context, FPS FDI in the past four years (2019-2022) has grown by a compound annual growth Pursue rate of 12%, with strong recovery since 2020. FPS FDI data per fDi Markets and as published by the City of London Corporation in their 2023 report on FPS FDI. See 昀椀gure 14 world-class #09 for further detail. promotion vi. Illustrative estimate only to indicate bene昀椀t potential and does not re昀氀ect a projection. We estimate an additional uplift on forecasted growth rates associated with the Create innovative bene昀椀ts of having an FPS strategy and the role of the Hub in reinvigorating promotional e昀昀orts. Corresponds to a range of approximately ~£19-29bn, rounded to the nearest and inter-Flip trade policy to focus on Create international forums for collaboration, such as multi- networks across services as much as goods billion. Calculated over 6 years from 2024-2030. Assumption of a 50% uplift on the compound annual growth rate for UK goods and services exports from IMF forecasts connectivityjurisdictional sandboxes that build on the work of the GFIN the world results in a range of ~0.8-1.2% additional uplift, rounded to the nearest tenth of a percent. Adjusted for in昀氀ation based on CPI in昀氀ation forecasts. FS export data from UNCTAD Create mechanisms for (worth ~US$117bn in 2022). Forecast of export growth and CPI in昀氀ation from IMF World Economic Outlook — April 2023. government-regulatory- vii. £225bn in total additional investment estimated as an aggregation of the £100bn in insurance and long term savings capital unlocked through Solvency II reforms, the industry partnership to £75bn in pension capital for investment announced in the Chancellorʼs Mansion House speech, and a portion of the £100bn in private capital leveraged as part of the net create and advise on the full zero transition, as stated by the UK Government. We estimate a portion of the net zero capital leveraged will overlap with the unlocked pension capital and insurance and trade toolbox long-term savings capital. We have applied a 50% discount rate on the net zero capital leveraged to account for this overlap. See references 17, 18, and 23 for additional information for each estimate. Supporting recommendation All statistics re昀氀ect rounded values. These estimates may not be mutually exclusive and may involve double counting of some bene昀椀ts if aggregated.

Vision for Economic Growth — a roadmap to prosperity 15 Strengthened reputation for ease of operating. 1. Support the conditions for growth regulators also need license from government to pay UK regulators overseeing FPS 昀椀rms have a justi昀椀ed what’s needed to recruit and retain talent. This is about reputation for high standards, but that needs to the right balance between keeping excellent long- be matched with e昀漀cient processes. This includes term sta昀昀 and bringing in industry expertise. A major Impact by 2030 昀椀nancial services regulatory authorisations, where secondment programme between industry, regulators industry bodies such as TheCityUK have already Government’s clearly deﬁned strategy for UK-based FPS maximises the sector’s contribution and government would also help strengthen skills and 34 Today’s o昀昀ered recommendations for improvement. to UK jobs and economic growth. encourage innovation. There could even be a scheme fragmented regulatory landscape also makes it for later careers, to encourage more experienced challenging to address cross-sectoral issues (see Figure professionals to work for the regulators. This would be Context 4 for examples). Resolving this may require a rethink of the equivalent of Now Teach, adapted for FPS, perhaps If the UK is to grow economically and create prosperity This report focuses on the speci昀椀c conditions for how agencies interact, including closer collaboration on as “Now Regulate”. This 昀氀ow of expertise in both for all its citizens, it must get the “basics” right. Many cross-sectoral issues. In Chapter 4, we propose a big growth that UK-based FPS needs in order to remain directions can bring better collaboration and solutions of these basics are not unique to FPS and represent move that, among other things, recommends extending globally competitive and contribute to a prosperous be it on sustainability, emerging tech challenges, or broader features of a 昀氀ourishing economy. The UK must UK (see Figure 3). It also celebrates the strengths that a stronger mandate to improve coordination. Financial consumer bene昀椀ts. be a place where people want to live and do business. underpin the UK as a global 昀椀nancial centre. This There must be world-class physical infrastructure includes an independent police force in the 昀椀nancial (such as transport links), digital infrastructure (such as district that can help to 昀椀ght 昀椀nancial crime, world-class Figure 4: Overview of applicable regulators for FS ﬁrms widely accessible high-speed broadband), and social legal services and a courts system that can deal with Regulatory objective infrastructure (such as excellent healthcare, schools, highly complex economic cases e昀昀ectively. Trade/ Payment System Regulator (PSR), Examples of challenges currently faced by 昀椀rms, and possible solutions and cultural o昀昀ers). Organisations need to prepare for competition future skills and talent challenges. These are all critical Financial Conduct Authority (FCA) features of a 昀氀ourishing, globally competitive economy. Competition and Markets Authority (CMA) Example 1: annual cycles of engagement Data protection Information Commissioners O昀漀ce (ICO) • Category 1 昀椀nancial services 昀椀rms have an annual Customer/ PSR, FCA strategy meeting (ASM) with regulators such as the FCA Figure 3: Conditions for growth of UK-based FPS in support of a prosperous UK public interests Prudential Regulatory Authority (PRA), and the PRA. The ASMs inform regulators’ areas of the interest that they will follow up on with a given 昀椀rm. The Pensions Regulator (TPR) • Today di昀昀erent ASMs are held with di昀昀erent regulators, Competition and Markets Authority Skills and talent Strengthened reputation for ease of operating when there is opportunity to cover them jointly. (CMA), Equality and Human Rights Regulators could follow up with speci昀椀c areas of interest Commission (EHRC), Health and Safety after the session. Executive (HSE) Competitive tax and remuneration policies A balanced approach to risk-taking Market integrity/ FCA Example 2: one-o昀昀 engagement stability Institute of Chartered Accountants • Regulators may understandably require information in England and Wales/in Scotland from supervised 昀椀rms following market events or as Skills and talent. UK organisations across the public Competitive tax and remuneration policies. FPS 昀椀rms (ICAEW/ICAES), Chartered Accountants part of eg system-wide exploratory scenario analyses. Ireland (CAI) and private sector must be able to easily recruit, and their employees make a huge contribution to the • But requests for information are not always coordinated Financial Reporting Council (FRC) — soon across regulatory bodies, and multiple stakeholders retain, and retrain talent to address the emerging UK Exchequer, with 昀椀rms paying nearly £100bn in taxes to be replaced by the Auditing, Reporting and Governance Authority (ARGA) within a 昀椀rm may be approached separately (such as the 31 needs of their businesses. Digital skills are a particular in 2020. This is roughly equivalent to the combined Market Financial Reporting Council (FRC) Chief Risk O昀漀cer for asset management, and the Chief 32 Financial O昀漀cer for insurance). watchpoint with one in eight roles in the sector now defence and police budgets for 2023-24, worth £106bn. transparency Competition and Markets • There is an opportunity to better coordinate requests But if other jurisdictions o昀昀er better deals on tax, tech roles. Some 95% of 昀椀nancial services 昀椀rms identify Authority (CMA) across regulators and streamline engagement of key data analytics and insight skills as a priority, although operations and individuals may move there. The UK Governance Financial Reporting Council (FRC) stakeholders across a given 昀椀rm. supply of these critical technical skills currently falls therefore must be competitive on tax and remuneration Tax HM Revenue and Customs (HMRC) 30 Prioritising reskilling so it as a matter of its own self-interest. Today, however, this short of demand by 20%. Single-activity industry regulator Multi-activity industry regulator Cross-industry regulator becomes a strategic boardroom priority across 昀椀nancial is not always achieved. In the case of a typical corporate NB some regulators are omitted from our list due to niche perimeters not 昀椀tting into our framework or because not applicable for FS 昀椀rms. For example: OPBAS, CORGI, EngC, services organisations is critical. Ensuring the sector is and investment bank, for example, the UK is projected FSR, GLAA, IPCC, SIA, Electoral Commission, Planning Inspectorate, etc. equipped with the right talent will require greater focus to have higher tax rates in 2024 than other 昀椀nancial Source: Oliver Wyman Regulatory Mapping on building future skills — including through retraining, 33 centres such as New York, Frankfurt, and Amsterdam. skills forecasting, and connections to the broader education system (eg through courses on innovation and sustainability) — as well as a genuinely responsive visa system.

Vision for Economic Growth — a roadmap to prosperity 15 Strengthened reputation for ease of operating. 1. Support the conditions for growth regulators also need license from government to pay UK regulators overseeing FPS 昀椀rms have a justi昀椀ed what’s needed to recruit and retain talent. This is about reputation for high standards, but that needs to the right balance between keeping excellent long- be matched with e昀漀cient processes. This includes term sta昀昀 and bringing in industry expertise. A major Impact by 2030 昀椀nancial services regulatory authorisations, where secondment programme between industry, regulators industry bodies such as TheCityUK have already Government’s clearly deﬁned strategy for UK-based FPS maximises the sector’s contribution and government would also help strengthen skills and 34 Today’s o昀昀ered recommendations for improvement. to UK jobs and economic growth. encourage innovation. There could even be a scheme fragmented regulatory landscape also makes it for later careers, to encourage more experienced challenging to address cross-sectoral issues (see Figure professionals to work for the regulators. This would be Context 4 for examples). Resolving this may require a rethink of the equivalent of Now Teach, adapted for FPS, perhaps If the UK is to grow economically and create prosperity This report focuses on the speci昀椀c conditions for how agencies interact, including closer collaboration on as “Now Regulate”. This 昀氀ow of expertise in both for all its citizens, it must get the “basics” right. Many cross-sectoral issues. In Chapter 4, we propose a big growth that UK-based FPS needs in order to remain directions can bring better collaboration and solutions of these basics are not unique to FPS and represent move that, among other things, recommends extending globally competitive and contribute to a prosperous be it on sustainability, emerging tech challenges, or broader features of a 昀氀ourishing economy. The UK must UK (see Figure 3). It also celebrates the strengths that a stronger mandate to improve coordination. Financial consumer bene昀椀ts. be a place where people want to live and do business. underpin the UK as a global 昀椀nancial centre. This There must be world-class physical infrastructure includes an independent police force in the 昀椀nancial (such as transport links), digital infrastructure (such as district that can help to 昀椀ght 昀椀nancial crime, world-class Figure 4: Overview of applicable regulators for FS ﬁrms widely accessible high-speed broadband), and social legal services and a courts system that can deal with Regulatory objective infrastructure (such as excellent healthcare, schools, highly complex economic cases e昀昀ectively. Trade/ Payment System Regulator (PSR), Examples of challenges currently faced by 昀椀rms, and possible solutions and cultural o昀昀ers). Organisations need to prepare for competition future skills and talent challenges. These are all critical Financial Conduct Authority (FCA) features of a 昀氀ourishing, globally competitive economy.Competition and Markets Authority (CMA)Example 1: annual cycles of engagement Data protection Information Commissioners O昀漀ce (ICO) • Category 1 昀椀nancial services 昀椀rms have an annual Customer/ PSR, FCA strategy meeting (ASM) with regulators such as the FCA Figure 3: Conditions for growth of UK-based FPS in support of a prosperous UKpublic interestsPrudential Regulatory Authority (PRA), and the PRA. The ASMs inform regulators’ areas of the interest that they will follow up on with a given 昀椀rm. The Pensions Regulator (TPR) • Today di昀昀erent ASMs are held with di昀昀erent regulators, Competition and Markets Authority Skills and talentStrengthened reputation for ease of operating when there is opportunity to cover them jointly. (CMA), Equality and Human Rights Regulators could follow up with speci昀椀c areas of interest Commission (EHRC), Health and Safety after the session. Executive (HSE) Competitive tax and remuneration policiesA balanced approach to risk-takingMarket integrity/FCAExample 2: one-o昀昀 engagement stability Institute of Chartered Accountants • Regulators may understandably require information in England and Wales/in Scotland from supervised 昀椀rms following market events or as Skills and talent. UK organisations across the public Competitive tax and remuneration policies. FPS 昀椀rms (ICAEW/ICAES), Chartered Accountants part of eg system-wide exploratory scenario analyses. Ireland (CAI) and private sector must be able to easily recruit, and their employees make a huge contribution to the • But requests for information are not always coordinated Financial Reporting Council (FRC) — soon across regulatory bodies, and multiple stakeholders retain, and retrain talent to address the emerging UK Exchequer, with 昀椀rms paying nearly £100bn in taxes to be replaced by the Auditing, Reporting and Governance Authority (ARGA) within a 昀椀rm may be approached separately (such as the 31 needs of their businesses. Digital skills are a particular in 2020. This is roughly equivalent to the combined Market Financial Reporting Council (FRC) Chief Risk O昀漀cer for asset management, and the Chief 32 Financial O昀漀cer for insurance). watchpoint with one in eight roles in the sector now defence and police budgets for 2023-24, worth £106bn.transparencyCompetition and Markets • There is an opportunity to better coordinate requests But if other jurisdictions o昀昀er better deals on tax, tech roles. Some 95% of 昀椀nancial services 昀椀rms identify Authority (CMA) across regulators and streamline engagement of key data analytics and insight skills as a priority, although operations and individuals may move there. The UK GovernanceFinancial Reporting Council (FRC)stakeholders across a given 昀椀rm. supply of these critical technical skills currently falls therefore must be competitive on tax and remuneration TaxHM Revenue and Customs (HMRC) 30 Prioritising reskilling so it as a matter of its own self-interest. Today, however, this short of demand by 20%. Single-activity industry regulator Multi-activity industry regulator Cross-industry regulator becomes a strategic boardroom priority across 昀椀nancial is not always achieved. In the case of a typical corporate NB some regulators are omitted from our list due to niche perimeters not 昀椀tting into our framework or because not applicable for FS 昀椀rms. For example: OPBAS, CORGI, EngC, services organisations is critical. Ensuring the sector is and investment bank, for example, the UK is projected FSR, GLAA, IPCC, SIA, Electoral Commission, Planning Inspectorate, etc. equipped with the right talent will require greater focus to have higher tax rates in 2024 than other 昀椀nancial Source: Oliver Wyman Regulatory Mapping on building future skills — including through retraining, 33 centres such as New York, Frankfurt, and Amsterdam. skills forecasting, and connections to the broader education system (eg through courses on innovation and sustainability) — as well as a genuinely responsive visa system.

Vision for Economic Growth — a roadmap to prosperity 17 Big move #1 Develop a UK FPS Strategy and FPS Partnership Council to support it A UK FPS Strategy would outline how government intends centre“. It is now time to follow up systematically to set the conditions for growth for a thriving UK-based through a more formalised strategy with clear timelines FPS sector. Financial centres around the world set out and KPIs. This UK FPS Strategy would signal to the world their ambition and direction for their global 昀椀nancial the ambition of government to work with regulators and centre in long-term strategies (see Figure 5). The UK the industry to further develop the UK’s world-class has made a good start, both from government via HMTʼs FPS industry and use that strength to galvanise UK “A new chapter for 昀椀nancial services” and industry via economic growth. TheCityUKʼs “Making the UK the leading global 昀椀nancial Figure 5: Overview of select FPS strategies36 Non-exhaustive Many countries have established FPS strategies. A selection of these are highlighted below, but other examples include Switzerland, Luxembourg, and Japan. Country Title Timescale Last updated United Kingdom A new chapter for 昀椀nancial Not speci昀椀ed Published H2 2021 services (HMT) Making the UK the leading global 2021-2026 H2 2021 昀椀nancial centre (TheCityUK) Central Library Building, Cardi昀昀 Ireland Ireland for Finance 2019-2026 H1 2022 (most recent (via the Update to new regulatory regimes, such as the voluntary code strategic review) Ireland for Finance) A balanced approach to risk-taking. Government, industry, and regulators can adopt a balanced approach of conduct being developed on environmental, social, to risk-taking that seeks to manage rather than eliminate and corporate governance (ESG) ratings and data risk. This can: with the International Regulatory Strategy Group ITM (2016-2020) H2 2022 Singapore Financial Services Industry 35 (IRSG). • Create better economic outcomes for UK citizens They could also jointly experiment on new Transformation Map (ITM) and ITM 2025 (via the launch and business. For example, if UK-based investors product innovations without 昀椀rms feeling they must (2021-2025) of the Financial Services ITM 2025) have all the answers 昀椀rst, as is being demonstrated (including pension funds) were more willing to invest through the 昀椀nancial market infrastructure (FMI) in high-growth, unlisted 昀椀rms as part of a diversi昀椀ed sandbox sponsored by HMT, the FCA, and the BoE. portfolio, then long-term savers could bene昀椀t from United Arab Emirates Business Plan 2007-2024 H1 2023 E昀昀orts such as these do not dilute high standards of greater returns, and UK 昀椀rms could access a deeper (昀椀rst publication (via the Business pool of capital (see Chapter 2). supervision, nor do they reduce 昀椀rm compliance. But in 2007) Plan 2023/2024) • Unlock innovation across regulators and supervised they do streamline the path for 昀椀rms and regulators to innovate. 昀椀rms. For example, regulators could increase their appetite to assess industry proposals for inclusion in NB cover images re昀氀ect most recent publication, if the strategy is an update in a series

Vision for Economic Growth — a roadmap to prosperity 17 Big move #1 Develop a UK FPS Strategy and FPS Partnership Council to support it A UK FPS Strategy would outline how government intends centre“. It is now time to follow up systematically to set the conditions for growth for a thriving UK-based through a more formalised strategy with clear timelines FPS sector. Financial centres around the world set out and KPIs. This UK FPS Strategy would signal to the world their ambition and direction for their global 昀椀nancial the ambition of government to work with regulators and centre in long-term strategies (see Figure 5). The UK the industry to further develop the UK’s world-class has made a good start, both from government via HMTʼs FPS industry and use that strength to galvanise UK “A new chapter for 昀椀nancial services” and industry via economic growth. TheCityUKʼs “Making the UK the leading global 昀椀nancial Figure 5: Overview of select FPS strategies36 Non-exhaustive Many countries have established FPS strategies. A selection of these are highlighted below, but other examples include Switzerland, Luxembourg, and Japan. Country Title Timescale Last updated United Kingdom A new chapter for 昀椀nancial Not speci昀椀ed Published H2 2021 services (HMT) Making the UK the leading global 2021-2026 H2 2021 昀椀nancial centre (TheCityUK) Central Library Building, Cardi昀昀 Ireland Ireland for Finance 2019-2026 H1 2022 (most recent (via the Update to new regulatory regimes, such as the voluntary code strategic review) Ireland for Finance) A balanced approach to risk-taking. Government, industry, and regulators can adopt a balanced approach of conduct being developed on environmental, social, to risk-taking that seeks to manage rather than eliminate and corporate governance (ESG) ratings and data risk. This can:with the International Regulatory Strategy Group ITM (2016-2020) H2 2022 Singapore Financial Services Industry 35 (IRSG). • Create better economic outcomes for UK citizens They could also jointly experiment on new Transformation Map (ITM) and ITM 2025 (via the launch and business. For example, if UK-based investors product innovations without 昀椀rms feeling they must (2021-2025) of the Financial Services ITM 2025) have all the answers 昀椀rst, as is being demonstrated (including pension funds) were more willing to invest through the 昀椀nancial market infrastructure (FMI) in high-growth, unlisted 昀椀rms as part of a diversi昀椀ed sandbox sponsored by HMT, the FCA, and the BoE. portfolio, then long-term savers could bene昀椀t from United Arab EmiratesBusiness Plan 2007-2024 H1 2023 E昀昀orts such as these do not dilute high standards of greater returns, and UK 昀椀rms could access a deeper (昀椀rst publication (via the Business pool of capital (see Chapter 2).supervision, nor do they reduce 昀椀rm compliance. But in 2007) Plan 2023/2024) • Unlock innovation across regulators and supervised they do streamline the path for 昀椀rms and regulators to innovate. 昀椀rms. For example, regulators could increase their appetite to assess industry proposals for inclusion in NB cover images re昀氀ect most recent publication, if the strategy is an update in a series

Vision for Economic Growth — a roadmap to prosperity 19 are captured and translated into policy outcomes Beneﬁts (see big move #9). The Partnership Council would Government can use the FPS strategy to provide clarity include representatives from across the sector, and con昀椀dence to industry. In particular, it can show helping generate collaboration to drive growth how it intends to support the sector in growing the through the economy. UK economy over the longer term. This, combined with • Track progress against the strategy. Other re-energised international promotion (see Chapter 5), jurisdictions trace their strategic progress. Singapore, will encourage increased private sector investment and for example, has a rolling set of media releases against a more dynamic economy. 38 their sustainable 昀椀nance roadmap. The European Key actors (non-exhaustive) Union’s legislative train schedule also indicates progress.39 HMT; FCA; BoE; PRA; FPS trade associations. The UK should adopt and adapt best practices internationally and hold itself accountable. The strategy would need to: could be one possible intervention. Another could • Determine the priority focus areas and sectors. be a later career scheme, as mentioned earlier, to E昀昀ective policy requires ruthless prioritisation encourage experienced professionals to work in the regulators — an equivalent of “Now Teach”, perhaps and excellent implementation. By highlighting called “Now Regulate”. speci昀椀c sectors for FPS to support, government • Establish an FPS Partnership Council. An FPS can signal its intentions on key policy areas such Partnership Council would be a strategic partnership as sustainable 昀椀nance and market infrastructure. The more certainty policymakers provide, the between government, industry and regulators. Other industry bodies have previously called for more likely it is that 昀椀rms will have the con昀椀dence collaboration. TheCityUK, for example, called for to invest, innovate, and increase the scale of their UK business. The strategy should also include strategic partnership in its 2017 report “A vision for a transformed, world-leading industry”.37 It consideration of the demand for skills within FPS, helping 昀椀rms to understand how government would act as a forum to capture industry views as government develops its FPS Strategy and plans to champion the provision, upskilling, and implements its workstreams. It could also act retraining of this talent (including through skills John Rylands Library, Manchester as the mechanism through which perspectives forecasting). A major secondment programme between industry, regulators, and government around trade policy and related agreements

Vision for Economic Growth — a roadmap to prosperity 21 2. Raise investment levels Impact by 2030 Long-term savers in the UK are better prepared for retirement, with higher risk-adjusted net returns in deﬁned contribution (DC) schemes, combined with higher contribution rates. More businesses can access the capital they need to innovate and grow, generating jobs and prosperity. More international investors are attracted to the UK due to a pipeline of investable projects and beneﬁt from the UK’s asset management expertise. Context 44 45 (re)insurance, and foreign exchange trading, and The UK is a major source of capital for global 昀椀rms and 46 projects. Its markets are among the deepest in the world. the second largest asset management centre. At the end of 2021, the UK had more than £11.6tn of assets The London Stock Exchange raised £10.5bn in equity for 40 47 UK and international companies in 2021. The country under management. It also had a relatively high level had the world’s highest 昀椀nancial services trade surplus of activity within venture capital (VC), especially when 41 and the largest share of international bank in 2021 compared to other European countries, although it 42 lending and borrowing. It is also the world’s largest continues to lag behind the US (see Figure 6). 43 centre for international debt issuance, commercial Figure 6: UK vs US VC investment as a proportion of GDP Percentage (%) of GDP 2015-2017 2019-2021 1.0 0.98 Today’s domestic capital pools are not maximised UK. As of 2021, there were more than 15 times as many for UK savers, nor the broader UK economy. The savers accumulating in DC schemes than accumulating 0.8 0.76 51 There is also an estimated 35% gender overriding purpose of pension schemes is to pay savers in DB schemes. an income in their retirement. Insurance funds also pension gap across DB and DC schemes, with men 52 having more in savings. 0.6 have a key role to play in supporting long-term savers. Where this goal aligns with risk-adjusted net returns, Better returns on DC savings schemes could 0.44 there is signi昀椀cant opportunity to unlock capital to fuel begin to 昀椀ll part of the long-term savings gap 0.4 economic growth. UK pension funds have the highest allocation to bonds and lowest allocation to equities for pension savers. Analysis by Oliver Wyman and 0.27 48 of any comparable pension system in the world. the British Business Bank suggests that if default 0.2 They also have lower contribution rates by employers funds followed a lifestyle approach and allocated and employees alike. In 2019, employers on average 5% of capital to VC or Growth Equity (GE), a 22-year- contributed to de昀椀ned bene昀椀t (DB) schemes at a rate 6 old saver could achieve up to 12% increase in their total 49 53 Beyond bene昀椀ts to long-term times higher than to de昀椀ned contribution (DC) schemes. 0 retirement savings. UK US UK US DC savers are also, generally, not contributing enough to savers, the UK’s high-growth businesses would also Seed Early stage VC Later stage VC their pension schemes. As of 2019, 53% of private sector bene昀椀t if a proportion of these investments were pension participants across schemes had contributions allocated to UK businesses. The BBB estimates that Source: 昀椀gures as published by the BBB. Based on BBB user de昀椀ned search and calculations of PitchBook and World Bank data. BBB (2022): https://www.british-business-bank.co.uk/small-business-equity-tracker-2022/. 50 Collectively, these of less than 8% of their earnings. barriers to 昀椀nance could be preventing up to 270,000 dynamics mean that most DC schemes are inadequate for small and medium-sized enterprises (SMEs) from 54 More capital could therefore providing a comfortable retirement. This is signi昀椀cant innovating every year. help to encourage more innovation across the country. given the role that DC schemes play and will play in the

Vision for Economic Growth — a roadmap to prosperity 21 2. Raise investment levels Impact by 2030 Long-term savers in the UK are better prepared for retirement, with higher risk-adjusted net returns in deﬁned contribution (DC) schemes, combined with higher contribution rates. More businesses can access the capital they need to innovate and grow, generating jobs and prosperity. More international investors are attracted to the UK due to a pipeline of investable projects and beneﬁt from the UK’s asset management expertise. Context 4445 (re)insurance, and foreign exchange trading, and The UK is a major source of capital for global 昀椀rms and 46 projects. Its markets are among the deepest in the world. the second largest asset management centre. At the end of 2021, the UK had more than £11.6tn of assets The London Stock Exchange raised £10.5bn in equity for 4047 UK and international companies in 2021. The country under management. It also had a relatively high level had the world’s highest 昀椀nancial services trade surplus of activity within venture capital (VC), especially when 41 and the largest share of international bank in 2021compared to other European countries, although it 42 lending and borrowing. It is also the world’s largest continues to lag behind the US (see Figure 6). 43 centre for international debt issuance, commercial Figure 6: UK vs US VC investment as a proportion of GDP Percentage (%) of GDP 2015-20172019-2021 1.00.98 Today’s domestic capital pools are not maximised UK. As of 2021, there were more than 15 times as many for UK savers, nor the broader UK economy. The savers accumulating in DC schemes than accumulating 0.80.76 51 There is also an estimated 35% gender overriding purpose of pension schemes is to pay savers in DB schemes. an income in their retirement. Insurance funds also pension gap across DB and DC schemes, with men 52 having more in savings. 0.6 have a key role to play in supporting long-term savers. Where this goal aligns with risk-adjusted net returns, Better returns on DC savings schemes could 0.44 there is signi昀椀cant opportunity to unlock capital to fuel begin to 昀椀ll part of the long-term savings gap 0.4 economic growth. UK pension funds have the highest allocation to bonds and lowest allocation to equities for pension savers. Analysis by Oliver Wyman and 0.27 48 of any comparable pension system in the world. the British Business Bank suggests that if default 0.2 They also have lower contribution rates by employers funds followed a lifestyle approach and allocated and employees alike. In 2019, employers on average 5% of capital to VC or Growth Equity (GE), a 22-year- contributed to de昀椀ned bene昀椀t (DB) schemes at a rate 6 old saver could achieve up to 12% increase in their total 49 53 Beyond bene昀椀ts to long-term times higher than to de昀椀ned contribution (DC) schemes. 0 retirement savings. UKUSUKUS DC savers are also, generally, not contributing enough to savers, the UK’s high-growth businesses would also SeedEarly stage VCLater stage VCtheir pension schemes. As of 2019, 53% of private sector bene昀椀t if a proportion of these investments were pension participants across schemes had contributions allocated to UK businesses. The BBB estimates that Source: 昀椀gures as published by the BBB. Based on BBB user de昀椀ned search and calculations of PitchBook and World Bank data. BBB (2022): https://www.british-business-bank.co.uk/small-business-equity-tracker-2022/. 50 Collectively, these of less than 8% of their earnings. barriers to 昀椀nance could be preventing up to 270,000 dynamics mean that most DC schemes are inadequate for small and medium-sized enterprises (SMEs) from 54 More capital could therefore providing a comfortable retirement. This is signi昀椀cant innovating every year. help to encourage more innovation across the country. given the role that DC schemes play and will play in the

Vision for Economic Growth — a roadmap to prosperity 23 Big move #2 • Up to £75bn in pension capital across LGPS and Key actors (non-exhaustive) DC schemes, where LGPS increase their allocation HMT; the FCA; Department for Work and Pensions to unlisted equities to 10% (which the government (DWP); TPR; relevant trade associations (in particular Fully implement a programme of change is consulting on at the time of publication), and DC schemes allocate at least 5% of their default funds the ABI); FPS stakeholders across the pensions for UK pension and insurance funds 65 value chain (see Figure 8). to unlisted equities. In recent years, momentum has grown to strengthen consultants, and auditors. Change will require Figure 7: Components of the target state for retirement savings and pensions a sustained and broad-based campaign across capital markets and reform pensions. On capital markets, Illustrative only the Hill,55 56 57 58 regulators and industry to help decision makers Kalifa, Austin, and Kent reviews proposed Today Future feel comfortable and con昀椀dent with the new strong steps forward. Many have been implemented, 59 approach. Within some organisations, it may Greater scale through consolidation (both DC including through the Financial Services and Markets Act. Scale Multiple, fragmented and LGPS). Increased contributions also require additional training or development They will have a signi昀椀cant impact on listings, secondary markets, and the equity research that underpins them. of specialist expertise to build comfort in investing Cost vs value Focus on cost and fees Focus on value and returns But further work is critical to ensure that the UK is the in new asset classes. If new demand resulting from place where great companies can start, grow, scale this culture change cannot be met with new supply of Hard to know performance Particularly Performance easy to track relevant for investment opportunities in the UK, then capital will and stay. This e昀昀ort is being taken forward by CMIT DC schemes Hard to compare schemes Easy to compare across schemes 昀氀ow overseas or remain in other, lower return, asset (the Capital Markets Industry Taskforce) as well as UK classes. So an even stronger pipeline of growth 昀椀rms Finance and TheCityUK. It is vital that their proposals Investment in Diversi昀椀cation across asset classes and within Very low, particularly within DC schemes will be vital which will require continued emphasis continue to receive strong support from government, illiquid assets them, with sophisticated control of liquidity risks 60 regulators and the industry. on seed and incubator capital being provided by Actions to get us to 2030 specialist early-stage investors encouraged by Pensions reform will also be critical to support improved 昀椀scal incentives. Structural changes Regulatory changes Cultural changes long-term returns for savers, as well as stronger capital • Make progress on reforms where there is strong markets and UK economic growth. The Mansion House 61 and broad-ranging support. Particularly important Reforms propose potential changes to UK pensions. It will be important that proposals with widespread support will be implementing Solvency II reform and a new Figure 8: Key stakeholders across the DC pensions lifecycle and the role of culture change are followed through. Figure 7 provides an illustrative Value for Money (VFM) framework for DC schemes. Alongside these e昀昀orts is the Mansion House Compact, Illustrative summary of what some of the reforms seek to deliver. Advice and distribution Pension scheme manufacture Investment and a commitment by some of the UK’s largest pension asset management Changes to the legal framework are necessary. But 昀椀rms representing around two-thirds of the UKʼs Pension saver Auto-enrol to the scheme, and Manage account and select Contribute to the pension fund. it is cultural change around risk appetite, including entire DC workplace market to allocate a minimum (member) (potentially) manage additional investments (if not default fund) Choose to stay/leave the scheme personal contributions upon retirement or job change 63 investment in unlisted asset classes, that will ultimately of 5% of DC funds to unlisted equities by 2030. Employer Provision of pension funding and key Deduct from payrolls to make n/a realise bene昀椀ts for savers, and the UK economy. The asset This will be complemented by large-scale investment contribution payment role in selection of employee bene昀椀t management industry will then need to make the most of consultants, pension proposition vehicles to deploy capital most e昀昀ectively. Scale will providers, and funds o昀昀ered these changes. The many stakeholders in DC pensions be critical. It will allow these funds to diversify broadly Review performance of proposition Advise on appropriate long-term that need to work together are outlined in Figure 8. A Employee bene昀椀t Support employer/trustees in consultant (EBC) selecting the proposition provider providers and funds o昀昀ered asset allocation and remain strongly involved throughout the scale- and legal vehicle (mastertrust vs good example of this approach in practice is on the long- up journey in later stage funding rounds. It will also own trust vs contract) term savings side, where regulatory reforms will allow — enable them to develop the world-class advice and Monitor asset manager Trustee* Appointed by both employer Select an asset manager or fund but not guarantee — greater infrastructure investment. structures, often relying on and fund performance and pension savers. To support experience needed by the companies they invest in, investment consultant advice The ABI’s Investment Delivery Forum supports 昀椀rms as investment selection and ensure comparable to that provided currently by US venture high-quality member outcomes they look at increasing allocations to assets such as capital 昀椀rms. Investment Advise trustees or employer on fund Advise trustees on suitable asset Feedback and advise 62 energy generation, energy networks and housing. consultant range and Default Fund o昀昀ering managers and/or investment choices trustees of asset manager Beneﬁts (eg default fund) and fund performance O昀昀er options to invest Proposition Provide member communications Provide scheme services (eg Key focus areas to deliver this target state are: Estimates indicate that there is a potential to unlock providers and the portal, facilitate investment communications, accounting, in alternative assets selection and understanding of risks platform provision) • Support cultural change across the investment billions in private capital from the insurance and long- Asset manager** Implement default fund structure For large schemes, create term savings industry by 2030: bespoke Execute investment decisions value chain, using regulatory and structural or tailored solution to meet needs on behalf of trustees, and changes and 昀椀nancial education as a key enabler. • Reforms to Solvency II could potentially unlock up to requisite disclosures The power to change capital deployment for pensions Auditor Provide assurance that regulatory Provide assurance that regulatory Provide assurance that regulatory £100bn from the insurance and long-term savings requirements are being met requirements are being met requirements are being met; give con昀椀dence that illiquid assets can sits right across the investment value chain. It starts industry into productive 昀椀nance, including for UK form part of a diversi昀椀ed portfolio with individual savers and employers and continues social infrastructure and green energy supply, over 64 through trustees, asset managers, employee bene昀椀t Culture change targeted: a shift away from a culture of low savings rates and focus on costs, to a culture of higher savings and focus on the decade from 2024. value and high net returns. This will involve a greater level of comfort in investing in illiquid and alternative assets. *Trustees not present in a contract, where role is partly taken on by the employer and partly by the proposition provider **Could be the same as the Proposition Provider in a bundled contract or Mastertrust Source: Oliver Wyman Pensions Lifecycle and Culture Change Framework

Vision for Economic Growth — a roadmap to prosperity 23 Big move #2 • Up to £75bn in pension capital across LGPS and Key actors (non-exhaustive) DC schemes, where LGPS increase their allocation HMT; the FCA; Department for Work and Pensions to unlisted equities to 10% (which the government (DWP); TPR; relevant trade associations (in particular Fully implement a programme of change is consulting on at the time of publication), and DC schemes allocate at least 5% of their default funds the ABI); FPS stakeholders across the pensions for UK pension and insurance funds 65 value chain (see Figure 8). to unlisted equities. In recent years, momentum has grown to strengthen consultants, and auditors. Change will require Figure 7: Components of the target state for retirement savings and pensions a sustained and broad-based campaign across capital markets and reform pensions. On capital markets, Illustrative only the Hill,55565758regulators and industry to help decision makers Kalifa, Austin, and Kent reviews proposed Today Future feel comfortable and con昀椀dent with the new strong steps forward. Many have been implemented, 59approach. Within some organisations, it may Greater scale through consolidation (both DC including through the Financial Services and Markets Act. ScaleMultiple, fragmented and LGPS). Increased contributions also require additional training or development They will have a signi昀椀cant impact on listings, secondary markets, and the equity research that underpins them. of specialist expertise to build comfort in investing Cost vs valueFocus on cost and feesFocus on value and returns But further work is critical to ensure that the UK is the in new asset classes. If new demand resulting from place where great companies can start, grow, scale this culture change cannot be met with new supply of Hard to know performanceParticularly Performance easy to track relevant for investment opportunities in the UK, then capital will and stay. This e昀昀ort is being taken forward by CMIT DC schemes Hard to compare schemes Easy to compare across schemes 昀氀ow overseas or remain in other, lower return, asset (the Capital Markets Industry Taskforce) as well as UK classes. So an even stronger pipeline of growth 昀椀rms Finance and TheCityUK. It is vital that their proposals Investment in Diversi昀椀cation across asset classes and within Very low, particularly within DC schemes will be vital which will require continued emphasis continue to receive strong support from government, illiquid assets them, with sophisticated control of liquidity risks 60 regulators and the industry.on seed and incubator capital being provided by Actions to get us to 2030 specialist early-stage investors encouraged by Pensions reform will also be critical to support improved 昀椀scal incentives.Structural changesRegulatory changes Cultural changes long-term returns for savers, as well as stronger capital • Make progress on reforms where there is strong markets and UK economic growth. The Mansion House 61and broad-ranging support. Particularly important Reforms propose potential changes to UK pensions. It will be important that proposals with widespread support will be implementing Solvency II reform and a new Figure 8: Key stakeholders across the DC pensions lifecycle and the role of culture change are followed through. Figure 7 provides an illustrative Value for Money (VFM) framework for DC schemes. Alongside these e昀昀orts is the Mansion House Compact, Illustrative summary of what some of the reforms seek to deliver.Advice and distribution Pension scheme manufacture Investment and a commitment by some of the UK’s largest pension asset management Changes to the legal framework are necessary. But 昀椀rms representing around two-thirds of the UKʼs Pension saver Auto-enrol to the scheme, and Manage account and select Contribute to the pension fund. it is cultural change around risk appetite, including entire DC workplace market to allocate a minimum (member)(potentially) manage additional investments (if not default fund)Choose to stay/leave the scheme personal contributions upon retirement or job change 63 investment in unlisted asset classes, that will ultimately of 5% of DC funds to unlisted equities by 2030. EmployerProvision of pension funding and key Deduct from payrolls to make n/a realise bene昀椀ts for savers, and the UK economy. The asset This will be complemented by large-scale investment contribution payment role in selection of employee bene昀椀t management industry will then need to make the most of consultants, pension proposition vehicles to deploy capital most e昀昀ectively. Scale will providers, and funds o昀昀ered these changes. The many stakeholders in DC pensions be critical. It will allow these funds to diversify broadly Review performance of proposition Advise on appropriate long-term that need to work together are outlined in Figure 8. A Employee bene昀椀t Support employer/trustees in consultant (EBC) selecting the proposition provider providers and funds o昀昀ered asset allocation and remain strongly involved throughout the scale- and legal vehicle (mastertrust vs good example of this approach in practice is on the long-up journey in later stage funding rounds. It will also own trust vs contract) term savings side, where regulatory reforms will allow — enable them to develop the world-class advice and Monitor asset manager Trustee* Appointed by both employer Select an asset manager or fund but not guarantee — greater infrastructure investment. structures, often relying on and fund performance and pension savers. To support experience needed by the companies they invest in, investment consultant advice The ABI’s Investment Delivery Forum supports 昀椀rms as investment selection and ensure comparable to that provided currently by US venture high-quality member outcomes they look at increasing allocations to assets such as capital 昀椀rms.Investment Advise trustees or employer on fund Advise trustees on suitable asset Feedback and advise 62 energy generation, energy networks and housing.consultantrange and Default Fund o昀昀eringmanagers and/or investment choices trustees of asset manager Beneﬁts (eg default fund) and fund performance O昀昀er options to invest Proposition Provide member communications Provide scheme services (eg Key focus areas to deliver this target state are:Estimates indicate that there is a potential to unlock providersand the portal, facilitate investment communications, accounting, in alternative assets selection and understanding of risks platform provision) • Support cultural change across the investment billions in private capital from the insurance and long- Asset manager** Implement default fund structure For large schemes, create term savings industry by 2030: bespoke Execute investment decisions value chain, using regulatory and structural or tailored solution to meet needs on behalf of trustees, and changes and 昀椀nancial education as a key enabler. • Reforms to Solvency II could potentially unlock up to requisite disclosures The power to change capital deployment for pensions AuditorProvide assurance that regulatory Provide assurance that regulatory Provide assurance that regulatory £100bn from the insurance and long-term savings requirements are being met requirements are being met requirements are being met; give con昀椀dence that illiquid assets can sits right across the investment value chain. It starts industry into productive 昀椀nance, including for UK form part of a diversi昀椀ed portfolio with individual savers and employers and continues social infrastructure and green energy supply, over 64 through trustees, asset managers, employee bene昀椀t Culture change targeted: a shift away from a culture of low savings rates and focus on costs, to a culture of higher savings and focus on the decade from 2024.value and high net returns. This will involve a greater level of comfort in investing in illiquid and alternative assets. *Trustees not present in a contract, where role is partly taken on by the employer and partly by the proposition provider **Could be the same as the Proposition Provider in a bundled contract or Mastertrust Source: Oliver Wyman Pensions Lifecycle and Culture Change Framework

Vision for Economic Growth — a roadmap to prosperity 25 Big move #3 In time it could also be worth exploring the creation of Beneﬁts associated a New Generation Trust for future generations. In a As mentioned in Big move #2, there is a potential to Maximise the eectiveness of New Generation Trust, each child could receive a pot of unlock up to £75bn in pension capital between now and money at birth, say £1,000, that would be channelled 2030 if LGPS and DC schemes increase their allocations for long-term investments in the UK’s growth. The every pound of government support to unlisted equities. Strategic government investment investments themselves would be inaccessible until could help channel some of this capital into UK growth adulthood, when they would be automatically invested assets more quickly, and leverage in more private capital Government has limited capital. This is why it must be Key actions to address these dynamics include: in an individual savings account (ISA) or DC pension. In as well. deployed judiciously and its impact maximised. To do • Clarify how disparate funding schemes align to so doing, the government would be providing a source this, three dynamics need to be considered. strategic government priorities, to leverage in of long-term capital to UK businesses. It could also help Key actors (non-exhaustive) • Visibility on government’s long-term strategy maximum private capital. Government should to build an investment culture in the UK, by introducing HMT; relevant trade associations (including the ABI); more citizens to the concept of investment and its use as FPS stakeholders across the pensions value chain and policy priorities. Today, there is fragmented provide transparency around where public capital is part of a balanced long-term savings plan. (see Figure 8); BBB; UKIB; ARIA; UKRI; Innovate UK. signalling across a variety of bodies such as the committed or available, and how this maps across di昀昀erent agencies and strategies. Tracking 昀氀ows BBB, the UK Infrastructure Bank (UKIB), and the can provide demonstrable evidence to 昀椀rms about Advanced Research and Innovation Agency (ARIA). government priorities. Transparency can also instil Providing transparency around existing funding programmes would help potential investors con昀椀dence in the consistency and commitment of government policies over time, which in turn better understand the government’s key strategic priorities such as green energy, technology, and may encourage further private sector investment in key areas such as 昀椀nance to support the net life sciences. This can, in turn, encourage 昀椀rms zero transition. to invest themselves. There is also evidence that alignment of government interventions supports • Support 昀椀rms to identify suitable government better outcomes for innovation-led businesses. funding opportunities that will best suit their For example, the BBB and UKRI research highlighted needs. The government has a wealth of resources that “research council spinouts” with support from available for high-growth 昀椀rms, but early stage both Innovate UK and the Bank were four times as 昀椀rms often struggle to navigate di昀昀erent 昀椀nancing likely to have raised external 昀椀nance compared to vehicles across government and government-linked those who were not in subsequent receipt of BBB institutions. A government resource could help 昀椀rms 66 investment or Innovate UK R&D support. to search for the opportunities that would most • Access to funding opportunities. Some 昀椀rms 昀椀nd suit their needs. The “front-end” function could it challenging to access the fragmented landscape build on already existing tools, such as the BBB’s of public funding within the UK, or are unaware of Finance Hub, Innovate UK’s Innovation Hub, UKRIʼs Funding Finder and the Department for Business the opportunities available. Others do not have the 69 resources to pursue funding across multiple discrete and Tradeʼs (DBT) catalogue of funding sources. There should be a “product and institution-neutral” opportunities. Funding gaps can be particularly pronounced among female founders, or minority- advisory team and portal that would help 昀椀rms to navigate the di昀昀erent choices and options available owned businesses. For example, earlier this year to them. This visibility would have the added bene昀椀t the Treasury Select Committee concluded that it of marketing the wealth of opportunities for high- had received evidence that the UKʼs VC market was growth 昀椀rms in the UK, potentially increasing the “highly unrepresentative” of the gender and ethnic 67 UK’s overall competitiveness. diversity in the UK. • Creation of investment vehicles to channel long- • Support the BBB as it tests proposals to open term capital. There is an opportunity to embrace its pipeline of growth company investment the potential impact of the Mansion House reforms opportunities to crowd in more investment. The BBB currently has over £15bn of capital mobilised to create investment vehicles that could provide a channel for long-term capital from pension funds. into more than 20,000 companies across the UK Some of these are already being developed by the through its commercial programmes alone. The BBB has announced its support for the Chancellor’s private sector. The BBB has also committed to 68 request to explore establishing a vehicle that could explore such a vehicle. receive third-party capital such as pension fund 70 investment. Government should continue to support the BBB in this endeavour.

Vision for Economic Growth — a roadmap to prosperity 25 Big move #3 In time it could also be worth exploring the creation of Beneﬁts associated a New Generation Trust for future generations. In a As mentioned in Big move #2, there is a potential to Maximise the eectiveness of New Generation Trust, each child could receive a pot of unlock up to £75bn in pension capital between now and money at birth, say £1,000, that would be channelled 2030 if LGPS and DC schemes increase their allocations for long-term investments in the UK’s growth. The every pound of government support to unlisted equities. Strategic government investment investments themselves would be inaccessible until could help channel some of this capital into UK growth adulthood, when they would be automatically invested assets more quickly, and leverage in more private capital Government has limited capital. This is why it must be Key actions to address these dynamics include: in an individual savings account (ISA) or DC pension. In as well. deployed judiciously and its impact maximised. To do • Clarify how disparate funding schemes align to so doing, the government would be providing a source this, three dynamics need to be considered.strategic government priorities, to leverage in of long-term capital to UK businesses. It could also help Key actors (non-exhaustive) • Visibility on government’s long-term strategy maximum private capital. Government should to build an investment culture in the UK, by introducing HMT; relevant trade associations (including the ABI); more citizens to the concept of investment and its use as FPS stakeholders across the pensions value chain and policy priorities. Today, there is fragmented provide transparency around where public capital is part of a balanced long-term savings plan. (see Figure 8); BBB; UKIB; ARIA; UKRI; Innovate UK. signalling across a variety of bodies such as the committed or available, and how this maps across di昀昀erent agencies and strategies. Tracking 昀氀ows BBB, the UK Infrastructure Bank (UKIB), and the can provide demonstrable evidence to 昀椀rms about Advanced Research and Innovation Agency (ARIA). government priorities. Transparency can also instil Providing transparency around existing funding programmes would help potential investors con昀椀dence in the consistency and commitment of government policies over time, which in turn better understand the government’s key strategic priorities such as green energy, technology, and may encourage further private sector investment in key areas such as 昀椀nance to support the net life sciences. This can, in turn, encourage 昀椀rms zero transition. to invest themselves. There is also evidence that alignment of government interventions supports • Support 昀椀rms to identify suitable government better outcomes for innovation-led businesses. funding opportunities that will best suit their For example, the BBB and UKRI research highlighted needs. The government has a wealth of resources that “research council spinouts” with support from available for high-growth 昀椀rms, but early stage both Innovate UK and the Bank were four times as 昀椀rms often struggle to navigate di昀昀erent 昀椀nancing likely to have raised external 昀椀nance compared to vehicles across government and government-linked those who were not in subsequent receipt of BBB institutions. A government resource could help 昀椀rms 66 investment or Innovate UK R&D support.to search for the opportunities that would most • Access to funding opportunities. Some 昀椀rms 昀椀nd suit their needs. The “front-end” function could it challenging to access the fragmented landscape build on already existing tools, such as the BBB’s of public funding within the UK, or are unaware of Finance Hub, Innovate UK’s Innovation Hub, UKRIʼs Funding Finder and the Department for Business the opportunities available. Others do not have the 69 resources to pursue funding across multiple discrete and Tradeʼs (DBT) catalogue of funding sources. There should be a “product and institution-neutral” opportunities. Funding gaps can be particularly pronounced among female founders, or minority-advisory team and portal that would help 昀椀rms to navigate the di昀昀erent choices and options available owned businesses. For example, earlier this year to them. This visibility would have the added bene昀椀t the Treasury Select Committee concluded that it of marketing the wealth of opportunities for high- had received evidence that the UKʼs VC market was growth 昀椀rms in the UK, potentially increasing the “highly unrepresentative” of the gender and ethnic 67UK’s overall competitiveness. diversity in the UK. • Creation of investment vehicles to channel long-• Support the BBB as it tests proposals to open term capital. There is an opportunity to embrace its pipeline of growth company investment the potential impact of the Mansion House reforms opportunities to crowd in more investment. The BBB currently has over £15bn of capital mobilised to create investment vehicles that could provide a channel for long-term capital from pension funds. into more than 20,000 companies across the UK Some of these are already being developed by the through its commercial programmes alone. The BBB has announced its support for the Chancellor’s private sector. The BBB has also committed to 68 request to explore establishing a vehicle that could explore such a vehicle. receive third-party capital such as pension fund 70 investment. Government should continue to support the BBB in this endeavour.

Vision for Economic Growth — a roadmap to prosperity 27 3. Become a digital-ﬁrst economy A key factor underpinning the UK’s innovation The ability to access and use data across borders is key ecosystem — across all sectors of the economy — to 昀椀rms’ growth and the UK’s economic activity. Cross- will be data. In the near term, it will be particularly border data transfers contribute as much as US$2.8tn to important to consider applications related to AI global GDP, and information transmission is increasing 77 Domestically, the UK’s own framework (such as data privacy); sustainable 昀椀nance (such as Impact by 2030 every decade. has made signi昀椀cant progress (see Figure 9), and other There is an increase in inclusive growth and prosperity for citizens and a rise in UK ﬁrms’ provision of decision-useful information to inform jurisdictions such as Australia and the Netherlands international competitiveness. Consumers can access a huge range of products safely and capital allocation choices); and interoperability of 78 There is switly. UK-based ﬁrms are able to innovate more eectively. standards and requirements to support secure data have replicated its regulatory coordination. an excellent opportunity to build on this momentum. sharing. Fortunately, the UK is already building a strong foundation for a strategic approach to data, Regulators should take existing collaborations, such as Context both domestically and internationally. It has a unique the DRCF, to the next level, as explored in the big move The UK has a thriving tech sector. The tech sector now also at the forefront of discussions around key emerging opportunity to get the balance right between protecting in this chapter. Cross-border data 昀氀ows are also a critical 74 as well as adds £150bn pa to the economy, and its contribution has technologies such as AI and tokenisation, part of the big move on creating innovative networks privacy and avoiding protectionism. Data transcends 71 There are how government can use technology and data most grown by over 25% between 2010 and 2019. borders, so interoperability of the UK’s approaches will around the world (see Big move #9). 75 just under 5 million people working in UK tech startups impactfully to build a better UK. The success of these be key. The costs of getting this wrong are signi昀椀cant. sectors points to the UK’s thriving innovation ecosystem, and scaleups, an increase from just under 3 million in 2019, and more than double the 2.18 million working in and the strengths it can lean on when meeting the 72 The 昀椀ntech sector, to name the tech economy in 2011. evolving needs of customers in the future. This includes Figure 9: Highlights of select progress on key data-related initiatives just one example, received US$12.5bn in VC investment in Gen Z, who already have US$7tn or more in purchasing 2018 February 2023 March 2023 June 2023 2022. This puts the UK in second place globally in terms of 76 in昀氀uence globally. Creation of the Centre for Data, Establishment of Publication of the government’s Secured US/UK in- 73 Ethics and Innovation (CDEI) to the Department for AI White Paper and support for a principle agreement to UK industry is 昀椀ntech investment, behind only the US. enable the trustworthy use of Science, Innovation & pro-innovation and responsible establish a data bridge data and AI Technology (DSIT) approach to AI July 2020 December 2022 March 2023 Creation of the DRCF to Contribution to Data Protection and Digital support cooperation and the Organisation for Information (DPDI) Bill to coordination between Economic Cooperation streamline data protection member regulators on and Development (OECD) requirements and set the digital regulatory matters Principles for Government legislative basis for the UK's Access to Data Digital Identity and Attributes Trust Framework Technology can contribute strongly to inclusive, could enhance e昀漀ciencies and productivity, deliver cost economic growth. Closing gaps in digitalisation savings, improve customer experience, and integrate that prevent new technologies from being adopted data-driven decision making processes. But it is not just across the economy is therefore important. In 2021, digitalisation of businesses that must be considered. a government-commissioned study identi昀椀ed that, for It is also the digital inclusion of individuals in their roles the UK’s nations and regions as a whole, strengthening as both employees and citizens. One study found that regional digital ecosystems across the UK could grow £1 invested in digital skills training would generate 81 Improving the digital skills of the digital sector’s Gross Value Added (GVA) by at least over £9 for the economy. digitally excluded people can have profound impact on £41.5bn by 2025 (above 2019 levels), creating a further 79 Continued reliance on legacy technology 678,000 jobs. 昀椀nancial outcomes and social mobility. A key focus for is a risk for UK SMEs, which the OECD estimates lag the UK Government and industry must therefore be to 80 behind other G7 nations in their adoption of innovations. deliver truly foundational reforms that will support 昀椀rms Increasing the rate of digitalisation among UK SMEs and individuals to operate and innovate more e昀昀ectively. London skyline

Vision for Economic Growth — a roadmap to prosperity 27 3. Become a digital-ﬁrst economyA key factor underpinning the UK’s innovation The ability to access and use data across borders is key ecosystem — across all sectors of the economy — to 昀椀rms’ growth and the UK’s economic activity. Cross- will be data. In the near term, it will be particularly border data transfers contribute as much as US$2.8tn to important to consider applications related to AI global GDP, and information transmission is increasing 77 Domestically, the UK’s own framework (such as data privacy); sustainable 昀椀nance (such as Impact by 2030 every decade. has made signi昀椀cant progress (see Figure 9), and other There is an increase in inclusive growth and prosperity for citizens and a rise in UK ﬁrms’ provision of decision-useful information to inform jurisdictions such as Australia and the Netherlands international competitiveness. Consumers can access a huge range of products safely and capital allocation choices); and interoperability of 78 There is switly. UK-based ﬁrms are able to innovate more eectively.standards and requirements to support secure data have replicated its regulatory coordination. an excellent opportunity to build on this momentum. sharing. Fortunately, the UK is already building a strong foundation for a strategic approach to data, Regulators should take existing collaborations, such as Context both domestically and internationally. It has a unique the DRCF, to the next level, as explored in the big move The UK has a thriving tech sector. The tech sector now also at the forefront of discussions around key emerging opportunity to get the balance right between protecting in this chapter. Cross-border data 昀氀ows are also a critical 74 as well as adds £150bn pa to the economy, and its contribution has technologies such as AI and tokenisation, part of the big move on creating innovative networks privacy and avoiding protectionism. Data transcends 71 There are how government can use technology and data most grown by over 25% between 2010 and 2019.borders, so interoperability of the UK’s approaches will around the world (see Big move #9). 75 just under 5 million people working in UK tech startups impactfully to build a better UK. The success of these be key. The costs of getting this wrong are signi昀椀cant. sectors points to the UK’s thriving innovation ecosystem, and scaleups, an increase from just under 3 million in 2019, and more than double the 2.18 million working in and the strengths it can lean on when meeting the 72 The 昀椀ntech sector, to name the tech economy in 2011.evolving needs of customers in the future. This includes Figure 9: Highlights of select progress on key data-related initiatives just one example, received US$12.5bn in VC investment in Gen Z, who already have US$7tn or more in purchasing 2018February 2023March 2023June 2023 2022. This puts the UK in second place globally in terms of 76 in昀氀uence globally. Creation of the Centre for Data, Establishment of Publication of the government’s Secured US/UK in- 73 Ethics and Innovation (CDEI) to the Department for AI White Paper and support for a principle agreement to UK industry is 昀椀ntech investment, behind only the US.enable the trustworthy use of Science, Innovation & pro-innovation and responsible establish a data bridge data and AI Technology (DSIT) approach to AI July 2020 December 2022 March 2023 Creation of the DRCF to Contribution to Data Protection and Digital support cooperation and the Organisation for Information (DPDI) Bill to coordination between Economic Cooperation streamline data protection member regulators on and Development (OECD) requirements and set the digital regulatory matters Principles for Government legislative basis for the UK's Access to Data Digital Identity and Attributes Trust Framework Technology can contribute strongly to inclusive, could enhance e昀漀ciencies and productivity, deliver cost economic growth. Closing gaps in digitalisation savings, improve customer experience, and integrate that prevent new technologies from being adopted data-driven decision making processes. But it is not just across the economy is therefore important. In 2021, digitalisation of businesses that must be considered. a government-commissioned study identi昀椀ed that, for It is also the digital inclusion of individuals in their roles the UK’s nations and regions as a whole, strengthening as both employees and citizens. One study found that regional digital ecosystems across the UK could grow £1 invested in digital skills training would generate 81 Improving the digital skills of the digital sector’s Gross Value Added (GVA) by at least over £9 for the economy. digitally excluded people can have profound impact on £41.5bn by 2025 (above 2019 levels), creating a further 79 Continued reliance on legacy technology 678,000 jobs. 昀椀nancial outcomes and social mobility. A key focus for is a risk for UK SMEs, which the OECD estimates lag the UK Government and industry must therefore be to 80 behind other G7 nations in their adoption of innovations. deliver truly foundational reforms that will support 昀椀rms Increasing the rate of digitalisation among UK SMEs and individuals to operate and innovate more e昀昀ectively. London skyline

Vision for Economic Growth — a roadmap to prosperity 29 Big move #4 Beneﬁts • Because of the vast use cases for digital veri昀椀cation • Widespread adoption of digital veri昀椀cation solutions (see 昀椀gure 10), we expect the widespread adoption of digital veri昀椀cation solutions to have a further could deliver about £800m per annum to the UK Be internationally competitive on data and digital economy, amounting to a potential £4.8bn in value catalytic impact to the UK economy, delivering 89 additional signi昀椀cant value. added from 2024-2030. • We expect a portion of the governmentʼs estimate of The UK has an opportunity to di昀昀erentiate itself through the development of the digital identity and Key actors (non-exhaustive) 85 on data. This must start with clear standards and attributes trust framework. value added by digital veri昀椀cation solutions to include More advanced digital the mitigation of fraud losses. We estimate as much DRCF members (Information Commissioners O昀漀ce [ICO], supportive regulation (see the 昀椀rst recommendation veri昀椀cation solutions can provide a customer with CMA, FCA, OfCom); DBT; DSIT; Cabinet O昀漀ce; United below). The UK must also have the infrastructure as £3bn of aggregate fraud losses could be mitigated “single sign-on” capability which avoids the hassle 90 Kingdom Accreditation Services (UKAS); HMT; The between 2024 and 2030. that will enable connectivity and data sharing to take of losing passwords or having username/password Centre for Finance, Innovation and Technology (CFIT). place in a secure way. These features will, collectively, credentials stolen. Meanwhile, 昀椀rms can bene昀椀t underpin foundational innovations that can support from lower operational costs from ongoing client the UK’s competitive approach to data use, including due diligence processes, while also protecting against Figure 10: The multiple opportunities associated with digital veriﬁcation digital veri昀椀cation solutions and a machine-readable fraud. Furthermore, digital veri昀椀cation solutions company 昀椀ling system, as discussed in further detail align with the second pillar of the UK government’s here. The key actions include: 86 fraud strategy to block fraud at an industrial level. • Diﬀerentiate the UK on data through clear The UK needs to accelerate progress on getting Employment standards and regulation. The UK’s existing digital veri昀椀cation solutions to market so that approach to data protection risks limiting new customer outcomes can be transformed. There must be leadership from a single entity to deliver Utilities/personal services Social media innovations that depend on secure and safe Job applications the vision and strategy (from DSIT) and strong e-learning data-sharing. The UK should di昀昀erentiate its data Subscribing regulatory coordination given the overlapping protection approach by combining high standards certi昀椀cates E-commerce regulation that touches digital veri昀椀cation. Switching Going on dates and pragmatism. Strong safeguards are necessary, providers • Develop a machine-readable company 昀椀ling “Right to work” but the cost of being overly prescriptive is signi昀椀cant. Fitness Reference checks system for the UK. This can form part of the Research Gym/昀椀tness checks Proof of age Updating Changing the UK’s existing approach to data memberships delivery and Retail Platform proposed by Rachel Kent in her Investment Logging in Creating an event payment protection could unlock new innovations, including details Research Review.87 It can also be connected to the Returning items the utilisation of NHS data for new research and Registering Book SSO for GP appointments development (R&D) initiatives. It could also help FCA’s National Storage Mechanism which is in the Buying age process of being upgraded.88 Building Posting restricted 昀椀rms leverage employee data to close the digital In the US, EDGAR is Showing Collect access products an internal database that performs automated vaccination prescriptions Attending events skills gap and extend their cross-border operations. record Fitness Making a Collecting The Healthcare TechUK has o昀昀ered recommendations to support collection, validation, acceptance, and submissions Accessing tracking purchase parcels “Physical” Immigration tax statements 82 by companies that are required by law to 昀椀le forms e昀昀ective data use across the country. TheCityUK Commuting Log in Credit check/ Apply for loan scoring with the US securities regulator, the Securities and Claiming or mortgage has also provided recommendations for policy- Voting universal credit Making a Exchange Commission (SEC). Establishing an EDGAR- payment KYC makers to facilitate digital trade services, which Pensions Homebuying/ equivalent tool in the UK could increase transparency includes data-related policy and regulation.83 Adopting Mobility rental Paying selling and sharing student loan around the equities market for investors and 昀椀rms. Birth, Investing Further detail on developing a strategic approach marriage, Board a plane Pay bills to openness and collaboration is described in big It would give equal access to real-time 昀椀nancial Government/ certi昀椀cates Hotel check-in Access move #9. and regulatory information on public companies, Public Sector Renewing claims history drivers license Banking • Accelerate the adoption of digital veri昀椀cation. From enabling investors to assess the 昀椀nancial health, Buy/claim and payments risks, and opportunities of those 昀椀rms. It would also Vehicle rental insurance Estonia’s government-led electronic ID (eID) solution streamline the regulatory compliance process for Accommodation to digital veri昀椀cation undertakings in East Asia, booking 昀椀rms needing to submit documentation, which can Transport Insurance jurisdictions are progressing with individual digital and pensions complement the BoE and FCAʼs e昀昀orts on digital 84 identity wallets and veri昀椀cation solutions. There are multiple use cases which demonstrate how this regulatory reporting (see the next big move). For example, in the case of the Taskforce for Climate- can make peopleʼs lives easier, as highlighted in Related Financial Disclosures (TCFD), it would Figure 10 and Figure 11, and there is potential for ensure that reporting is available in real time Source: Oliver Wyman CustomerFirst Digital Identity Framework smoother and more secure experiences across and immediately comparable. a range of touchpoints in the customer lifecycle. The UK is advancing digital veri昀椀cation solutions

Vision for Economic Growth — a roadmap to prosperity 29 Big move #4 Beneﬁts • Because of the vast use cases for digital veri昀椀cation • Widespread adoption of digital veri昀椀cation solutions (see 昀椀gure 10), we expect the widespread adoption of digital veri昀椀cation solutions to have a further could deliver about £800m per annum to the UK Be internationally competitive on data and digitaleconomy, amounting to a potential £4.8bn in value catalytic impact to the UK economy, delivering 89 additional signi昀椀cant value. added from 2024-2030. • We expect a portion of the governmentʼs estimate of The UK has an opportunity to di昀昀erentiate itself through the development of the digital identity and Key actors (non-exhaustive) 85 on data. This must start with clear standards and attributes trust framework.value added by digital veri昀椀cation solutions to include More advanced digital the mitigation of fraud losses. We estimate as much DRCF members (Information Commissioners O昀漀ce [ICO], supportive regulation (see the 昀椀rst recommendation veri昀椀cation solutions can provide a customer with CMA, FCA, OfCom); DBT; DSIT; Cabinet O昀漀ce; United below). The UK must also have the infrastructure as £3bn of aggregate fraud losses could be mitigated “single sign-on” capability which avoids the hassle 90 Kingdom Accreditation Services (UKAS); HMT; The between 2024 and 2030. that will enable connectivity and data sharing to take of losing passwords or having username/password Centre for Finance, Innovation and Technology (CFIT). place in a secure way. These features will, collectively, credentials stolen. Meanwhile, 昀椀rms can bene昀椀t underpin foundational innovations that can support from lower operational costs from ongoing client the UK’s competitive approach to data use, including due diligence processes, while also protecting against Figure 10: The multiple opportunities associated with digital veriﬁcation digital veri昀椀cation solutions and a machine-readable fraud. Furthermore, digital veri昀椀cation solutions company 昀椀ling system, as discussed in further detail align with the second pillar of the UK government’s here. The key actions include:86 fraud strategy to block fraud at an industrial level. • Diﬀerentiate the UK on data through clear The UK needs to accelerate progress on getting Employment standards and regulation. The UK’s existing digital veri昀椀cation solutions to market so that approach to data protection risks limiting new customer outcomes can be transformed. There must be leadership from a single entity to deliver Utilities/personal services Social media innovations that depend on secure and safe Job applications the vision and strategy (from DSIT) and strong e-learning data-sharing. The UK should di昀昀erentiate its data Subscribing regulatory coordination given the overlapping protection approach by combining high standards certi昀椀cates E-commerce regulation that touches digital veri昀椀cation. Switching Going on dates and pragmatism. Strong safeguards are necessary, providers • Develop a machine-readable company 昀椀ling “Right to work” but the cost of being overly prescriptive is signi昀椀cant. Fitness Reference checks system for the UK. This can form part of the Research Gym/昀椀tness checks Proof of age Updating Changing the UK’s existing approach to data memberships delivery and Retail Platform proposed by Rachel Kent in her Investment Logging in Creating an event payment protection could unlock new innovations, including details Research Review.87 It can also be connected to the Returning items the utilisation of NHS data for new research and Registering Book SSO for GP appointments development (R&D) initiatives. It could also help FCA’s National Storage Mechanism which is in the Buying age process of being upgraded.88 Building Posting restricted 昀椀rms leverage employee data to close the digital In the US, EDGAR is ShowingCollectaccess products an internal database that performs automated vaccination prescriptions Attending events skills gap and extend their cross-border operations. record Fitness Making a Collecting The Healthcare TechUK has o昀昀ered recommendations to support collection, validation, acceptance, and submissions Accessingtrackingpurchaseparcels “Physical” Immigration tax statements 82by companies that are required by law to 昀椀le forms e昀昀ective data use across the country. TheCityUK Commuting Log in Credit check/ Apply for loan scoring with the US securities regulator, the Securities and Claiming or mortgage has also provided recommendations for policy- Voting universal credit Making a Exchange Commission (SEC). Establishing an EDGAR- payment KYC makers to facilitate digital trade services, which Pensions Homebuying/ equivalent tool in the UK could increase transparency includes data-related policy and regulation.83 Adopting Mobility rental Paying selling and sharing student loan around the equities market for investors and 昀椀rms. Birth, Investing Further detail on developing a strategic approach marriage, Board a plane Pay bills to openness and collaboration is described in big It would give equal access to real-time 昀椀nancial Government/ certi昀椀cates Hotel check-in Access move #9.and regulatory information on public companies, Public SectorRenewing claims history drivers license Banking • Accelerate the adoption of digital veri昀椀cation. From enabling investors to assess the 昀椀nancial health, Buy/claim and payments risks, and opportunities of those 昀椀rms. It would also Vehicle rental insurance Estonia’s government-led electronic ID (eID) solution streamline the regulatory compliance process for Accommodation to digital veri昀椀cation undertakings in East Asia, booking 昀椀rms needing to submit documentation, which can Transport Insurance jurisdictions are progressing with individual digital and pensions complement the BoE and FCAʼs e昀昀orts on digital 84 identity wallets and veri昀椀cation solutions. There are multiple use cases which demonstrate how this regulatory reporting (see the next big move). For example, in the case of the Taskforce for Climate- can make peopleʼs lives easier, as highlighted in Related Financial Disclosures (TCFD), it would Figure 10 and Figure 11, and there is potential for ensure that reporting is available in real time Source: Oliver Wyman CustomerFirst Digital Identity Framework smoother and more secure experiences across and immediately comparable. a range of touchpoints in the customer lifecycle. The UK is advancing digital veri昀椀cation solutions

Vision for Economic Growth — a roadmap to prosperity 31 Figure 11: Digital veriﬁcation across the customer lifecycle — potential beneﬁts across use cases for banks Big move #5 Customer facing Not customer facing Invest in driving an innovation and growth mindset One-oﬀ processes 1 Customer onboarding (account opening) process Implementing a digital-昀椀rst economy requires • Task regulators with deploying machine-readable Identity veri昀椀cation 2a (ie con昀椀rming that the customer is government, regulators, and the industry to all play a and machine-executable regulation, building on who they say they are) part. Regulators will need to further invest in their people, eﬀorts underway by the FCA and the BoE. Machine- 2b Politically exposed persons (PEPs) systems, and technologies to keep pace with competing readable regulation (MRR) and machine-executable and sanctions list checks jurisdictions. They will also need to work together and regulation (MER) translate regulation into computer Document veri昀椀cation 2c provide global leadership on interoperable standards code such that compliance requirements can be (ie passport, proof of address) for emerging technologies (see Chapter 5). For the FCA managed in an automated way. This, in turn, will Ongoing processes E-signatures and the PRA speci昀椀cally, this will help to deliver on their reduce the compliance burden on 昀椀rms which can Today (Using digital identity to 3 secondary international competitiveness and growth then allocate more capital to innovation activities. sign for services) objective. The key actions to realise this big move are: Equally it will allow supervisors to be more agile and • Enable regulators to provide collective leadership strategic. They will be able to focus less on process and assembling data, more on addressing risks. MRR Access to online/mobile banking 3b on cross-sectoral priorities such as digital (Authentication to see transactions) veri昀椀cation, data, tokenisation and AI. The digital can also free up capacity, enabling supervisors to assess new risks and opportunities from emerging transformations of the next few years will require technologies. Today, these emerging technologies 5a Anti-money laundering (AML) checks agile, coherent responses. There will need to be (Ongoing customer due diligence [CDD]) a consistent approach across the regulators on include tokenisation and generative AI. They may look emerging technologies. Their role will be critical if we di昀昀erent in a few years’ time. Continued investment Payments authorisation 4 into innovative technology and 昀椀nancial supervision are to implement digital veri昀椀cation, manage data, (SupTech) to automate supervisory processes and and maximise the positive impact of AI. Fortunately, enable real-time monitoring of key risk indicators the DRCF is already working across silos more 91 5b Ongoing fraud monitoring and early warning signs will therefore be critical. e昀昀ectively. It should be given appropriate resources E昀昀orts should build on the FCA’s and BoE’s pilots on and an even stronger mandate to drive regulatory coordination for digital issues. It would focus both digital regulatory reporting, which explore automating 6 and streamlining various aspects of the regulatory Employee onboarding and on strategic outcomes and operational e昀漀ciency, 92 digital and physical access aligning reporting requirements across regulators. reporting process. • Streamline approaches to creating regulatory Beneﬁts Future reform. The UK must continue to take pride in high Open 昀椀nance 7 This move will serve as a key enabler for innovation (Access to additional 昀椀nancial services) regulatory standards. But there is an opportunity to across the UK, and also support delivery of some 8 Identity as a service consider how the existing months-long approaches cornerstone innovations such as digital veri昀椀cation, (Your bank as your keychain provider) of consultation and creation of discussion papers can be complemented with more “agile” approaches, the bene昀椀ts of which are estimated for illustrative purposes in the previous move. whereby industry feedback is captured “live.” Stronger methods of More seamless customer Other “societal” bene昀椀ts/risks 1 experience to onboard 4 payments authorisation One recommendation could be to capture these • Opportunity to establish Know Your Key actors (non-exhaustive) ideas through a public-private partnership forum, Digitising identity Reducing op. costs of AML Customer (KYC) utility potentially as part of the FPS Partnership Council 2a 5a checks (ie ongoing CDD) DRCF members (ICO, CMA, FCA, OfCom); DSIT; Cabinet veri昀椀cation process • Opportunity to establish transaction (see Big move #1), tasked with testing very speci昀椀c monitoring utility O昀漀ce; Parliament; other 昀椀nancial services regulators 2b Digitising PEPs and sanctions 5b Reducing op. cost of ongoing areas or topics where regulatory reform might (see Figure 4). list processes transaction monitoring • Opportunities presented by Central be required. Digitising document/ Reducing op. cost to support Bank Digital Currencies (CBDCs) 2c 6 lost/stolen passwords credential veri昀椀ation 3 Stronger methods of account 7 Revenue opportunity access authentication from open banking/昀椀nance Reduction in op. cost to support 3b 8 Revenues from o昀昀ering lost/stolen customer passwords identity as a service Customer experience Risk mitigant Cost Revenue Source: Oliver Wyman CustomerFirst Digital Identity Framework

Vision for Economic Growth — a roadmap to prosperity 31 Figure 11: Digital veriﬁcation across the customer lifecycle — potential beneﬁts across use cases for banksBig move #5 Customer facing Not customer facingInvest in driving an innovation and growth mindset One-oﬀ processes1 Customer onboarding (account opening) processImplementing a digital-昀椀rst economy requires • Task regulators with deploying machine-readable Identity veri昀椀cation 2a (ie con昀椀rming that the customer is government, regulators, and the industry to all play a and machine-executable regulation, building on who they say they are)part. Regulators will need to further invest in their people, eﬀorts underway by the FCA and the BoE. Machine- 2bPolitically exposed persons (PEPs) systems, and technologies to keep pace with competing readable regulation (MRR) and machine-executable and sanctions list checksjurisdictions. They will also need to work together and regulation (MER) translate regulation into computer Document veri昀椀cation2cprovide global leadership on interoperable standards code such that compliance requirements can be (ie passport, proof of address) for emerging technologies (see Chapter 5). For the FCA managed in an automated way. This, in turn, will Ongoing processesE-signaturesand the PRA speci昀椀cally, this will help to deliver on their reduce the compliance burden on 昀椀rms which can Today(Using digital identity to 3secondary international competitiveness and growth then allocate more capital to innovation activities. sign for services)objective. The key actions to realise this big move are: Equally it will allow supervisors to be more agile and • Enable regulators to provide collective leadership strategic. They will be able to focus less on process and assembling data, more on addressing risks. MRR Access to online/mobile banking3bon cross-sectoral priorities such as digital (Authentication to see transactions) veri昀椀cation, data, tokenisation and AI. The digital can also free up capacity, enabling supervisors to assess new risks and opportunities from emerging transformations of the next few years will require technologies. Today, these emerging technologies 5aAnti-money laundering (AML) checksagile, coherent responses. There will need to be (Ongoing customer due diligence [CDD]) a consistent approach across the regulators on include tokenisation and generative AI. They may look emerging technologies. Their role will be critical if we di昀昀erent in a few years’ time. Continued investment Payments authorisation4 into innovative technology and 昀椀nancial supervision are to implement digital veri昀椀cation, manage data, (SupTech) to automate supervisory processes and and maximise the positive impact of AI. Fortunately, enable real-time monitoring of key risk indicators the DRCF is already working across silos more 91 5bOngoing fraud monitoring and early warning signs will therefore be critical. e昀昀ectively. It should be given appropriate resources E昀昀orts should build on the FCA’s and BoE’s pilots on and an even stronger mandate to drive regulatory coordination for digital issues. It would focus both digital regulatory reporting, which explore automating 6 and streamlining various aspects of the regulatory Employee onboarding and on strategic outcomes and operational e昀漀ciency, 92 digital and physical accessaligning reporting requirements across regulators. reporting process. • Streamline approaches to creating regulatory Beneﬁts Future reform. The UK must continue to take pride in high Open 昀椀nance 7 This move will serve as a key enabler for innovation (Access to additional 昀椀nancial services)regulatory standards. But there is an opportunity to across the UK, and also support delivery of some 8Identity as a serviceconsider how the existing months-long approaches cornerstone innovations such as digital veri昀椀cation, (Your bank as your keychain provider)of consultation and creation of discussion papers can be complemented with more “agile” approaches, the bene昀椀ts of which are estimated for illustrative purposes in the previous move. whereby industry feedback is captured “live.” Stronger methods of More seamless customer Other “societal” bene昀椀ts/risks 1experience to onboard4payments authorisationOne recommendation could be to capture these • Opportunity to establish Know Your Key actors (non-exhaustive) ideas through a public-private partnership forum, Digitising identity Reducing op. costs of AML Customer (KYC) utility potentially as part of the FPS Partnership Council 2a5a checks (ie ongoing CDD) DRCF members (ICO, CMA, FCA, OfCom); DSIT; Cabinet veri昀椀cation process• Opportunity to establish transaction (see Big move #1), tasked with testing very speci昀椀c monitoring utility O昀漀ce; Parliament; other 昀椀nancial services regulators 2b Digitising PEPs and sanctions 5b Reducing op. cost of ongoing areas or topics where regulatory reform might (see Figure 4). list processestransaction monitoring• Opportunities presented by Central be required. Digitising document/Reducing op. cost to support Bank Digital Currencies (CBDCs) 2c6lost/stolen passwords credential veri昀椀ation 3Stronger methods of account 7Revenue opportunity access authentication from open banking/昀椀nance Reduction in op. cost to support 3b8Revenues from o昀昀ering lost/stolen customer passwordsidentity as a service Customer experienceRisk mitigantCostRevenue Source: Oliver Wyman CustomerFirst Digital Identity Framework

Vision for Economic Growth — a roadmap to prosperity 33 The investment gap to 昀椀nance the transition to net 4. Anchor the UK as a leader Demonstrating leadership in sustainable 昀椀nance can zero and the protection of nature and biodiversity help to consolidate the UK’s role as the “go-to” partner is daunting. In 2021, the International Energy Agency in sustainable ﬁnance for 昀椀rms and countries when it comes to transitioning (IEA) estimated that annual clean energy investment to net zero, protecting biodiversity, and delivering on worldwide would need to more than triple by 2030, other sustainability-related goals. It is also worth noting 96 and a recent estimate puts the 昀椀gure at US$4.6tn. that the ultimate success of the UK as a centre for But capital 昀氀ows today are nowhere near the levels Impact by 2030 sustainable 昀椀nance will be in no small part determined required to transition to a more sustainable energy UK-based FPS has a strong track record in supporting businesses globally to decarbonise by the overall vibrancy of its capital markets. As the UK and reach other sustainability-related goals, through the provision of ﬁnancing, investment system (see Figure 12). One estimate from 2022 put considers a range of reforms to protect and enhance the the UK’s investment gap for the transition as being up and expertise. The UK is also a leading centre for scaling innovative approaches including competitiveness of its capital markets more broadly, it 97 Also, within the UK alone, there is to £111bn by 2030. high-integrity carbon and nature markets. is important that these are developed in lockstep with an estimated 昀椀nancing gap to meet nature-related the policy measures needed to seize the opportunity of outcomes targeted in UK policy of at least £44-97bn anchoring the UK as a leader in sustainable 昀椀nance. 98 Context To close these gaps, the UK needs to unlock by 2032. E昀昀orts are underway as part of the Financial Market Law The UK is a pioneer in sustainable 昀椀nance. It has public and private capital at scale through predictable experience in 昀椀nancing the transition and sustainable Committee (FMLC) working group to explore potential and durable energy and industrial policies. development, adopting the necessary policies and clari昀椀cations around 昀椀duciary duty in the context of 94 best practice frameworks. This enables the UK to set sustainability objectives (such as the net zero transition). Financial market infrastructure providers are also looking a global example. It was the 昀椀rst G7 country to require Figure 12: Global clean energy investments — current versus required to reach net zero by 2050 to support broader sustainability goals. For example, disclosures aligned to Task Force for Climate-Related US$ trillion (2022) the London Stock Exchange was the 昀椀rst exchange in Financial Disclosures (TCFD) recommendations and Level of global clean energy investment required annually to reach net zero by 2050 ~4.6 secured support for the launch of the Taskforce on the world to use a public market framework to facilitate Nature-Related Financial Disclosures (TNFD), as part funding in climate mitigation projects that create carbon 93 95 of the UK G7 presidency. credits, via its voluntary carbon markets designation. ~1.7 ~1.6 ~1.4 ~1.2 ~1.3 ~1.1 ~1.1 ~1.1 2016 2017 2018 2019 2020 2021 2022 2023e 2030 O昀昀shore windfarm at Redcar NB 2030 昀椀gures refer to IEAʼs Net Zero by 2050 Scenario Source: IEA (2023), World Energy Investment 2023, IEA, Paris https://www.iea.org/reports/world-energy-investment-2023, License: CC BY 4.0

Vision for Economic Growth — a roadmap to prosperity 33 The investment gap to 昀椀nance the transition to net 4. Anchor the UK as a leader Demonstrating leadership in sustainable 昀椀nance can zero and the protection of nature and biodiversity help to consolidate the UK’s role as the “go-to” partner is daunting. In 2021, the International Energy Agency in sustainable ﬁnance for 昀椀rms and countries when it comes to transitioning (IEA) estimated that annual clean energy investment to net zero, protecting biodiversity, and delivering on worldwide would need to more than triple by 2030, other sustainability-related goals. It is also worth noting 96 and a recent estimate puts the 昀椀gure at US$4.6tn. that the ultimate success of the UK as a centre for But capital 昀氀ows today are nowhere near the levels Impact by 2030 sustainable 昀椀nance will be in no small part determined required to transition to a more sustainable energy UK-based FPS has a strong track record in supporting businesses globally to decarbonise by the overall vibrancy of its capital markets. As the UK and reach other sustainability-related goals, through the provision of ﬁnancing, investment system (see Figure 12). One estimate from 2022 put considers a range of reforms to protect and enhance the the UK’s investment gap for the transition as being up and expertise. The UK is also a leading centre for scaling innovative approaches including competitiveness of its capital markets more broadly, it 97 Also, within the UK alone, there is to £111bn by 2030. high-integrity carbon and nature markets. is important that these are developed in lockstep with an estimated 昀椀nancing gap to meet nature-related the policy measures needed to seize the opportunity of outcomes targeted in UK policy of at least £44-97bn anchoring the UK as a leader in sustainable 昀椀nance. 98 Context To close these gaps, the UK needs to unlock by 2032. E昀昀orts are underway as part of the Financial Market Law The UK is a pioneer in sustainable 昀椀nance. It has public and private capital at scale through predictable experience in 昀椀nancing the transition and sustainable Committee (FMLC) working group to explore potential and durable energy and industrial policies. development, adopting the necessary policies and clari昀椀cations around 昀椀duciary duty in the context of 94 best practice frameworks. This enables the UK to set sustainability objectives (such as the net zero transition). Financial market infrastructure providers are also looking a global example. It was the 昀椀rst G7 country to require Figure 12: Global clean energy investments — current versus required to reach net zero by 2050 to support broader sustainability goals. For example, disclosures aligned to Task Force for Climate-Related US$ trillion (2022) the London Stock Exchange was the 昀椀rst exchange in Financial Disclosures (TCFD) recommendations and Level of global clean energy investment required annually to reach net zero by 2050~4.6 secured support for the launch of the Taskforce on the world to use a public market framework to facilitate Nature-Related Financial Disclosures (TNFD), as part funding in climate mitigation projects that create carbon 9395 of the UK G7 presidency.credits, via its voluntary carbon markets designation. ~1.7 ~1.6 ~1.4 ~1.2 ~1.3 ~1.1 ~1.1 ~1.1 2016 2017 2018 2019 2020 2021 2022 2023e 2030 O昀昀shore windfarm at RedcarNB 2030 昀椀gures refer to IEAʼs Net Zero by 2050 Scenario Source: IEA (2023), World Energy Investment 2023, IEA, Paris https://www.iea.org/reports/world-energy-investment-2023, License: CC BY 4.0

Vision for Economic Growth — a roadmap to prosperity 35 Big move #6 Beneﬁts Key actors (non-exhaustive) The government has said that its Net-Zero and British HMT; the FCA; Department for Energy Security and Energy Security strategies will leverage £100bn in Create the conditions to scale and Net Zero (DESNZ); FRC; BBB; UKIB; UKEF; FPS Industry 103 The right private sector funds between now and 2030. Participants; Green Finance Institute; Impact Investing accelerate ﬁnance for a just transition enabling conditions can help to unlock this capital. Institute; Civil society organisations. Figure 13: Key levers available to help inﬂuence real economy emissions reductions Reaching net zero represents the transformational across sectors (eg long-term hydrogen o昀昀take growth opportunity of the 21st century. Finance must agreements and incentives to retro昀椀t steel plants). In昀氀uence on real Asset Asset Professional By providing further detail on its own plans, the UK i 昀氀ow to businesses that have committed to credible Lever type Lever economy emissions Banks managers owners Insurers services Government can encourage the mobilisation of transition plans and are delivering against them. New capital Capital market Proactively steer capital private 昀椀nance in support of the transition. Governments have a critical role to play in providing investments origination markets origination towards net zero aligned projects unequivocal signals. In the UK, without further policy • Support the scaling up of private 昀椀nance and and corporates, including clarity, the required capital will not mobilise at the de-risking of projects in support of the transition. through labelled green and transition 昀椀nance scale and pace needed. So accelerating 昀椀nancing for Equity investments merit special attention, as the transition 昀椀rst requires an ambitious, visionary General Consider corporate net zero does infrastructure. Building energy e昀漀ciency purpose lending alignment as part of lending and credible domestic energy and industrial policy retro昀椀ts was one area that the CCC highlighted decisions, re昀氀ected through, framework beyond what has been set out to date. Next for instance, loan covenants to be below the necessary level to reach net zero and exclusions there must be regulatory support for interoperable 100 targets, for example. The UK National Infrastructure frameworks and approaches, and scaling-up of a Commission’s 昀椀ve-year report, due in October, will Specialised Proactively steer lending wide variety of 昀椀nancing solutions. Finally, political lendingii towards lower carbon projects, o昀昀er a crucial analysis of what needs to be done to assets or infrastructure, support for 昀椀nancing the sectors which are critical to 101 including through labelled support investment. TheCityUK’s report earlier green and transition 昀椀nance the transition and have set credible transition plans, this year also highlighted recommendations to including those that are “hard-to-abate”, is crucially Insurance Provide risk management mainstream “green” investment and R&D incentives and risk to support the development important. This will help advance decarbonisation 102 for services. Streamlining planning and permitting management of low carbon projects; e昀昀orts. It will also enable growth of economically viable processes, including connections to the grid, would consider net zero alignment in underwriting decisions technologies and solutions to advance the transition over speed up development and implementation of the long term. This e昀昀ort will require collaboration across Managing Security Consider the emissions and the 昀椀nancial system and across value chains (see Figure projects, further attracting investors. Long-dated invested selection and transition pro昀椀les of corporates energy projects match long-term liabilities so the capital trade facilitation as part of security selection 13). There must also be a focus on creating a transition decisions facilitated in the that is just, which will require a consideration of climate outcome of Solvency II reform will be critical. There secondary markets will also need to be consideration for the key delivery issues alongside other outcomes, as outlined by the Stewardship Leverage voting rights and role that di昀昀erent authorities and regions will play 99 in昀氀uence to encourage corporate Impact Investing Institute. The key actions are: across the UK. management teams to take steps iii • Provide further clarity and commitment around • Create con昀椀dence among 昀椀nancial institutions to drive decarbonisation Investment Create and market net zero sector-speci昀椀c policies to deliver on net zero that they can support 昀椀nancing the transition products aligned savings and investment commitments. Private 昀椀nance can invest in the without jeopardising their own Paris-aligned or products (eg funds, pensions, transition only on the bedrock of policy clarity. The net zero targets. Government must lead in setting life insurance) Skidmore Review highlighted investors’ reticence the necessary policy and enabling conditions to Investment Embed net zero considerations mandates into investment mandates to make investments given lack of transparency of achieve net zero targets and support the 昀椀nancial awarded to asset managers the government’s own priorities. The Transition Plan sector to help the real economy transition. This Availability of each lever per institution Taskforce is developing guidance for corporates and means acknowledging that 昀椀rms in energy-intensive Higher Medium Lower 昀椀nancial institutions that will provide the needed industries need to play a role in solving the climate transparency on credible transition plans. These crisis and that a divestment approach will not Clari昀椀cations as provided in the original publication: i. Practices vary across asset owners — some directly perform asset management activities such as securities selection and e昀昀orts must be matched on a national level with necessarily create optimal outcomes for the planet. specialist lending, while others delegate more of this activity to third party managers; ii. Specialised lending refers to: infrastructure, asset, and project-based 昀椀nancing; iii. Banks the government’s own plans. The Climate Change The building blocks must be put rapidly in place, are not equity owners but can exercise loan covenant voting. Source: table content from the Glasgow Financial Alliance for Net Zero (GFANZ) 2021 Progress Report. Oliver Wyman served as knowledge partner to GFANZ at time of publication. Figure adapted for this report to include an additional column for professional services. Refer to further detail here: https://assets.bbhub.io/company/ Committee’s (CCC) sector-speci昀椀c pathways are a including overcoming the stigma of transition 昀椀nance. good start. But more is required to translate these This will cascade from international standard-setters, sites/63/2021/11/GFANZ-Progress-Report.pdf. pathways to the level of detail required to support the in particular the International Sustainability Standards transition plans of speci昀椀c UK companies, especially Board (ISSB) whose standards are being considered for those in energy-intensive industries. Appropriate by the UK Financial Reporting Council (FRC). policy interventions will be wide-ranging and vary

Vision for Economic Growth — a roadmap to prosperity 35 Big move #6 Beneﬁts Key actors (non-exhaustive) The government has said that its Net-Zero and British HMT; the FCA; Department for Energy Security and Energy Security strategies will leverage £100bn in Create the conditions to scale and Net Zero (DESNZ); FRC; BBB; UKIB; UKEF; FPS Industry 103 The right private sector funds between now and 2030. Participants; Green Finance Institute; Impact Investing accelerate ﬁnance for a just transitionenabling conditions can help to unlock this capital. Institute; Civil society organisations. Figure 13: Key levers available to help inﬂuence real economy emissions reductions Reaching net zero represents the transformational across sectors (eg long-term hydrogen o昀昀take growth opportunity of the 21st century. Finance must agreements and incentives to retro昀椀t steel plants). In昀氀uence on real Asset Asset Professional By providing further detail on its own plans, the UK i 昀氀ow to businesses that have committed to credible Lever typeLevereconomy emissions Banks managers owners Insurers services Government can encourage the mobilisation of transition plans and are delivering against them. New capital Capital market Proactively steer capital private 昀椀nance in support of the transition. Governments have a critical role to play in providing investments originationmarkets origination towards net zero aligned projects unequivocal signals. In the UK, without further policy • Support the scaling up of private 昀椀nance and and corporates, including clarity, the required capital will not mobilise at the de-risking of projects in support of the transition. through labelled green and transition 昀椀nance scale and pace needed. So accelerating 昀椀nancing for Equity investments merit special attention, as the transition 昀椀rst requires an ambitious, visionary General Consider corporate net zero does infrastructure. Building energy e昀漀ciency purpose lending alignment as part of lending and credible domestic energy and industrial policy retro昀椀ts was one area that the CCC highlighted decisions, re昀氀ected through, framework beyond what has been set out to date. Next for instance, loan covenants to be below the necessary level to reach net zero and exclusions there must be regulatory support for interoperable 100 targets, for example. The UK National Infrastructure frameworks and approaches, and scaling-up of a Commission’s 昀椀ve-year report, due in October, will Specialised Proactively steer lending wide variety of 昀椀nancing solutions. Finally, political lendingiitowards lower carbon projects, o昀昀er a crucial analysis of what needs to be done to assets or infrastructure, support for 昀椀nancing the sectors which are critical to 101including through labelled support investment. TheCityUK’s report earlier green and transition 昀椀nance the transition and have set credible transition plans, this year also highlighted recommendations to including those that are “hard-to-abate”, is crucially Insurance Provide risk management mainstream “green” investment and R&D incentives and risk to support the development important. This will help advance decarbonisation 102 for services. Streamlining planning and permitting management of low carbon projects; e昀昀orts. It will also enable growth of economically viable processes, including connections to the grid, would consider net zero alignment in underwriting decisions technologies and solutions to advance the transition over speed up development and implementation of the long term. This e昀昀ort will require collaboration across Managing Security Consider the emissions and the 昀椀nancial system and across value chains (see Figure projects, further attracting investors. Long-dated invested selection and transition pro昀椀les of corporates energy projects match long-term liabilities so the capitaltrade facilitation as part of security selection 13). There must also be a focus on creating a transition decisions facilitated in the that is just, which will require a consideration of climate outcome of Solvency II reform will be critical. There secondary markets will also need to be consideration for the key delivery issues alongside other outcomes, as outlined by the StewardshipLeverage voting rights and role that di昀昀erent authorities and regions will play 99 in昀氀uence to encourage corporate Impact Investing Institute. The key actions are:across the UK.management teams to take steps iii • Provide further clarity and commitment around • Create con昀椀dence among 昀椀nancial institutions to drive decarbonisation Investment Create and market net zero sector-speci昀椀c policies to deliver on net zero that they can support 昀椀nancing the transition productsaligned savings and investment commitments. Private 昀椀nance can invest in the without jeopardising their own Paris-aligned or products (eg funds, pensions, transition only on the bedrock of policy clarity. The net zero targets. Government must lead in setting life insurance) Skidmore Review highlighted investors’ reticence the necessary policy and enabling conditions to Investment Embed net zero considerations mandates into investment mandates to make investments given lack of transparency of achieve net zero targets and support the 昀椀nancial awarded to asset managers the government’s own priorities. The Transition Plan sector to help the real economy transition. This Availability of each lever per institution Taskforce is developing guidance for corporates and means acknowledging that 昀椀rms in energy-intensive Higher Medium Lower 昀椀nancial institutions that will provide the needed industries need to play a role in solving the climate transparency on credible transition plans. These crisis and that a divestment approach will not Clari昀椀cations as provided in the original publication: i. Practices vary across asset owners — some directly perform asset management activities such as securities selection and e昀昀orts must be matched on a national level with necessarily create optimal outcomes for the planet. specialist lending, while others delegate more of this activity to third party managers; ii. Specialised lending refers to: infrastructure, asset, and project-based 昀椀nancing; iii. Banks the government’s own plans. The Climate Change The building blocks must be put rapidly in place, are not equity owners but can exercise loan covenant voting. Source: table content from the Glasgow Financial Alliance for Net Zero (GFANZ) 2021 Progress Report. Oliver Wyman served as knowledge partner to GFANZ at time of publication. Figure adapted for this report to include an additional column for professional services. Refer to further detail here: https://assets.bbhub.io/company/ Committee’s (CCC) sector-speci昀椀c pathways are a including overcoming the stigma of transition 昀椀nance. good start. But more is required to translate these This will cascade from international standard-setters, sites/63/2021/11/GFANZ-Progress-Report.pdf. pathways to the level of detail required to support the in particular the International Sustainability Standards transition plans of speci昀椀c UK companies, especially Board (ISSB) whose standards are being considered for those in energy-intensive industries. Appropriate by the UK Financial Reporting Council (FRC). policy interventions will be wide-ranging and vary

Vision for Economic Growth — a roadmap to prosperity 37 Big move #7 Scale high-integrity, innovative markets and be at the forefront of new investment opportunities Sustainable 昀椀nance markets are innovating fast. for the potential role of regulation around VCMs, building on the proposals put forward by the How quickly new approaches develop — such as those 105 Skidmore Review. related to the voluntary carbon markets, nature, and Care should also be given to impact investing — will be dependent on enabling provide the right incentives and policy frameworks conditions to encourage their growth. In many cases, 106 for participants across the VCM value chain, so this will require the UK to leverage its deep expertise that they promote, purchase and sell high-integrity and experience in building and integrating world- credits and that these do not come at the cost of class marketplaces underpinned by fair laws, credible emissions reductions. Collectively these e昀昀orts standards, enabling policies and incentivised action have the potential to drive signi昀椀cant momentum for across the value chain. It may also require new types scaling the liquidity and growth of carbon markets. of specialist expertise as 昀椀rms move to embrace new • Scale-up other high-integrity nature markets investment opportunities, such as those related to 107 and support approaches to protect natural capital. natural capital. In many cases, fostering the growth of There is a strong argument to be made for protecting these markets while they are still nascent will heighten natural capital, as nature-based solutions can achieve UK competitiveness, making the need for action all the an estimated 37% of the mitigation needed until more urgent. Key actions include: 108 2030 to meet net zero targets. Uncertainty around • Develop an all-encompassing high-integrity relevant environmental policy and regulation is just voluntary carbon markets (VCM) ecosystem. one factor impeding the growth of nature markets There is growing acknowledgement that carbon today. If there is to be a thriving nature market based credits can play a role in the removal and o昀昀set in the UK, then the current programme of work of emissions that cannot otherwise be avoided in summarised in the government’s Green Finance Strategy and Nature Markets Framework must be the near term. Currently relatively small — one completed, and an ambitious course set for the estimate put the total market size at US$2bn at the end of 2021 — it has the potential to grow fast. rest of the decade. The planned consultation on 2021 was already a fourfold increase on 2020, nature markets, and piloting new markets, such as the Natural Environment Investment Readiness Fund 104 and by 2030 the market could see rapid growth. 109 (NEIRF) will be crucial. E昀昀orts such as these will help However, organisations can 昀椀nd it di昀漀cult and the market to mature and develop a greater pipeline costly to navigate the market. There are multiple marketplaces and a plethora of guidance on “best of investable projects that will support private sector practice” approaches and principles of use. It is not investment over the long term. always clear that purchasing a carbon credit will These activities can also support 昀椀nancial institutions result in meaningful emissions reductions, and there is concern of reputational damage if a claim participating in “impact investing” activities, whereby Glasgow, host of the COP26 Climate Conference is made improperly. Creating an environment “investments are made with the intention to generate Beneﬁts Key actors (non-exhaustive) positive, measurable social and environmental impact where market actors can have con昀椀dence in the 110 Finally, the UK’s established With the right enabling conditions in place and impactful DESNZ; the Department for Environment, Food alongside a 昀椀nancial return”. integrity of the market; how the use of o昀昀sets may complement their transition commitments; and strengths in insurance can play a pivotal role in supporting mobilisation of government 昀椀scal and policy support, and Rural A昀昀airs (DEFRA); the UK ETS Authority; and accelerating the bene昀椀ts that these new markets will how they should disclose and account for their use the private sector could play a meaningful role in driving FPS Industry Participants; Green Finance Institute; bring. For example, the London market could develop the substantial economic opportunity of VCM and closing Impact Investing Institute; civil society organisations. is key. As a priority, the government can remove insurance products to protect against project failure the 昀椀nancing gap for achieving nature-related outcomes the complexity and barriers that are preventing participation in the market, including consideration or fraud risks. targeted in UK policy, which one estimate puts between 111 at least £44bn and £97bn.

Vision for Economic Growth — a roadmap to prosperity 37 Big move #7 Scale high-integrity, innovative markets and be at the forefront of new investment opportunities Sustainable 昀椀nance markets are innovating fast. for the potential role of regulation around VCMs, building on the proposals put forward by the How quickly new approaches develop — such as those 105 Skidmore Review. related to the voluntary carbon markets, nature, and Care should also be given to impact investing — will be dependent on enabling provide the right incentives and policy frameworks conditions to encourage their growth. In many cases, 106 for participants across the VCM value chain, so this will require the UK to leverage its deep expertise that they promote, purchase and sell high-integrity and experience in building and integrating world-credits and that these do not come at the cost of class marketplaces underpinned by fair laws, credible emissions reductions. Collectively these e昀昀orts standards, enabling policies and incentivised action have the potential to drive signi昀椀cant momentum for across the value chain. It may also require new types scaling the liquidity and growth of carbon markets. of specialist expertise as 昀椀rms move to embrace new • Scale-up other high-integrity nature markets investment opportunities, such as those related to 107 and support approaches to protect natural capital. natural capital. In many cases, fostering the growth of There is a strong argument to be made for protecting these markets while they are still nascent will heighten natural capital, as nature-based solutions can achieve UK competitiveness, making the need for action all the an estimated 37% of the mitigation needed until more urgent. Key actions include:108 2030 to meet net zero targets. Uncertainty around • Develop an all-encompassing high-integrity relevant environmental policy and regulation is just voluntary carbon markets (VCM) ecosystem. one factor impeding the growth of nature markets There is growing acknowledgement that carbon today. If there is to be a thriving nature market based credits can play a role in the removal and o昀昀set in the UK, then the current programme of work of emissions that cannot otherwise be avoided in summarised in the government’s Green Finance Strategy and Nature Markets Framework must be the near term. Currently relatively small — one completed, and an ambitious course set for the estimate put the total market size at US$2bn at the end of 2021 — it has the potential to grow fast. rest of the decade. The planned consultation on 2021 was already a fourfold increase on 2020, nature markets, and piloting new markets, such as the Natural Environment Investment Readiness Fund 104 and by 2030 the market could see rapid growth. 109 (NEIRF) will be crucial. E昀昀orts such as these will help However, organisations can 昀椀nd it di昀漀cult and the market to mature and develop a greater pipeline costly to navigate the market. There are multiple marketplaces and a plethora of guidance on “best of investable projects that will support private sector practice” approaches and principles of use. It is not investment over the long term. always clear that purchasing a carbon credit will These activities can also support 昀椀nancial institutions result in meaningful emissions reductions, and there is concern of reputational damage if a claim participating in “impact investing” activities, whereby Glasgow, host of the COP26 Climate Conference is made improperly. Creating an environment “investments are made with the intention to generate Beneﬁts Key actors (non-exhaustive) positive, measurable social and environmental impact where market actors can have con昀椀dence in the 110 Finally, the UK’s established With the right enabling conditions in place and impactful DESNZ; the Department for Environment, Food alongside a 昀椀nancial return”. integrity of the market; how the use of o昀昀sets may complement their transition commitments; and strengths in insurance can play a pivotal role in supporting mobilisation of government 昀椀scal and policy support, and Rural A昀昀airs (DEFRA); the UK ETS Authority; and accelerating the bene昀椀ts that these new markets will how they should disclose and account for their use the private sector could play a meaningful role in driving FPS Industry Participants; Green Finance Institute; bring. For example, the London market could develop the substantial economic opportunity of VCM and closing Impact Investing Institute; civil society organisations. is key. As a priority, the government can remove insurance products to protect against project failure the 昀椀nancing gap for achieving nature-related outcomes the complexity and barriers that are preventing participation in the market, including consideration or fraud risks.targeted in UK policy, which one estimate puts between 111 at least £44bn and £97bn.

Vision for Economic Growth — a roadmap to prosperity 39 5. Pursue world-class promotion and interconnectivity Impact by 2030 Financial and professional services accelerate growth and prosperity across the UK. This comes through increased FDI into FPS, which ﬂows into other sectors. It also derives from increased FPS exports and leadership in setting robust and pragmatic international standards around new technologies and sustainable ﬁnance. Overseas ﬁrms increasingly see the UK as a focus for investment, and a springboard for providing services globally. Context The UK’s FPS sector is recognised as a global leader 113 Its were managed on behalf of overseas clients. powering growth of the global economy. In 2022, it insurance market is also one of the top in the world, and the largest in Europe, helping businesses to manage attracted a combined value of £2bn in FPS foreign direct 114 The London Market is highly risk and associated costs. investment (FPS FDI) projects, whereby 昀椀rms in other export-oriented, with 68% of its business coming from countries make investments into the UK, either through 115 companies outside the UK and Ireland in 2020. setting up a new entity or expanding the operations here (see Figure 14). In 2022, this FDI created nearly UK services exports were the second highest in the 15,000 jobs. Over half of the jobs created in 2021 were 112 116 There is also enormous opportunity outside London. world in 2022. to grow services to new markets through heightened The UK is also a top destination for international promotional activities. Moreover, trade 昀氀ows are not investors, including pension and sovereign wealth static. In 2021 for instance, the US represented 34.1% funds. Investors seek to invest in the UK as part of a 117 This represented an increase of the UK’s FS exports. 118 According to UNCTAD data, from 30.2% in 2019. diversi昀椀ed portfolio and also bene昀椀t from the UK’s asset UK net FS exports have held constant since 2008, management expertise, which can help them to channel The UK’s performance as a global 昀椀nancial centre their assets globally. Consequently, of the £11.6tn while the US, Singapore and Hong Kong have all There are also major opportunities for the UK as a 119 must be bolstered internationally by strong, cohesive, assets under management in the UK in 2021, 46% increased signi昀椀cantly. convening power for 昀椀nancial services innovation. and strategic promotion. Traditional strengths, such as The UK has a long track record of leading supranational time zone, language, and rule of law, are important but policy conversations. In 2008, the Treasury rescue plan Figure 14: UK FPS FDI in recent years cannot stand on their own in an increasingly competitive for UK banks became a template for wider eurozone and £ Million global marketplace. Equally, we need to re昀氀ect the wider 2,071 US government actions. More recently, the UK’s FCA has pool of “pull” factors that the UK can o昀昀er. These new chaired the Coordination Group of the Global Financial factors include transition 昀椀nance expertise and proven Innovation Network (GFIN), as well the International leadership around technological innovations, such as 869 Organisations of Securities Commissioners (IOSCO) 120 The UK also 1,339 open banking and AI. In selling its o昀昀er to the world, workstream on crypto and digital assets. provides leadership on technical standards. In each 1,234 UK FPS will need to show how it serves its clients in case, UK leadership draws on its existing strengths as 428 solving global challenges from the net zero transition 399 an international 昀椀nancial centre. to tech transformation, and how it can support 昀椀rms to 670 昀氀ourish and grow. Bringing together the full coalition of The following two big moves are catalysts to ensure 298 1,202 UK players, with a strong vision and narrative, would 911 835 powerfully increase the UK’s impact. that the UK’s FPS promotion is most impactful and 372 that it continues to be innovative in its approaches to embedding market access. 2019 2020 2021 2022 Financial services Professional services Source: fDi Markets data as published by the City of London Corporation (2023): https://www.theglobalcity.uk/resources/foreign-direct-investment.

Vision for Economic Growth — a roadmap to prosperity 39 5. Pursue world-class promotion and interconnectivity Impact by 2030 Financial and professional services accelerate growth and prosperity across the UK. This comes through increased FDI into FPS, which ﬂows into other sectors. It also derives from increased FPS exports and leadership in setting robust and pragmatic international standards around new technologies and sustainable ﬁnance. Overseas ﬁrms increasingly see the UK as a focus for investment, and a springboard for providing services globally. Context The UK’s FPS sector is recognised as a global leader 113 Its were managed on behalf of overseas clients. powering growth of the global economy. In 2022, it insurance market is also one of the top in the world, and the largest in Europe, helping businesses to manage attracted a combined value of £2bn in FPS foreign direct 114 The London Market is highly risk and associated costs. investment (FPS FDI) projects, whereby 昀椀rms in other export-oriented, with 68% of its business coming from countries make investments into the UK, either through 115 companies outside the UK and Ireland in 2020. setting up a new entity or expanding the operations here (see Figure 14). In 2022, this FDI created nearly UK services exports were the second highest in the 15,000 jobs. Over half of the jobs created in 2021 were 112116 There is also enormous opportunity outside London.world in 2022. to grow services to new markets through heightened The UK is also a top destination for international promotional activities. Moreover, trade 昀氀ows are not investors, including pension and sovereign wealth static. In 2021 for instance, the US represented 34.1% funds. Investors seek to invest in the UK as part of a 117 This represented an increase of the UK’s FS exports. 118 According to UNCTAD data, from 30.2% in 2019. diversi昀椀ed portfolio and also bene昀椀t from the UK’s asset UK net FS exports have held constant since 2008, management expertise, which can help them to channel The UK’s performance as a global 昀椀nancial centre their assets globally. Consequently, of the £11.6tn while the US, Singapore and Hong Kong have all There are also major opportunities for the UK as a 119 must be bolstered internationally by strong, cohesive, assets under management in the UK in 2021, 46% increased signi昀椀cantly. convening power for 昀椀nancial services innovation. and strategic promotion. Traditional strengths, such as The UK has a long track record of leading supranational time zone, language, and rule of law, are important but policy conversations. In 2008, the Treasury rescue plan Figure 14: UK FPS FDI in recent years cannot stand on their own in an increasingly competitive for UK banks became a template for wider eurozone and £ Million global marketplace. Equally, we need to re昀氀ect the wider 2,071 US government actions. More recently, the UK’s FCA has pool of “pull” factors that the UK can o昀昀er. These new chaired the Coordination Group of the Global Financial factors include transition 昀椀nance expertise and proven Innovation Network (GFIN), as well the International leadership around technological innovations, such as 869 Organisations of Securities Commissioners (IOSCO) 120 The UK also 1,339 open banking and AI. In selling its o昀昀er to the world, workstream on crypto and digital assets. provides leadership on technical standards. In each 1,234 UK FPS will need to show how it serves its clients in case, UK leadership draws on its existing strengths as 428 solving global challenges from the net zero transition 399 an international 昀椀nancial centre. to tech transformation, and how it can support 昀椀rms to 670 昀氀ourish and grow. Bringing together the full coalition of The following two big moves are catalysts to ensure 2981,202 UK players, with a strong vision and narrative, would 911835 powerfully increase the UK’s impact. that the UK’s FPS promotion is most impactful and 372 that it continues to be innovative in its approaches to embedding market access. 2019202020212022 Financial servicesProfessional services Source: fDi Markets data as published by the City of London Corporation (2023): https://www.theglobalcity.uk/resources/foreign-direct-investment.

Vision for Economic Growth — a roadmap to prosperity 41 Big move #8 – Supporting coordination and the advocacy The Hubʼs key performance indicators (KPIs) would need eﬀorts of others. The Hub will not do its own to re昀氀ect results in FDI and export promotion across direct advocacy. But it can enable, amplify, and di昀昀erent regions in the UK, a step change in the sector’s Showcase the UK’s ﬁnancial and professional services highlight the existing work being done across reputation internationally, and the recognition sector on the international stage like never before the country’s bodies, thereby supporting their of value-add across the sector’s multiple stakeholders. coordination, fostering greater partnership, and Beneﬁts associated potentially championing joint delivery. For example, where appropriate the Hub can highlight areas of Between 2024-2030, we estimate the Hub mutual interest across promotion agencies and could contribute: The UK’s competitors, from Ireland to Singapore to those Providing these existing entities with added support, in the Middle East, have powerful investment agencies signpost where collaboration (rather than parallel through an FPS Knowledge and Support Hub, would • Up to £0.7bn of FPS FDI, if we assume an annual e昀昀orts) could be most useful. focused on attracting FPS. Promotion of the UK’s FPS help to turbo-charge promotional e昀昀orts for all actors 122 proposition internationally relies on a wide range of – Providing further industry research. The Hub uptick in FPS FDI worth up to 6% of 2022 levels. across the UK (see Figure 15). The establishment of • Additional investment accrued outside of FDI, could collate existing intelligence being produced organisations in central government and across the a dedicated hub to support promotion of the UK FPS including up to an additional £500m in overseas by other entities, including benchmarking on the FCDO’s global network, the devolved administrations’ FDI sector’s promotional activities is a strategic imperative. 123 VC investment into the UK. UK vs competitor jurisdictions. Where appropriate, teams, investment promotion bodies representing UK It would elevate the sector’s global positioning, attract it can translate this work into “digestible” formats • Up to £24bn increase in FS exports, if we assume regions and cities, and other FPS actors, such as trade investment, and foster sustainable growth. the Hub could contribute an average additional that can be shared directly with investors abroad. associations. There is value in this approach. It means uplift of approximately 0.9% compound annual The Hub could also provide market intelligence, there can be di昀昀erentiation and nuance in articulating trends, and insights that would be objective growth on top of the forecasted growth of UK the UK’s unique strengths. 124 and up-to-date. These resources would help goods and services exports. investors, decision makers and industry leaders • Up to 5,000 additional jobs could be added to bene昀椀t from the latest research and expertise. from increased FDI from 2024-2030, if we Figure 15: The pillars of the FPS Knowledge and Support Hub This would also help the Hub to achieve the other assume an annual uptick in new job creation functions mentioned above (ie, supporting consistent with annual FPS FDI growth worth international messaging, coordination, and up to 6% of 2022 levels. Job estimates assume others’ advocacy e昀昀orts). the same level of investment productivity as 2022, however this may vary depending on 125 the type of additional investment received. In terms of governance, the Hub should be a national, Key stakeholders supported joint initiative of industry and the public sector. The board should have representatives from central and Key actors (non-exhaustive) devolved nation governments, as well as industry Government Devolved nations, Actors within 昀椀nancial Central and devolved national governments; FPS bodies (such as trade associations). It would also industry participants (including trade associations); DBT; and regulators regions and cities and professional services (eg trade associations) be complementary to any recommendations that DSIT; Foreign, Commonwealth, and Development O昀漀ce will be put forward in the Harrington Review on the (FCDO); relevant regulators, including those overseeing Functions 121 government’s approach to attracting FDI. 昀椀nancial services 昀椀rms (see Figure 4). Supporting international Supporting coordination and Providing further the advocacy eﬀorts of others messaging and promotion industry research The FPS Knowledge and Support Hub The key action is to: needs of international markets, capturing the • Establish an FPS Knowledge and Support Hub imaginations of investors and partners. The with the following objectives: hub could also provide a supporting marketing – Supporting international messaging and capability that would develop and implement comprehensive campaigns, working with existing promotion. The hub can highlight the compelling organisations to showcase speci昀椀c verticals or narratives, messaging and collateral of existing key areas of excellence such as the sector’s talent promotion e昀昀orts that showcase the sector’s pool. This could involve capacity building in areas excellence. This can resonate with the evolving of the UK that have limited promotion activities.

Vision for Economic Growth — a roadmap to prosperity 41 Big move #8 – Supporting coordination and the advocacy The Hubʼs key performance indicators (KPIs) would need eﬀorts of others. The Hub will not do its own to re昀氀ect results in FDI and export promotion across direct advocacy. But it can enable, amplify, and di昀昀erent regions in the UK, a step change in the sector’s Showcase the UK’s ﬁnancial and professional services highlight the existing work being done across reputation internationally, and the recognition sector on the international stage like never beforethe country’s bodies, thereby supporting their of value-add across the sector’s multiple stakeholders. coordination, fostering greater partnership, and Beneﬁts associated potentially championing joint delivery. For example, where appropriate the Hub can highlight areas of Between 2024-2030, we estimate the Hub mutual interest across promotion agencies and could contribute: The UK’s competitors, from Ireland to Singapore to those Providing these existing entities with added support, in the Middle East, have powerful investment agencies signpost where collaboration (rather than parallel through an FPS Knowledge and Support Hub, would • Up to £0.7bn of FPS FDI, if we assume an annual e昀昀orts) could be most useful. focused on attracting FPS. Promotion of the UK’s FPS help to turbo-charge promotional e昀昀orts for all actors 122 proposition internationally relies on a wide range of – Providing further industry research. The Hub uptick in FPS FDI worth up to 6% of 2022 levels. across the UK (see Figure 15). The establishment of • Additional investment accrued outside of FDI, could collate existing intelligence being produced organisations in central government and across the a dedicated hub to support promotion of the UK FPS including up to an additional £500m in overseas by other entities, including benchmarking on the FCDO’s global network, the devolved administrations’ FDI sector’s promotional activities is a strategic imperative. 123 VC investment into the UK. UK vs competitor jurisdictions. Where appropriate, teams, investment promotion bodies representing UK It would elevate the sector’s global positioning, attract it can translate this work into “digestible” formats • Up to £24bn increase in FS exports, if we assume regions and cities, and other FPS actors, such as trade investment, and foster sustainable growth.the Hub could contribute an average additional that can be shared directly with investors abroad. associations. There is value in this approach. It means uplift of approximately 0.9% compound annual The Hub could also provide market intelligence, there can be di昀昀erentiation and nuance in articulating trends, and insights that would be objective growth on top of the forecasted growth of UK the UK’s unique strengths. 124 and up-to-date. These resources would help goods and services exports. investors, decision makers and industry leaders • Up to 5,000 additional jobs could be added to bene昀椀t from the latest research and expertise. from increased FDI from 2024-2030, if we Figure 15: The pillars of the FPS Knowledge and Support Hub This would also help the Hub to achieve the other assume an annual uptick in new job creation functions mentioned above (ie, supporting consistent with annual FPS FDI growth worth international messaging, coordination, and up to 6% of 2022 levels. Job estimates assume others’ advocacy e昀昀orts). the same level of investment productivity as 2022, however this may vary depending on 125 the type of additional investment received. In terms of governance, the Hub should be a national, Key stakeholders supported joint initiative of industry and the public sector. The board should have representatives from central and Key actors (non-exhaustive) devolved nation governments, as well as industry Government Devolved nations, Actors within 昀椀nancial Central and devolved national governments; FPS bodies (such as trade associations). It would also industry participants (including trade associations); DBT; and regulatorsregions and citiesand professional services (eg trade associations)be complementary to any recommendations that DSIT; Foreign, Commonwealth, and Development O昀漀ce will be put forward in the Harrington Review on the (FCDO); relevant regulators, including those overseeing Functions 121 government’s approach to attracting FDI. 昀椀nancial services 昀椀rms (see Figure 4). Supporting international Supporting coordination and Providing further the advocacy eﬀorts of others messaging and promotionindustry research The FPS Knowledge and Support Hub The key action is to:needs of international markets, capturing the • Establish an FPS Knowledge and Support Hub imaginations of investors and partners. The with the following objectives:hub could also provide a supporting marketing – Supporting international messaging and capability that would develop and implement comprehensive campaigns, working with existing promotion. The hub can highlight the compelling organisations to showcase speci昀椀c verticals or narratives, messaging and collateral of existing key areas of excellence such as the sector’s talent promotion e昀昀orts that showcase the sector’s pool. This could involve capacity building in areas excellence. This can resonate with the evolving of the UK that have limited promotion activities.

Vision for Economic Growth — a roadmap to prosperity 43 Big move #9 • Create international forums for collaboration, for UK regulators to partner with other national regulators to establish joint protected environments. such as multi-jurisdictional sandboxes that build on the work of the GFIN. We want potential access Companies can then test innovative new products and, potentially, gain multiple authorisations to Create innovative networks across the world to turn into actual 昀氀ows of products and services. Lessons can be learned from the success of the UK’s introduce them in several jurisdictions far more quickly. Simultaneously, lessons learned can quickly 126 regulatory sandboxes, and their replication abroad Open markets drive innovation. The UK can play mobility arrangements. Digital agreements could be shared through the GFIN, and in昀氀uence the a leading role in establishing global regulatory include joining the multi-lateral Digital Economy demonstrates the power of these environments as development of supra national industry standards frameworks, especially for emerging technologies. Partnership Agreement (DEPA) which includes one way of safely fostering innovation. In particular, Within these frameworks, the UK can help 昀椀rms New Zealand, Chile, and Singapore. In terms of they enable regulators to adopt a more agile approach (see Figure 16). navigate these technologies and their application MRAs, the UK can complete the Swiss MRA and to overseeing new technologies. The next stage is internationally. A critical part of this, even if not apply the lessons learned as it is implemented. explicitly discussed in the recommendations below, Enhanced mobility arrangements could include Figure 16: Illustrative example of a multi-jurisdictional regulatory sandbox — one form of international collaboration will be to ensure that domestic policy frameworks ambitious visa-free arrangements or a preferential and standards (such as those on data use and sharing, visa-access regime. The UK’s FPS Strategy (see Potential key outcomes: or sustainable 昀椀nance approaches), are designed with Chapter 2) should set out the broad framework • • Businesses have regulatory authorisations to operate in all countries involved a focus on interoperability. It is crucial that the UK for how new approaches to trade policy with a • • Interoperable regulatory standards have been piloted and tested (where new regulatory regimes or standards are required) protect its high levels of openness. greater focus on services will be operationalised • (the “trade toolbox” approach). • Voluntary standards developed by industry have been piloted (where new voluntary standards are required) The UK should adopt a new strategic approach • Creating mechanisms for government-regulator- to openness and collaboration which will, in turn, industry partnership to create and advise on enable 昀椀rms to innovate and extend their services internationally. Key activities include: the full trade toolbox. One such mechanism • Flipping trade policy to focus on services as much could be the FPS Partnership Council as proposed earlier in this report. It could also build on existing as goods. Services trade plays a major role within processes already established, such as those with UK business Singaporean business Swiss businesses the UK economy, but it is not su昀漀ciently prioritised the UK-Australia trade deal (where regulators had a operating internationally operating in the UK operating in the UK within trade policy. While free trade agreements 24-month dialogue to provide recommendations) or (FTAs) are important, they are hard won and slow. the Swiss-UK MRA (where regulators and professional 127 For services, more could be achieved more quickly associations discussed the agreements). This would by deploying the full trade toolbox. The Resolution Cross-border regulatory sandbox established to support innovation within a speci昀椀c emerging innovation better integrate views on the design and execution of Foundation has outlined core components of market access, as well as FTA negotiations. Improving Financial Monetary Authority Swiss Financial Markets new service trade agreements to include mutual the consultative process will enhance buy-in for any Conduct Authority of Singapore Supervisory Authority recognition of professional quali昀椀cations (MRPQs); market access and trade agreements and ensure digital agreements; mutual recognition agreements that they are most impactful for 昀椀rms seeking to (MRA) for 昀椀nancial services; and other enhanced operate internationally. Note: this is an illustrative example only, and does not re昀氀ect a formal commitment among any parties to participate. Beneﬁts associated Key actors (non-exhaustive) This move will bene昀椀t UK-based FPS on the global stage, Central and devolved national governments; FPS contributing to an uptick in FPS FDI in昀氀ows. See high- industry participants (including trade associations); level illustrative estimate in the previous big move. DBT; DSIT; FCDO; FCA; BOE; PRA; HMT relevant regulators in foreign jurisdictions. Birmingham skyline

Vision for Economic Growth — a roadmap to prosperity 43 Big move #9 • Create international forums for collaboration, for UK regulators to partner with other national regulators to establish joint protected environments. such as multi-jurisdictional sandboxes that build on the work of the GFIN. We want potential access Companies can then test innovative new products and, potentially, gain multiple authorisations to Create innovative networks across the worldto turn into actual 昀氀ows of products and services. Lessons can be learned from the success of the UK’s introduce them in several jurisdictions far more quickly. Simultaneously, lessons learned can quickly 126 regulatory sandboxes, and their replication abroad Open markets drive innovation. The UK can play mobility arrangements. Digital agreements could be shared through the GFIN, and in昀氀uence the a leading role in establishing global regulatory include joining the multi-lateral Digital Economy demonstrates the power of these environments as development of supra national industry standards frameworks, especially for emerging technologies. Partnership Agreement (DEPA) which includes one way of safely fostering innovation. In particular, Within these frameworks, the UK can help 昀椀rms New Zealand, Chile, and Singapore. In terms of they enable regulators to adopt a more agile approach (see Figure 16). navigate these technologies and their application MRAs, the UK can complete the Swiss MRA and to overseeing new technologies. The next stage is internationally. A critical part of this, even if not apply the lessons learned as it is implemented. explicitly discussed in the recommendations below, Enhanced mobility arrangements could include Figure 16: Illustrative example of a multi-jurisdictional regulatory sandbox — one form of international collaboration will be to ensure that domestic policy frameworks ambitious visa-free arrangements or a preferential and standards (such as those on data use and sharing, visa-access regime. The UK’s FPS Strategy (see Potential key outcomes: or sustainable 昀椀nance approaches), are designed with Chapter 2) should set out the broad framework • • Businesses have regulatory authorisations to operate in all countries involved a focus on interoperability. It is crucial that the UK for how new approaches to trade policy with a • • Interoperable regulatory standards have been piloted and tested (where new regulatory regimes or standards are required) protect its high levels of openness.greater focus on services will be operationalised • (the “trade toolbox” approach).• Voluntary standards developed by industry have been piloted (where new voluntary standards are required) The UK should adopt a new strategic approach • Creating mechanisms for government-regulator- to openness and collaboration which will, in turn, industry partnership to create and advise on enable 昀椀rms to innovate and extend their services internationally. Key activities include:the full trade toolbox. One such mechanism • Flipping trade policy to focus on services as much could be the FPS Partnership Council as proposed earlier in this report. It could also build on existing as goods. Services trade plays a major role within processes already established, such as those with UK business Singaporean business Swiss businesses the UK economy, but it is not su昀漀ciently prioritised the UK-Australia trade deal (where regulators had a operating internationally operating in the UK operating in the UK within trade policy. While free trade agreements 24-month dialogue to provide recommendations) or (FTAs) are important, they are hard won and slow. the Swiss-UK MRA (where regulators and professional 127 For services, more could be achieved more quickly associations discussed the agreements). This would by deploying the full trade toolbox. The Resolution Cross-border regulatory sandbox established to support innovation within a speci昀椀c emerging innovation better integrate views on the design and execution of Foundation has outlined core components of market access, as well as FTA negotiations. Improving Financial Monetary Authority Swiss Financial Markets new service trade agreements to include mutual the consultative process will enhance buy-in for any Conduct Authority of Singapore Supervisory Authority recognition of professional quali昀椀cations (MRPQs); market access and trade agreements and ensure digital agreements; mutual recognition agreements that they are most impactful for 昀椀rms seeking to (MRA) for 昀椀nancial services; and other enhanced operate internationally.Note: this is an illustrative example only, and does not re昀氀ect a formal commitment among any parties to participate. Beneﬁts associated Key actors (non-exhaustive) This move will bene昀椀t UK-based FPS on the global stage, Central and devolved national governments; FPS contributing to an uptick in FPS FDI in昀氀ows. See high- industry participants (including trade associations); level illustrative estimate in the previous big move. DBT; DSIT; FCDO; FCA; BOE; PRA; HMT relevant regulators in foreign jurisdictions. Birmingham skyline

Vision for Economic Growth — a roadmap to prosperity 45 Conclusion Key points of contact The UK is at an in昀氀ection point. It can and must 昀椀ght regulators, government, and industry. If successful, this City of London Corporation key points of contact: Oliver Wyman key points of contact: for its role as a world-class global 昀椀nancial centre. In will raise overall investment levels, promote sustainable Damian Nussbaum Lisa Quest so doing, it will drive better results for consumers, outcomes, and drive innovation. It will also require a new Executive Director, Innovation and Growth Partner and Head of UK & Ireland, Oliver Wyman citizens and businesses. level of international promotion and collaboration. This must be a collaboration that makes abundantly clear Kerstin Matthias John Romeo This report has outlined a set of big moves to help ensure Policy and Innovation Director, Innovation and Growth Managing Partner, Oliver Wyman and CEO, to 昀椀rms operating internationally how the UK can help that UK-based FPS can deliver growth and prosperity. them to succeed. Oliver Wyman Forum Action will require a renewed partnership between Daniel O’Byrne Strategic Operations and Engagement Director, Huw Van Steenis Innovation and Growth Vice Chair Simi Shah Victoria Evans Trade and Investment Director, Partner Innovation and Growth Rupal Kantaria Kristy Sandino Partner Assistant Director, Corporate A昀昀airs David Taliente Kay Abdilahi Partner Head of Media Anthony Charrie Emily To昀椀eld Partner Executive Director, Corporate Communications Lewis Cannon Jen Beckerman Principal Executive Director, O昀漀ce of the Policy Chairman Elizabeth Hoyler Henry Lee Engagement Manager Senior Programme O昀漀cer, Mansion House KC Harris Will Porter Associate Projects and Correspondence O昀漀ce, Mansion House Additional support provided by Additional support by Joanna Kalemba, Jason Panagiotopoulus, Riana Patel, Ben Dixon, Martin Bailey, Melissa Panszi, Olivia Larkin, Tsanimir Sakutov, Maeve Sinnott, Prafulla Timila Stacey Francis-Fuller, Harriet Tuggey, Gordon Mead, Laura Davison, Duncan Ricardson, Andrew McGowan, Paula Lucci, Lisa Dimon City Hall, Belfast

Vision for Economic Growth — a roadmap to prosperity 45 Conclusion Key points of contact The UK is at an in昀氀ection point. It can and must 昀椀ght regulators, government, and industry. If successful, this City of London Corporation key points of contact:Oliver Wyman key points of contact: for its role as a world-class global 昀椀nancial centre. In will raise overall investment levels, promote sustainable Damian Nussbaum Lisa Quest so doing, it will drive better results for consumers, outcomes, and drive innovation. It will also require a new Executive Director, Innovation and GrowthPartner and Head of UK & Ireland, Oliver Wyman citizens and businesses.level of international promotion and collaboration. This must be a collaboration that makes abundantly clear Kerstin Matthias John Romeo This report has outlined a set of big moves to help ensure Policy and Innovation Director, Innovation and GrowthManaging Partner, Oliver Wyman and CEO, to 昀椀rms operating internationally how the UK can help that UK-based FPS can deliver growth and prosperity. them to succeed. Oliver Wyman Forum Action will require a renewed partnership between Daniel O’Byrne Strategic Operations and Engagement Director, Huw Van Steenis Innovation and Growth Vice Chair Simi Shah Victoria Evans Trade and Investment Director, Partner Innovation and Growth Rupal Kantaria Kristy Sandino Partner Assistant Director, Corporate A昀昀airs David Taliente Kay Abdilahi Partner Head of Media Anthony Charrie Emily To昀椀eld Partner Executive Director, Corporate Communications Lewis Cannon Jen Beckerman Principal Executive Director, O昀漀ce of the Policy Chairman Elizabeth Hoyler Henry Lee Engagement Manager Senior Programme O昀漀cer, Mansion House KC Harris Will Porter Associate Projects and Correspondence O昀漀ce, Mansion House Additional support provided by Additional support by Joanna Kalemba, Jason Panagiotopoulus, Riana Patel, Ben Dixon, Martin Bailey, Melissa Panszi, Olivia Larkin, Tsanimir Sakutov, Maeve Sinnott, Prafulla Timila Stacey Francis-Fuller, Harriet Tuggey, Gordon Mead, Laura Davison, Duncan Ricardson, Andrew McGowan, Paula Lucci, Lisa Dimon City Hall, Belfast

Vision for Economic Growth — a roadmap to prosperity 47 London School of Economics and PEXA Thunes Acknowledgements Political Science* PIMFA Tradeweb London Stock Exchange Group PrimaryBid UBS* Lord Bridges Prudential UCL Policy Lab Lord Grimstone PWC UK Business Angels Association Lord Hill Quant UK Finance* We would like to thank the many organisations that supported the Vision for Economic Growth — a roadmap to Lord Wei Queen Mary University of London University College London* prosperity initiative. These include: Loughborough University Re昀椀nitiv University of Edinburgh Business School M&G Revolut University of Leeds Association of British Insurers British Private Equity & Venture Foreign, Commonwealth and MarketAxess Europe Ltd Royal London Group* University of London Aboitiz Data Innovation Capital Association* Development O昀漀ce Marsh Santander UK Vanguard Group abrdn* Carbon Tracker Founders Forum MasterCard Scale up Institute Virgin Money UK* AIG Caxton Associates* Gibson Dunn Metro Bank Schroders Visa Airwallax Cboe Europe Glasswall Microsoft Schroders Greencoat Welsh Government Allen & Overy LLP Centre for Finance, Innovation, GlobeChain MIDAS Scottish Financial Enterprise West Midlands Growth Company and Technology GMEX Group Mitsubishi UFJ Financial Group Amazon Web Services China Britain Business Council* Scottish Government West Yorkshire Combined Authority American Prospect Magazine Grant Thornton Money and Pensions Service* Seraphim Space Willkie China Construction Bank Corporation Green Finance Institute* Monzo* Amitypath London Branch Sigma Advanced Capital Management World Federation of Exchanges Angel Investor* Citi* H/Advisors Cicero Moody’s Skandinaviska Enskilda Banken AB (Publ) Yorkshire Building Society* AON Citigroup UK* Halkbank London Representative O昀漀ce Morgan Stanley SMBC Bank International plc Zopa Aquis Exchange ClearBank Hiscox* National Australia Bank Squire Patton Boggs Zurich Insurance* AssetCo Cli昀昀ord Chance LLP Honey Consulting Network International Standard Chartered Association for Financial Climate Bonds Initiative HSBC* New Financial State Street Global Advisors Markets in Europe Coincover IFM Investors Nexus (University of Leeds) Streets Consulting Association of Foreign Banks Commerzbank IHS Markit NinetyOne Systemiq Atom Bank* Conduit Capital Illuminate Finance Nomura Tech London Advocates and Global Aviva Credit Suisse Impact Investing Institute Northern Trust Tech Advocates Aviva Investors Daxci Impax Asset Management Oaknorth TechTalent Bain & Company Deutsche Bank UK Imperial College London ODDO BHF UK Limited TechUK* Banco Santander S.A. — London branch DLA Piper UK LLP* Information Technology and Ontario Teachers Pension Plan The Alan Turing Institute Bank of England Innovation Foundation Onward The City UK Duke Street* ING Bank NV Bankers for Net Zero E3G Orchard Global The Investment Association Barclays Innovate Finance* Pension Bee The Phoenix Group Eigen Technologies Intermediate Capital Group Barrington Hibbert Associates Ernst & Young Pension Insurance Corporation The University of Manchester, Centre for BDO International Swaps and Financial Technology Studies Euroclear UK & International UK Derivatives Association Beringea European Venues and J. Stern & Co LLP Better Finance Intermediaries Association J . P. Morgan Blackrock Exponential View J.P. Morgan Asset Management* *Strategic Advisory Board Member Blackstone Federated Hermes Joseph Rowntree Organisation Bloomberg Europe* Fidelity King’s College London BMLL Tech Financial Conduct Authority* KPMG BNP Paribas — UK Financial Services Livery Group Leeds City Council BNY Mellon — London* Financial Services Skills Commission* Liberis Boston Consulting Group Finantia UK Limited Lloyd’s of London British America Business Findlay Park London Business School British Business Bank FinTech North London Market Group British Patient Capital* FinTech West

Vision for Economic Growth — a roadmap to prosperity 47 London School of Economics and PEXA Thunes AcknowledgementsPolitical Science* PIMFA Tradeweb London Stock Exchange Group PrimaryBid UBS* Lord Bridges Prudential UCL Policy Lab Lord Grimstone PWC UK Business Angels Association Lord Hill Quant UK Finance* We would like to thank the many organisations that supported the Vision for Economic Growth — a roadmap to Lord WeiQueen Mary University of LondonUniversity College London* prosperity initiative. These include:Loughborough University Re昀椀nitiv University of Edinburgh Business School M&G Revolut University of Leeds Association of British InsurersBritish Private Equity & Venture Foreign, Commonwealth and MarketAxess Europe LtdRoyal London Group*University of London Aboitiz Data InnovationCapital Association*Development O昀漀ceMarshSantander UK Vanguard Group abrdn*Carbon TrackerFounders ForumMasterCard Scale up Institute Virgin Money UK* AIGCaxton Associates*Gibson DunnMetro Bank Schroders Visa AirwallaxCboe EuropeGlasswallMicrosoft Schroders Greencoat Welsh Government Allen & Overy LLPCentre for Finance, Innovation, GlobeChainMIDASScottish Financial Enterprise West Midlands Growth Company and TechnologyGMEX GroupMitsubishi UFJ Financial Group Amazon Web ServicesChina Britain Business Council* Scottish Government West Yorkshire Combined Authority American Prospect MagazineGrant ThorntonMoney and Pensions Service*Seraphim Space Willkie China Construction Bank Corporation Green Finance Institute*Monzo* AmitypathLondon Branch Sigma Advanced Capital Management World Federation of Exchanges Angel Investor*Citi*H/Advisors CiceroMoody’s Skandinaviska Enskilda Banken AB (Publ) Yorkshire Building Society* AONCitigroup UK*Halkbank London Representative O昀漀ceMorgan StanleySMBC Bank International plc Zopa Aquis ExchangeClearBankHiscox*National Australia Bank Squire Patton Boggs Zurich Insurance* AssetCoCli昀昀ord Chance LLPHoney ConsultingNetwork InternationalStandard Chartered Association for Financial Climate Bonds InitiativeHSBC*New FinancialState Street Global Advisors Markets in EuropeCoincoverIFM InvestorsNexus (University of Leeds)Streets Consulting Association of Foreign BanksCommerzbankIHS MarkitNinetyOne Systemiq Atom Bank*Conduit CapitalIlluminate FinanceNomura Tech London Advocates and Global AvivaCredit SuisseImpact Investing InstituteNorthern Trust Tech Advocates Aviva InvestorsDaxciImpax Asset ManagementOaknorth TechTalent Bain & CompanyDeutsche Bank UKImperial College LondonODDO BHF UK LimitedTechUK* Banco Santander S.A. — London branchDLA Piper UK LLP*Information Technology and Ontario Teachers Pension PlanThe Alan Turing Institute Bank of EnglandInnovation FoundationOnward The City UK Duke Street*ING Bank NV Bankers for Net ZeroE3GOrchard Global The Investment Association BarclaysInnovate Finance*Pension Bee The Phoenix Group Eigen TechnologiesIntermediate Capital Group Barrington Hibbert AssociatesErnst & YoungPension Insurance CorporationThe University of Manchester, Centre for BDOInternational Swaps and Financial Technology Studies Euroclear UK & International UKDerivatives Association BeringeaEuropean Venues and J. Stern & Co LLP Better FinanceIntermediaries AssociationJ . P. Morgan BlackrockExponential ViewJ.P. Morgan Asset Management**Strategic Advisory Board Member BlackstoneFederated HermesJoseph Rowntree Organisation Bloomberg Europe*FidelityKing’s College London BMLL TechFinancial Conduct Authority*KPMG BNP Paribas — UKFinancial Services Livery GroupLeeds City Council BNY Mellon — London*Financial Services Skills Commission*Liberis Boston Consulting GroupFinantia UK LimitedLloyd’s of London British America BusinessFindlay ParkLondon Business School British Business BankFinTech NorthLondon Market Group British Patient Capital*FinTech West

Vision for Economic Growth — a roadmap to prosperity 49 Sources: 31 See reference 9. 54 British Business Bank and Oliver Wyman (2023) https://www.british- 32 See reference 10. business-bank.co.uk/small-business-昀椀nance-markets-report-2022-23- 1 O昀漀ce for Budget Responsibility (2013) https://obr.uk/box/post- British Business Bank (2023) http://www.british-business-bank.co.uk/ 19 factsheet/. 33 UK Finance (2023) https://www.uk昀椀nance.org.uk/policy-and-guidance/ world-war-ii-debt-reduction/#:~:text=Both%20non%2Dinterest%20 press-release/british-business-bank-responds-to-the-chancellors- 55 UK Listing Review (2021) https://www.gov.uk/government/ spending%20and,rate%20of%20whole%20economy%20in昀氀ation. mansion-house-speech/. reports-and-publications/2022-total-tax-contribution-uk-banking- sector. publications/uk-listings-review#:~:text=The%20UK%20Listing%20 2 O昀漀ce for National Statistics (2019) https://www.ons.gov.uk/economy/ 20 The UK government estimates "widespread use of digital identity review%20examines,for%20which%20London%20is%20known. 34 TheCityUK (2023) https://www.thecityuk.com/our-work/improving- nationalaccounts/uksectoraccounts/compendium/economicreview/ products would be worth around £800m per year to the UK 56 Kalifa Review of UK 昀椀ntech (2021) https://www.gov.uk/government/ april2019/longtermtrendsinukemployment1861to2018#:~:text= economy." Calculated over 6 years, from 2024-2030. See UK regulatory-e昀漀ciency-on-authorisations/. publications/the-kalifa-review-of-uk-昀椀ntech. During%20the%20inter%2Dwar%20years,average%20employment% government digital attributes and trust framework consultation 20rate%20was%2073%25. (2022) https://www.gov.uk/government/consultations/digital- 35 Refer to the further detail on International Regulatory Strategy Group 57 UK Secondary Capital Raising Review (2022) https://www.gov.uk/ (IRSG) consultation. IRSG (2023) https://www.irsg.co.uk/publications/ government/publications/uk-secondary-capital-raising-review. identity-and-attributes-consultation/digital-identity-and- Resolution Foundation (2023) https://economy2030. esg-ratings-and-data-products-providers-code-of-conduct-released- 3 resolutionfoundation.org/reports/beyond-boosterism/. attributes-consultation#:~:text=It%20is%20estimated%20that%20 for-consultation. 58 See reference 21. widespread,%20year%20to%20the%20UK%20economy. 36 For Singapore: Monetary Authority of Singapore (2023) https://www. 59 Financial Services and Markets Act (2023) https://www.legislation.gov. Resolution Foundation & Centre for Economic Performance, LSE 4 21 Investment Research Review (2021) https://www.gov.uk/government/ (2022) https://economy2030.resolutionfoundation.org/reports/ publications/investment-research-review. mas.gov.sg/development/昀椀nancial-services-industry-transformation- uk/ukpga/2023/29/contents. stagnation-nation/. map-2025. For UAE: Dubai Financial Services Authority (2023) https:// Financial Conduct Authority (2023) https://www.fca.org.uk/innovation/ www.dfsa.ae/your-resources/publications-reports/business-plan. 60 For further details please see the following sources: UK Finance See reference 3. 22 (2023) https://www.uk昀椀nance.org.uk/policy-and-guidance/reports- 5 regtech/digital-regulatory-reporting. For Ireland: Government of Ireland (2022) https://www.gov.ie/en/ ibid. and-publications/uk-capital-markets-building-strong-foundations. 6 publication/ireland-for-昀椀nance-strategy/#updated-ireland-for- ABI (2023) https://www.abi.org.uk/news/news-articles/2023/7/put- Private capital leveraged across the Government’s Net-Zero Strategy World Federation of Exchanges (2022) https://www.world-exchanges. 23 昀椀nance-strategy. For the UK: HM Treasury (2021) https://www.gov. 7 savers-at-the-heart-of-plans-to-boost-pension-investment/. CMIT org/our-work/articles/2022-annual-statistics-guide. and British Energy Security Strategy. Originally published by the uk/government/publications/a-new-chapter-for-昀椀nancial-services (2023) https://capitalmarketsindustrytaskforce.com. A follow-up Department for Business, Energy and Industrial Strategy, since and TheCityUK (2021) https://www.thecityuk.com/our-work/ report is planned for the Autumn. Other organisations have also replaced by the Department of Energy Security and Net Zero and O昀漀ce for National Statistics via City of London’s City Statistics Brie昀椀ng 8 making-the-uk-the-leading-global-昀椀nancial-centre/. For Japan: (2022) https://www.cityo昀氀ondon.gov.uk/supporting-businesses/ the Department for Business and Trade (2022) https://www.gov.uk/ JFSA (2022) https://www.fsa.go.jp/en/news/2022/20220926.html. made meaningful contributions to the discussion on reform, such as economic-research/research-publications/city-statistics-brie昀椀ng. government/news/chris-skidmore-launches-net-zero-review. For Luxembourg: Luxembourg for Finance (2022) https://www. the Tony Blair Institute (2023) https://www.institute.global/insights/ 24 Natural capital, as de昀椀ned by the Natural Capital Committee, refers economic-prosperity/investing-in-the-future-boosting-savings-and- luxembourgfor昀椀nance.com/en/publication-mag/the-future-of-the- Aggregation as per City of London State of the Sector Report. Includes 9 to “that part of nature which directly or indirectly underpins value to prosperity-for-the-uk. The City of London Corporation also published 昀椀nancial-industry-in-luxembourg/.For Switzerland: State Secretariat tax revenues from the 昀椀nancial services sector (year to March 2020), a report about unlocking DC scheme capital for growth of the UK’s people, including ecosystems, species, freshwater, soils, minerals, for International Finance (2020) https://www.sif.admin.ch/sif/en/ and legal and accounting tax revenues (calendar year 2020). City 昀椀nancial, professional services and technology sectors. Please see of London (2021) https://www.cityo昀氀ondon.gov.uk/supporting- the air and oceans, as well as natural processes and functions.” home/昀椀nanzmarktpolitik/strategy.html. City of London Corporation (2023) https://www.cityo昀氀ondon.gov.uk/ Natural capital assets provide ecosystem services (eg pollination and businesses/economic-research/research-publications/total-tax- 37 TheCityUK and PwC (2017) https://www.pwc.co.uk/industries/ supporting-businesses/economic-research/research-publications/ contribution-of-uk-昀椀nancial-services and TheCityUK (2021) https:// water puri昀椀cation) which, in turn, help to support the production of 昀椀nancial-services/insights/vision-for-transformed-world-leading- powerful-pensions-unlocking-dc-capital-for-uk-tech-growth. goods and services across the economy. For further detail, refer to www.thecityuk.com/our-work/total-tax-contribution-study-for-uk- industry.html. 61 See reference 17. legal-and-accounting-activities-2021. the 昀椀rst state of natural capital report: Natural Capital Committee 10 O昀漀ce for Budget Responsibility and HM Treasury (2023) https://www. (2019): https://www.gov.uk/government/publications/natural-capital- 38 Monetary Authority of Singapore (2023) https://www.mas.gov.sg/ 62 See reference 59. committee-natural-capital-terminology. development/sustainable-昀椀nance. gov.uk/government/publications/spring-budget-2023/spring-budget- 39 European Union (2023) https://www.europarl.europa.eu/legislative- 63 See City of London Corporation (2023) for more information on the Time period estimated is from 2022-2032. Green Finance Institute 2023-html. 25 Mansion House Compact. https://news.cityo昀氀ondon.gov.uk/lord- 11 According to UNCTAD data, 2022 UK FS exports amounted to US$117bn. (2021) https://www.green昀椀nanceinstitute.co.uk/news-and-insights/ train/theme-a-europe-昀椀t-for-the-digital-age/昀椀le-昀椀ntech-action-plan. mayor-welcomes-landmark-agreement-to-unlock-pension-funds/. See 昀椀nance-gap-for-uk-nature-report/. 40 See reference 7. the Chancellor's Mansion House speech for more detail on estimates Converted to GBP using 1 August 2023 exchange rate of 0.78 from UK Government (2023) https://www.gov.uk/government/speeches/ Forest Trendsʼ Ecosystem Marketplace (2022) https://www. Oanda. UNCTAD (2023) https://unctadstat.unctad.org/datacentre/. 26 41 UNCTAD (2023) as published via https://www.theglobalcity.uk/ chancellorjeremy-hunts-mansion-house-speech. 12 Bank for International Settlements (2023) https://www.bis.org/ ecosystemmarketplace.com/publications/state-of-the-voluntary- resources/state-of-the-sector-2023. statistics/bankstats.htm. As published via https://www.theglobalcity. carbon-markets-2022. 42 See reference 12. 64 See reference 18. Illustrative estimate only to indicate bene昀椀t potential and does not uk/insights/state-of-the-sector-2023. 27 43 Bank for International Settlements (2023) https://stats.bis.org/statx/ 65 See reference 17. ibid. re昀氀ect a projection. Corresponds to a range of approximately £0.5- 13 srs/table/c1. As published via https://www.theglobalcity.uk/resources/ 66 British Business Bank (2022) https://www.british-business-bank. 0.7bn. Re昀氀ects a base case of 5% uplift (+/- 20% range applied) using state-of-the-sector-2023. co.uk/backing-innovation-led-businesses-2022/. 14 InnovateFinance (2023) https://www.innovate昀椀nance.com/capital/ 2022 levels, which equates to up to 6%. For context, FPS FDI in the 昀椀ntech-investment-landscape-2022/. past four years (2019-2022) has grown by a compound annual growth 44 London Market Group (2022) https://lmg.london/document/4900/. 67 © Parliamentary Copyright House of Commons 2023. House of rate of 12%, with strong recovery since 2020. FPS FDI data per fDi Commons Treasury Committee (2022-3) https://committees. ONS, Business Register and Employment Survey 2021 (2022 release); 15 45 Bank for International Settlements (2023) https://www.bis.org/ Markets and as published by the City of London Corporation in their parliament.uk/publications/41030/documents/200122/default/. NISRA, Business Register and Employment Survey 2021 (2022 2023 report on FPS FDI. statistics/rpfx22.htm. As published via https://www.theglobalcity.uk/ release). Available via the City Statistics Brie昀椀ng (2023) https://www. resources/state-of-the-sector-2023. 68 See reference 19. cityo昀氀ondon.gov.uk/supporting-businesses/economic-research/ Illustrative estimate only to indicate bene昀椀t potential and does not 28 46 © Investment Association. Investment Association (2022) https://www. 69 Please see British Business Bank Finance Hub (2018) https://www. research-publications/city-statistics-brie昀椀ng. re昀氀ect a projection. We estimate an additional uplift on forecasted theia.org/sites/default/昀椀les/2022-09/Investment%20Management%20 british-business-bank.co.uk/昀椀nance-hub/. Innovate UK Innovation TheCityUK (2022) https://www.thecityuk.com/our-work/exporting- growth rates associated with the bene昀椀ts of having an FPS strategy 16 Survey%202021-22%20full%20report.pdf. Hub (2022) https://ukinnovationhub.ukri.org/. DBT funding catalogue from-across-britain-2022/. and the role of the Hub in reinvigorating promotional e昀昀orts. https://www.gov.uk/business-昀椀nance-support. UKRI Funding Finder 47 ibid. Corresponds to a range of approximately ~£19-29bn, rounded to the (2020) https://www.ukri.org/opportunity/. Re昀氀ects the estimates cited by the Chancellor in his Mansion House 17 nearest billion. Calculated over 6 years from 2024-2030. Assumption 48 New Financial, CMIT (2023) https://capitalmarketsindustrytaskforce.com/. speech on 10th July 2023. Re昀氀ects £50bn for DC schemes with a 5% 70 See reference 19. of a 50% uplift on the compound annual growth rate for UK goods 49 The Association of British Insurers (2023) https://www.abi.org. allocation to private equity, and £25bn for LGPS with a 10% allocation and services exports from IMF forecasts results in a range of ~0.8- 71 TechUK (2023) https://www.techuk.org/resource/a-uk-tech-plan-how- uk/globalassets/昀椀les/publications/public/lts/2023/abi-pension- to unlisted equities. The former estimate assumes that the UK 1.2% additional uplift, rounded to the nearest tenth of a percent. investment-report.pdf. the-next-government-can-use-technology-to-build-a-better-britain.html. workplace DC market adopts the objectives of 昀椀rms in the Mansion Adjusted for in昀氀ation based on CPI in昀氀ation forecasts. FS export data 72 TechNation (2023) https://technation.io/a-decade-of-uk- House Compact. Government plans to consult on the allocation of from UNCTAD (worth ~US$117bn in 2022). Forecast of export growth 50 Institute for Fiscal Studies (2023) https://ifs.org.uk/publications/ tech/#investment-and-valuations. the latter estimate for LGPS. Bene昀椀ts are accrued by 2030, with no speci昀椀cation if beginning or end year. Refer to further detail here: and CPI in昀氀ation from IMF World Economic Outlook — April 2023. challenges-uk-pension-system-case-pensions-review. UK Government (2023) https://www.gov.uk/government/speeches/ UNCTAD (2023) https://unctadstat.unctad.org/datacentre/. IMF World 51 The Pensions Regulator (2021) https://www.thepensionsregulator. 73 See reference 14. chancellor-jeremy-hunts-mansion-house-speech. Economic Outlook (2023) https://www.imf.org/en/Publications/WEO/ gov.uk/en/document-library/corporate-information/corporate-plans/ 74 For example: a recent report by UK Finance and Oliver Wyman weo-database/2023/April. The Association of British Insurers (ABI) estimates that from 2024 tpr-strategy-pensions-of-the-future#7218018e044642f08287257b7 explored the future of securities tokenisation and how the UK 18 £225bn in investment estimated as an aggregation of the £100bn in Solvency II reforms will create “the potential for the industry to invest 29 e0f5bcb. could consolidate its role as a global 昀椀nancial centre. Refer to the insurance and long term savings capital unlocked through Solvency 52 Department for Work and Pensions (2023) https://www.gov.uk/ report: UK Finance and Oliver Wyman (2023) https://www.uk昀椀nance. over £100bn in the next ten years in productive 昀椀nance, such as UK II reforms, the £75bn in pension capital for investment announced org.uk/policy-and-guidance/reports-and-publications/unlocking- government/statistics/gender-pensions-gap-in-private-pensions/ social infrastructure and green energy supply.” The value of private in the Chancellorʼs Mansion House speech, and a portion of the power-securities-tokenisation. Global Financial Markets Association the-gender-pensions-gap-in-private-pensions. Refers to a 35% gap insurer investment that could be achieved is highly dependent on the £100bn in private capital leveraged as part of the net zero transition, (2023) https://www.gfma.org/policies-resources/gfma-publishes- between male and female uncrystallised non-zero median pension nature of the Solvency II reforms and, speci昀椀cally, the changes to the as stated by the UK government. We estimate a portion of the net wealth around normal minimum pension age in 2018 to 2020. report-on-impact-of-dlt-in-global-capital-markets/. matching adjustment and how they will be implemented. The PRA is zero capital leveraged will overlap with the unlocked pension capital 75 See reference 71. consulting on this later this year. See further detail from the ABI here: 53 British Business Bank (2019) https://www.british-business-bank.co.uk/ https://www.abi.org.uk/news/news-articles/2022/11/solvencyiireform/ and insurance and long-term savings capital. We have applied a 50% research/the-future-of-dc-pensions-enabling-access-to-venture- 76 Oliver Wyman Forum (2022) https://www.oliverwymanforum.com/ and here for the PRA consultation: https://www.bankofengland.co.uk/ discount rate on the net zero capital leveraged to account for this capital-and-growth-equity/. global-consumer-sentiment/a-gen-z.html. overlap. See references 17, 18, and 23 for additional information. prudential-regulation/publication/2023/june/review-of-solvency-ii- Financial Services Skills Commission (2023) https://昀椀nancialservicesskills. adapting-to-the-uk-insurance-market. 30 org/news/2450-2/.

Vision for Economic Growth — a roadmap to prosperity 49 Sources: 31 See reference 9. 54 British Business Bank and Oliver Wyman (2023) https://www.british- 32 See reference 10. business-bank.co.uk/small-business-昀椀nance-markets-report-2022-23- 1 O昀漀ce for Budget Responsibility (2013) https://obr.uk/box/post- British Business Bank (2023) http://www.british-business-bank.co.uk/ 19 factsheet/. 33 UK Finance (2023) https://www.uk昀椀nance.org.uk/policy-and-guidance/ world-war-ii-debt-reduction/#:~:text=Both%20non%2Dinterest%20press-release/british-business-bank-responds-to-the-chancellors-55 UK Listing Review (2021) https://www.gov.uk/government/ spending%20and,rate%20of%20whole%20economy%20in昀氀ation.mansion-house-speech/.reports-and-publications/2022-total-tax-contribution-uk-banking- sector. publications/uk-listings-review#:~:text=The%20UK%20Listing%20 2 O昀漀ce for National Statistics (2019) https://www.ons.gov.uk/economy/20 The UK government estimates "widespread use of digital identity review%20examines,for%20which%20London%20is%20known. 34 TheCityUK (2023) https://www.thecityuk.com/our-work/improving- nationalaccounts/uksectoraccounts/compendium/economicreview/products would be worth around £800m per year to the UK 56 Kalifa Review of UK 昀椀ntech (2021) https://www.gov.uk/government/ april2019/longtermtrendsinukemployment1861to2018#:~:text= economy." Calculated over 6 years, from 2024-2030. See UK regulatory-e昀漀ciency-on-authorisations/.publications/the-kalifa-review-of-uk-昀椀ntech. During%20the%20inter%2Dwar%20years,average%20employment% government digital attributes and trust framework consultation 20rate%20was%2073%25.(2022) https://www.gov.uk/government/consultations/digital-35 Refer to the further detail on International Regulatory Strategy Group 57 UK Secondary Capital Raising Review (2022) https://www.gov.uk/ (IRSG) consultation. IRSG (2023) https://www.irsg.co.uk/publications/ government/publications/uk-secondary-capital-raising-review. identity-and-attributes-consultation/digital-identity-and- Resolution Foundation (2023) https://economy2030.esg-ratings-and-data-products-providers-code-of-conduct-released- 3 resolutionfoundation.org/reports/beyond-boosterism/.attributes-consultation#:~:text=It%20is%20estimated%20that%20for-consultation.58 See reference 21. widespread,%20year%20to%20the%20UK%20economy.36 For Singapore: Monetary Authority of Singapore (2023) https://www.59 Financial Services and Markets Act (2023) https://www.legislation.gov. Resolution Foundation & Centre for Economic Performance, LSE 421 Investment Research Review (2021) https://www.gov.uk/government/ (2022) https://economy2030.resolutionfoundation.org/reports/publications/investment-research-review.mas.gov.sg/development/昀椀nancial-services-industry-transformation-uk/ukpga/2023/29/contents. stagnation-nation/. map-2025. For UAE: Dubai Financial Services Authority (2023) https:// Financial Conduct Authority (2023) https://www.fca.org.uk/innovation/www.dfsa.ae/your-resources/publications-reports/business-plan. 60 For further details please see the following sources: UK Finance See reference 3.22 (2023) https://www.uk昀椀nance.org.uk/policy-and-guidance/reports- 5regtech/digital-regulatory-reporting.For Ireland: Government of Ireland (2022) https://www.gov.ie/en/ ibid. and-publications/uk-capital-markets-building-strong-foundations. 6 publication/ireland-for-昀椀nance-strategy/#updated-ireland-for- ABI (2023) https://www.abi.org.uk/news/news-articles/2023/7/put- Private capital leveraged across the Government’s Net-Zero Strategy World Federation of Exchanges (2022) https://www.world-exchanges.23昀椀nance-strategy. For the UK: HM Treasury (2021) https://www.gov. 7 savers-at-the-heart-of-plans-to-boost-pension-investment/. CMIT org/our-work/articles/2022-annual-statistics-guide.and British Energy Security Strategy. Originally published by the uk/government/publications/a-new-chapter-for-昀椀nancial-services (2023) https://capitalmarketsindustrytaskforce.com. A follow-up Department for Business, Energy and Industrial Strategy, since and TheCityUK (2021) https://www.thecityuk.com/our-work/ report is planned for the Autumn. Other organisations have also replaced by the Department of Energy Security and Net Zero and O昀漀ce for National Statistics via City of London’s City Statistics Brie昀椀ng 8 making-the-uk-the-leading-global-昀椀nancial-centre/. For Japan: (2022) https://www.cityo昀氀ondon.gov.uk/supporting-businesses/the Department for Business and Trade (2022) https://www.gov.uk/JFSA (2022) https://www.fsa.go.jp/en/news/2022/20220926.html. made meaningful contributions to the discussion on reform, such as economic-research/research-publications/city-statistics-brie昀椀ng.government/news/chris-skidmore-launches-net-zero-review.For Luxembourg: Luxembourg for Finance (2022) https://www.the Tony Blair Institute (2023) https://www.institute.global/insights/ 24 Natural capital, as de昀椀ned by the Natural Capital Committee, refers economic-prosperity/investing-in-the-future-boosting-savings-and- luxembourgfor昀椀nance.com/en/publication-mag/the-future-of-the- Aggregation as per City of London State of the Sector Report. Includes 9 to “that part of nature which directly or indirectly underpins value to prosperity-for-the-uk. The City of London Corporation also published 昀椀nancial-industry-in-luxembourg/.For Switzerland: State Secretariat tax revenues from the 昀椀nancial services sector (year to March 2020), a report about unlocking DC scheme capital for growth of the UK’s people, including ecosystems, species, freshwater, soils, minerals, for International Finance (2020) https://www.sif.admin.ch/sif/en/ and legal and accounting tax revenues (calendar year 2020). City 昀椀nancial, professional services and technology sectors. Please see of London (2021) https://www.cityo昀氀ondon.gov.uk/supporting-the air and oceans, as well as natural processes and functions.” home/昀椀nanzmarktpolitik/strategy.html.City of London Corporation (2023) https://www.cityo昀氀ondon.gov.uk/ Natural capital assets provide ecosystem services (eg pollination and businesses/economic-research/research-publications/total-tax-37 TheCityUK and PwC (2017) https://www.pwc.co.uk/industries/ supporting-businesses/economic-research/research-publications/ contribution-of-uk-昀椀nancial-services and TheCityUK (2021) https://water puri昀椀cation) which, in turn, help to support the production of 昀椀nancial-services/insights/vision-for-transformed-world-leading- powerful-pensions-unlocking-dc-capital-for-uk-tech-growth. goods and services across the economy. For further detail, refer to www.thecityuk.com/our-work/total-tax-contribution-study-for-uk-industry.html. 61 See reference 17. legal-and-accounting-activities-2021.the 昀椀rst state of natural capital report: Natural Capital Committee 10 O昀漀ce for Budget Responsibility and HM Treasury (2023) https://www.(2019): https://www.gov.uk/government/publications/natural-capital-38 Monetary Authority of Singapore (2023) https://www.mas.gov.sg/62 See reference 59. committee-natural-capital-terminology.development/sustainable-昀椀nance. gov.uk/government/publications/spring-budget-2023/spring-budget- 39 European Union (2023) https://www.europarl.europa.eu/legislative- 63 See City of London Corporation (2023) for more information on the Time period estimated is from 2022-2032. Green Finance Institute 2023-html.25 Mansion House Compact. https://news.cityo昀氀ondon.gov.uk/lord- 11 According to UNCTAD data, 2022 UK FS exports amounted to US$117bn. (2021) https://www.green昀椀nanceinstitute.co.uk/news-and-insights/train/theme-a-europe-昀椀t-for-the-digital-age/昀椀le-昀椀ntech-action-plan.mayor-welcomes-landmark-agreement-to-unlock-pension-funds/. See 昀椀nance-gap-for-uk-nature-report/.40 See reference 7. the Chancellor's Mansion House speech for more detail on estimates Converted to GBP using 1 August 2023 exchange rate of 0.78 from UK Government (2023) https://www.gov.uk/government/speeches/ Forest Trendsʼ Ecosystem Marketplace (2022) https://www. Oanda. UNCTAD (2023) https://unctadstat.unctad.org/datacentre/.2641 UNCTAD (2023) as published via https://www.theglobalcity.uk/ chancellorjeremy-hunts-mansion-house-speech. 12 Bank for International Settlements (2023) https://www.bis.org/ecosystemmarketplace.com/publications/state-of-the-voluntary-resources/state-of-the-sector-2023. statistics/bankstats.htm. As published via https://www.theglobalcity.carbon-markets-2022.42 See reference 12.64 See reference 18. Illustrative estimate only to indicate bene昀椀t potential and does not uk/insights/state-of-the-sector-2023.2743 Bank for International Settlements (2023) https://stats.bis.org/statx/65 See reference 17. ibid.re昀氀ect a projection. Corresponds to a range of approximately £0.5- 13 srs/table/c1. As published via https://www.theglobalcity.uk/resources/ 66 British Business Bank (2022) https://www.british-business-bank. 0.7bn. Re昀氀ects a base case of 5% uplift (+/- 20% range applied) using state-of-the-sector-2023. co.uk/backing-innovation-led-businesses-2022/. 14 InnovateFinance (2023) https://www.innovate昀椀nance.com/capital/ 2022 levels, which equates to up to 6%. For context, FPS FDI in the 昀椀ntech-investment-landscape-2022/. past four years (2019-2022) has grown by a compound annual growth 44 London Market Group (2022) https://lmg.london/document/4900/.67 © Parliamentary Copyright House of Commons 2023. House of rate of 12%, with strong recovery since 2020. FPS FDI data per fDi Commons Treasury Committee (2022-3) https://committees. ONS, Business Register and Employment Survey 2021 (2022 release); 15 45 Bank for International Settlements (2023) https://www.bis.org/ Markets and as published by the City of London Corporation in their parliament.uk/publications/41030/documents/200122/default/. NISRA, Business Register and Employment Survey 2021 (2022 2023 report on FPS FDI.statistics/rpfx22.htm. As published via https://www.theglobalcity.uk/ release). Available via the City Statistics Brie昀椀ng (2023) https://www.resources/state-of-the-sector-2023.68 See reference 19. cityo昀氀ondon.gov.uk/supporting-businesses/economic-research/ Illustrative estimate only to indicate bene昀椀t potential and does not 28 46 © Investment Association. Investment Association (2022) https://www. 69 Please see British Business Bank Finance Hub (2018) https://www. research-publications/city-statistics-brie昀椀ng. re昀氀ect a projection. We estimate an additional uplift on forecasted theia.org/sites/default/昀椀les/2022-09/Investment%20Management%20 british-business-bank.co.uk/昀椀nance-hub/. Innovate UK Innovation TheCityUK (2022) https://www.thecityuk.com/our-work/exporting-growth rates associated with the bene昀椀ts of having an FPS strategy 16 Survey%202021-22%20full%20report.pdf. Hub (2022) https://ukinnovationhub.ukri.org/. DBT funding catalogue from-across-britain-2022/.and the role of the Hub in reinvigorating promotional e昀昀orts. https://www.gov.uk/business-昀椀nance-support. UKRI Funding Finder 47 ibid. Corresponds to a range of approximately ~£19-29bn, rounded to the (2020) https://www.ukri.org/opportunity/. Re昀氀ects the estimates cited by the Chancellor in his Mansion House 17 nearest billion. Calculated over 6 years from 2024-2030. Assumption 48 New Financial, CMIT (2023) https://capitalmarketsindustrytaskforce.com/. speech on 10th July 2023. Re昀氀ects £50bn for DC schemes with a 5% 70 See reference 19. of a 50% uplift on the compound annual growth rate for UK goods 49 The Association of British Insurers (2023) https://www.abi.org. allocation to private equity, and £25bn for LGPS with a 10% allocation and services exports from IMF forecasts results in a range of ~0.8- 71 TechUK (2023) https://www.techuk.org/resource/a-uk-tech-plan-how- uk/globalassets/昀椀les/publications/public/lts/2023/abi-pension- to unlisted equities. The former estimate assumes that the UK 1.2% additional uplift, rounded to the nearest tenth of a percent. investment-report.pdf. the-next-government-can-use-technology-to-build-a-better-britain.html. workplace DC market adopts the objectives of 昀椀rms in the Mansion Adjusted for in昀氀ation based on CPI in昀氀ation forecasts. FS export data 72 TechNation (2023) https://technation.io/a-decade-of-uk- House Compact. Government plans to consult on the allocation of from UNCTAD (worth ~US$117bn in 2022). Forecast of export growth 50 Institute for Fiscal Studies (2023) https://ifs.org.uk/publications/tech/#investment-and-valuations. the latter estimate for LGPS. Bene昀椀ts are accrued by 2030, with no speci昀椀cation if beginning or end year. Refer to further detail here: and CPI in昀氀ation from IMF World Economic Outlook — April 2023. challenges-uk-pension-system-case-pensions-review. UK Government (2023) https://www.gov.uk/government/speeches/UNCTAD (2023) https://unctadstat.unctad.org/datacentre/. IMF World 51 The Pensions Regulator (2021) https://www.thepensionsregulator.73 See reference 14. chancellor-jeremy-hunts-mansion-house-speech.Economic Outlook (2023) https://www.imf.org/en/Publications/WEO/gov.uk/en/document-library/corporate-information/corporate-plans/74 For example: a recent report by UK Finance and Oliver Wyman weo-database/2023/April. The Association of British Insurers (ABI) estimates that from 2024 tpr-strategy-pensions-of-the-future#7218018e044642f08287257b7explored the future of securities tokenisation and how the UK 18 £225bn in investment estimated as an aggregation of the £100bn in Solvency II reforms will create “the potential for the industry to invest 29e0f5bcb. could consolidate its role as a global 昀椀nancial centre. Refer to the insurance and long term savings capital unlocked through Solvency 52 Department for Work and Pensions (2023) https://www.gov.uk/report: UK Finance and Oliver Wyman (2023) https://www.uk昀椀nance. over £100bn in the next ten years in productive 昀椀nance, such as UK II reforms, the £75bn in pension capital for investment announced org.uk/policy-and-guidance/reports-and-publications/unlocking- government/statistics/gender-pensions-gap-in-private-pensions/ social infrastructure and green energy supply.” The value of private in the Chancellorʼs Mansion House speech, and a portion of the power-securities-tokenisation. Global Financial Markets Association the-gender-pensions-gap-in-private-pensions. Refers to a 35% gap insurer investment that could be achieved is highly dependent on the £100bn in private capital leveraged as part of the net zero transition, (2023) https://www.gfma.org/policies-resources/gfma-publishes- between male and female uncrystallised non-zero median pension nature of the Solvency II reforms and, speci昀椀cally, the changes to the as stated by the UK government. We estimate a portion of the net wealth around normal minimum pension age in 2018 to 2020.report-on-impact-of-dlt-in-global-capital-markets/. matching adjustment and how they will be implemented. The PRA is zero capital leveraged will overlap with the unlocked pension capital 75 See reference 71. consulting on this later this year. See further detail from the ABI here: 53 British Business Bank (2019) https://www.british-business-bank.co.uk/ https://www.abi.org.uk/news/news-articles/2022/11/solvencyiireform/ and insurance and long-term savings capital. We have applied a 50% research/the-future-of-dc-pensions-enabling-access-to-venture-76 Oliver Wyman Forum (2022) https://www.oliverwymanforum.com/ and here for the PRA consultation: https://www.bankofengland.co.uk/discount rate on the net zero capital leveraged to account for this capital-and-growth-equity/.global-consumer-sentiment/a-gen-z.html. overlap. See references 17, 18, and 23 for additional information. prudential-regulation/publication/2023/june/review-of-solvency-ii- Financial Services Skills Commission (2023) https://昀椀nancialservicesskills. adapting-to-the-uk-insurance-market.30 org/news/2450-2/.

Vision for Economic Growth — a roadmap to prosperity 51 77 Casalini, F. and J. López González (2019), "Trade and Cross-Border 99 Refer to the Impact Investing Institute (III) for further resources 122 See reference 27. 125 Job estimates assume the same level of investment productivity as Data Flows", OECD Trade Policy Papers, No. 220, OECD Publishing, around the considerations that will need to be considered to support 2022, however this may vary depending on the type of additional Paris, https://doi.org/10.1787/b2023a47-en. a just transition, including their just transition criteria: https://www. 123 Illustrative estimate only to indicate bene昀椀t potential and does investment received. The job creation 昀椀gures were calculated using impactinvest.org.uk/resources/publications/just-transition-criteria/. not re昀氀ect a projection. Calculated over 6 years from 2024-2030. the estimated job creation in 2022 by FPS FDI of 15,000 new jobs 78 DRCF (2022) https://www.gov.uk/government/publications/digital- Estimated 4-6% uplift (in line with FPS FDI estimates) based on DBT An additional example is the Women in Finance Climate Action through an FPS investment of ~£2bn, which was scaled to estimate regulation-cooperation-forum-workplan-2022-to-2023/digital- Group: https://www.aviva.com/sustainability/women-in-昀椀nance/. total amount of overseas investment into the UK (worth ~£1,239 that there would be ~3,500-5,000 additional jobs created through regulation-cooperation-forum-plan-of-work-for-2022-to-2023. million for 2022-2023). There may be overlap between FPS FDI 100 Climate Change Committee (2022) https://www.theccc.org.uk/ an FPS FDI uplift of £0.5-0.7BN from 2024-2030. FPS FDI data per fDi estimate and overseas VC investment, as some VC investment is 79 Originally prepared for the Department for Digital, Culture, Media publication/2022-progress-report-to-parliament. Markets and as published by the City of London Corporation in their counted in FDI estimates. See DBT inward investment results technical and Sport, since replaced by the Department for Science, Innovation annex for more details on FDI calculations: https://www.gov.uk/ 2023 report on FPS FDI. 101 National Infrastructure Commission (2023) https://nic.org.uk/studies- and Technology and the Department for Culture, Media and Sport. 126 S Bhalotia, S Dhingra, E Fry and S Hale, Trading Up: The role of the Steer Economic Development (2021) https://www.gov.uk/government/ reports/national-infrastructure-assessment/. government/statistics/dbt-inward-investment-results-2022-to-2023/ publications/assessing-the-uks-regional-digital-ecosystems. 102 TheCityUK (2023) https://www.thecityuk.com/our-work/driving-uk- dbt-inward-investment-results-technical-annex-2022-to-2023. post-Brexit trade approach in the UK’s economic strategy, Resolution Foundation (2023) https://economy2030.resolutionfoundation.org/ 80 OECD (2021) https://www.oecd.org/innovation/inno/inno-stats.htm. Total overseas VC investment from DBT inward investment results growth-capturing-future-international-investment-in-a-rapidly- (2023) https://www.gov.uk/government/statistics/dbt-inward- reports/trading-up/. changing-world/. 81 Good Things Foundation, Cebr, Capita (2022) https://www. investment-results-2022-to-2023/dbt-inward-investment-results- 127 ibid. 103 UK Government (2023) https://www.gov.uk/government/publications/ 2022-to-2023-html-version#venture-capital-and-large-capital. goodthingsfoundation.org/insights/the-economic-impact-of-digital- inclusion-in-the-uk/. powering-up-britain/powering-up-britain-net-zero-growth- 124 See reference 28. 82 See reference 71. plan#:~:text=The%20policies%20and%20ambitions%20we,to%20 480%2C000%20jobs%20in%202030. 83 TheCityUK (2023) https://www.thecityuk.com/our-work/digital-trade- 104 See reference 26. a-commercially-viable-approach/. 105 Originally published by the Department for Business, Energy and 84 As an example, please 昀椀nder further detail here: European Commission (2021) https://commission.europa.eu/strategy-and-policy/ Industrial Strategy, since replaced by the Department of Energy priorities-2019-2024/europe-昀椀t-digital-age/european-digital-identity_en. Security and Net Zero and the Department for Business and Trade (2022) https://www.gov.uk/government/news/net-zero-review-uk- 85 UK Government digital identity and attributes framework could-do-more-to-reap-economic-bene昀椀ts-of-green-growth. (2022) https://www.gov.uk/government/publications/uk-digital- identity-and-attributes-trust-framework-beta-version. 106 These include, for example: project developers, registries and 86 UK Government Fraud Strategy (2023) https://www.gov.uk/ veri昀椀cation providers, data and accounting solutions providers, brokers, intermediaries, exchanges; and marketplaces. government/publications/fraud-strategy. 107 See reference 24 for a de昀椀nition of natural capital. 87 See reference 21. 88 FCA (2023) https://www.fca.org.uk/markets/primary-markets/ 108 Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) (2019) https://doi.org/10.5281/ regulatory-disclosures/national-storage-mechanism and HM zenodo.3553579. Government (2023) https://www.gov.uk/government/publications/ investment-research-review. 109 For the Green Finance Strategy: HM Treasury, Department for Energy 89 See reference 20. Security & Net Zero (formerly part of the Department for Business, Energy and Industrial Strategy), Department for Environment, Food and Rural A昀昀airs (2023) https://www.gov.uk/government/publications/ 90 This is a highly illustrative estimate and estimations of fraud losses green-昀椀nance-strategy/mobilising-green-investment-2023-green- vary. This takes one industry estimate and assumes that digital 昀椀nance-strategy-annexes. For the Nature Markets Framework: veri昀椀cation solutions can mitigate a proportion of those losses, and that they would be held constant at latest available per annum levels. Department for Environment, Food and Rural A昀昀airs (2023) https:// www.gov.uk/government/publications/nature-markets. Illustrative estimate only to indicate bene昀椀t potential and does not re昀氀ect a projection. Fraud estimates vary depending on transactions 110 De昀椀nition of impact investing taken from the Global Impact Investing in scope. Estimates used for this illustration those of UK Finance. UK Network: https://thegiin.org/impact-investing/need-to-know/. This is Finance estimated fraud losses of ~£1.2 billion in 2022. We assume also the de昀椀nition used by the Impact Investing Institute. for illustrative purposes that remote purchases (card not present) 111 See reference 25. and card identity theft are those that would most bene昀椀t from a 112 fDi data Markets as published by City of London Corporation (2023) digital veri昀椀cation solution (~£0.45 billion per annum). However, https://www.theglobalcity.uk/resources/foreign-direct-investment other estimates exist. For example, Action Fraud estimated £2.4bn in and https://www.theglobalcity.uk/resources/state-of-the-sector-2023. fraud losses between 2020 and 2021 and that 80% of this was “cyber enabled.” A proportion of this fraud could be mitigated through a 113 © Investment Association. Investment Association (2022) https:// stronger, re-usable digital veri昀椀cation solutions for customers. Fraud www.theia.org/industry-policy/research/investment-management- losses held constant each year for six years (2024-2030) for this survey. illustrative estimate. UK Finance estimates: UK Finance (2023) https:// 114 2022 estimates, measured by total premium volumes in USD. Source: www.uk昀椀nance.org.uk/policy-and-guidance/reports-and-publications/ Swiss Re Institute (2023) https://www.swissre.com/institute/research/ annual-fraud-report-2023. Action Fraud estimates: Action Fraud sigma-research/sigma-2023-03.html. (2021) https://www.actionfraud.police.uk/fraud-stats. 91 Oliver Wyman (2019) https://www.oliverwyman.com/our-expertise/ 115 Based on gross premiums by insured location. London Markets Group insights/2019/mar/supervising-tomorrow.html. (2022) https://lmg.london/document/4900/. 92 Financial Conduct Authority (2023) https://www.fca.org.uk/innovation/ 116 OECD (2023) https://data.oecd.org/trade/trade-in-services. regtech/digital-regulatory-reporting. htm#indicator-chart. 117 Refers to 昀椀nancial and related professional services. TheCityUK 93 For the Green Finance Strategy: HM Treasury, Department for Energy (2023) https://www.thecityuk.com/our-work/key-facts-about-the-uk- Security & Net Zero (formerly part of the Department for Business, as-an-international-昀椀nancial-centre-2022/. Energy and Industrial Strategy), Department for Environment, Food and Rural A昀昀airs (2023) https://www.gov.uk/government/publications/ 118 Refers to 昀椀nancial and related professional services. TheCityUK green-昀椀nance-strategy. (2020) https://www.thecityuk.com/our-work/key-facts-about-the-uk- 94 ibid. as-an-international-昀椀nancial-centre-2020/. 95 London Stock Exchange (2022) https://www.lseg.com/en/media- 119 UNCTAD Stat (2023) https://unctadstat.unctad.org/wds/. centre/press-releases/2022/foresight-sustainable-forestry-昀椀rst-fund- 120 IOSCO (2022) https://www.iosco.org/media_room/?subSection=speec to-use-london-stock-exchange-vcm-framework. hes&subSection1=Chair-of-Fintech-Task-Force-(FTF). 96 IEA (2021) https://www.iea.org/reports/net-zero-by-2050 and IEA 121 Refer to the terms of reference for the Harrington Review. HM (2023) https://www.iea.org/reports/world-energy-investment-2023. Treasury (2023) https://www.gov.uk/government/publications/ 97 E3G and WWF (2022) https://www.e3g.org/publications/unlocking- terms-of-reference-for-the-review-of-foreign-direct-investment/ the-uk-s-economic-opportunity-of-the-21st-century/. terms-of-reference-for-the-review-into-the-governments-approach- 98 See reference 25. to-attracting-foreign-direct-investment.

Vision for Economic Growth — a roadmap to prosperity 51 77 Casalini, F. and J. López González (2019), "Trade and Cross-Border 99 Refer to the Impact Investing Institute (III) for further resources 122 See reference 27.125 Job estimates assume the same level of investment productivity as Data Flows", OECD Trade Policy Papers, No. 220, OECD Publishing, around the considerations that will need to be considered to support 2022, however this may vary depending on the type of additional Paris, https://doi.org/10.1787/b2023a47-en.a just transition, including their just transition criteria: https://www.123 Illustrative estimate only to indicate bene昀椀t potential and does investment received. The job creation 昀椀gures were calculated using impactinvest.org.uk/resources/publications/just-transition-criteria/. not re昀氀ect a projection. Calculated over 6 years from 2024-2030. the estimated job creation in 2022 by FPS FDI of 15,000 new jobs 78 DRCF (2022) https://www.gov.uk/government/publications/digital- Estimated 4-6% uplift (in line with FPS FDI estimates) based on DBT An additional example is the Women in Finance Climate Action through an FPS investment of ~£2bn, which was scaled to estimate regulation-cooperation-forum-workplan-2022-to-2023/digital- Group: https://www.aviva.com/sustainability/women-in-昀椀nance/.total amount of overseas investment into the UK (worth ~£1,239 that there would be ~3,500-5,000 additional jobs created through regulation-cooperation-forum-plan-of-work-for-2022-to-2023. million for 2022-2023). There may be overlap between FPS FDI 100 Climate Change Committee (2022) https://www.theccc.org.uk/ an FPS FDI uplift of £0.5-0.7BN from 2024-2030. FPS FDI data per fDi estimate and overseas VC investment, as some VC investment is 79 Originally prepared for the Department for Digital, Culture, Media publication/2022-progress-report-to-parliament. Markets and as published by the City of London Corporation in their counted in FDI estimates. See DBT inward investment results technical and Sport, since replaced by the Department for Science, Innovation annex for more details on FDI calculations: https://www.gov.uk/2023 report on FPS FDI. 101 National Infrastructure Commission (2023) https://nic.org.uk/studies- and Technology and the Department for Culture, Media and Sport. 126 S Bhalotia, S Dhingra, E Fry and S Hale, Trading Up: The role of the Steer Economic Development (2021) https://www.gov.uk/government/reports/national-infrastructure-assessment/.government/statistics/dbt-inward-investment-results-2022-to-2023/ publications/assessing-the-uks-regional-digital-ecosystems.102 TheCityUK (2023) https://www.thecityuk.com/our-work/driving-uk-dbt-inward-investment-results-technical-annex-2022-to-2023. post-Brexit trade approach in the UK’s economic strategy, Resolution Foundation (2023) https://economy2030.resolutionfoundation.org/ 80 OECD (2021) https://www.oecd.org/innovation/inno/inno-stats.htm.Total overseas VC investment from DBT inward investment results growth-capturing-future-international-investment-in-a-rapidly-(2023) https://www.gov.uk/government/statistics/dbt-inward-reports/trading-up/. changing-world/. 81 Good Things Foundation, Cebr, Capita (2022) https://www.investment-results-2022-to-2023/dbt-inward-investment-results-127 ibid. 103 UK Government (2023) https://www.gov.uk/government/publications/2022-to-2023-html-version#venture-capital-and-large-capital. goodthingsfoundation.org/insights/the-economic-impact-of-digital- inclusion-in-the-uk/.powering-up-britain/powering-up-britain-net-zero-growth-124 See reference 28. 82 See reference 71.plan#:~:text=The%20policies%20and%20ambitions%20we,to%20 480%2C000%20jobs%20in%202030. 83 TheCityUK (2023) https://www.thecityuk.com/our-work/digital-trade-104 See reference 26. a-commercially-viable-approach/. 105 Originally published by the Department for Business, Energy and 84 As an example, please 昀椀nder further detail here: European Commission (2021) https://commission.europa.eu/strategy-and-policy/Industrial Strategy, since replaced by the Department of Energy priorities-2019-2024/europe-昀椀t-digital-age/european-digital-identity_en.Security and Net Zero and the Department for Business and Trade (2022) https://www.gov.uk/government/news/net-zero-review-uk- 85 UK Government digital identity and attributes framework could-do-more-to-reap-economic-bene昀椀ts-of-green-growth. (2022) https://www.gov.uk/government/publications/uk-digital- identity-and-attributes-trust-framework-beta-version.106 These include, for example: project developers, registries and 86 UK Government Fraud Strategy (2023) https://www.gov.uk/veri昀椀cation providers, data and accounting solutions providers, brokers, intermediaries, exchanges; and marketplaces. government/publications/fraud-strategy.107 See reference 24 for a de昀椀nition of natural capital. 87 See reference 21. 88 FCA (2023) https://www.fca.org.uk/markets/primary-markets/108 Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) (2019) https://doi.org/10.5281/ regulatory-disclosures/national-storage-mechanism and HM zenodo.3553579. Government (2023) https://www.gov.uk/government/publications/ investment-research-review.109 For the Green Finance Strategy: HM Treasury, Department for Energy 89 See reference 20.Security & Net Zero (formerly part of the Department for Business, Energy and Industrial Strategy), Department for Environment, Food and Rural A昀昀airs (2023) https://www.gov.uk/government/publications/ 90 This is a highly illustrative estimate and estimations of fraud losses green-昀椀nance-strategy/mobilising-green-investment-2023-green- vary. This takes one industry estimate and assumes that digital 昀椀nance-strategy-annexes. For the Nature Markets Framework: veri昀椀cation solutions can mitigate a proportion of those losses, and that they would be held constant at latest available per annum levels. Department for Environment, Food and Rural A昀昀airs (2023) https:// www.gov.uk/government/publications/nature-markets. Illustrative estimate only to indicate bene昀椀t potential and does not re昀氀ect a projection. Fraud estimates vary depending on transactions 110 De昀椀nition of impact investing taken from the Global Impact Investing in scope. Estimates used for this illustration those of UK Finance. UK Network: https://thegiin.org/impact-investing/need-to-know/. This is Finance estimated fraud losses of ~£1.2 billion in 2022. We assume also the de昀椀nition used by the Impact Investing Institute. for illustrative purposes that remote purchases (card not present) 111 See reference 25. and card identity theft are those that would most bene昀椀t from a 112 fDi data Markets as published by City of London Corporation (2023) digital veri昀椀cation solution (~£0.45 billion per annum). However, https://www.theglobalcity.uk/resources/foreign-direct-investment other estimates exist. For example, Action Fraud estimated £2.4bn in and https://www.theglobalcity.uk/resources/state-of-the-sector-2023. fraud losses between 2020 and 2021 and that 80% of this was “cyber enabled.” A proportion of this fraud could be mitigated through a 113 © Investment Association. Investment Association (2022) https:// stronger, re-usable digital veri昀椀cation solutions for customers. Fraud www.theia.org/industry-policy/research/investment-management- losses held constant each year for six years (2024-2030) for this survey. illustrative estimate. UK Finance estimates: UK Finance (2023) https:// 114 2022 estimates, measured by total premium volumes in USD. Source: www.uk昀椀nance.org.uk/policy-and-guidance/reports-and-publications/Swiss Re Institute (2023) https://www.swissre.com/institute/research/ annual-fraud-report-2023. Action Fraud estimates: Action Fraud sigma-research/sigma-2023-03.html. (2021) https://www.actionfraud.police.uk/fraud-stats. 91 Oliver Wyman (2019) https://www.oliverwyman.com/our-expertise/115 Based on gross premiums by insured location. London Markets Group insights/2019/mar/supervising-tomorrow.html.(2022) https://lmg.london/document/4900/. 92 Financial Conduct Authority (2023) https://www.fca.org.uk/innovation/116 OECD (2023) https://data.oecd.org/trade/trade-in-services. regtech/digital-regulatory-reporting.htm#indicator-chart. 117 Refers to 昀椀nancial and related professional services. TheCityUK 93 For the Green Finance Strategy: HM Treasury, Department for Energy (2023) https://www.thecityuk.com/our-work/key-facts-about-the-uk- Security & Net Zero (formerly part of the Department for Business, as-an-international-昀椀nancial-centre-2022/. Energy and Industrial Strategy), Department for Environment, Food and Rural A昀昀airs (2023) https://www.gov.uk/government/publications/ 118 Refers to 昀椀nancial and related professional services. TheCityUK green-昀椀nance-strategy.(2020) https://www.thecityuk.com/our-work/key-facts-about-the-uk- 94 ibid.as-an-international-昀椀nancial-centre-2020/. 95 London Stock Exchange (2022) https://www.lseg.com/en/media-119 UNCTAD Stat (2023) https://unctadstat.unctad.org/wds/. centre/press-releases/2022/foresight-sustainable-forestry-昀椀rst-fund-120 IOSCO (2022) https://www.iosco.org/media_room/?subSection=speec to-use-london-stock-exchange-vcm-framework.hes&subSection1=Chair-of-Fintech-Task-Force-(FTF). 96 IEA (2021) https://www.iea.org/reports/net-zero-by-2050 and IEA 121 Refer to the terms of reference for the Harrington Review. HM (2023) https://www.iea.org/reports/world-energy-investment-2023.Treasury (2023) https://www.gov.uk/government/publications/ 97 E3G and WWF (2022) https://www.e3g.org/publications/unlocking-terms-of-reference-for-the-review-of-foreign-direct-investment/ the-uk-s-economic-opportunity-of-the-21st-century/.terms-of-reference-for-the-review-into-the-governments-approach- 98 See reference 25.to-attracting-foreign-direct-investment.

Vision for Economic Growth — a roadmap to prosperity 53 About Oliver Wyman Oliver Wyman is a global leader in management consulting. With o昀漀ces in more than 70 cities across 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The 昀椀rm has more than 6,000 professionals around the world who work with clients to optimize their business, improve their operations and risk pro昀椀le, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a business of Marsh McLennan [NYSE: MMC]. For more information, visit www.oliverwyman.com. Report Quali昀椀cations/Assumptions, and Limiting Conditions Oliver Wyman was commissioned by the City of London Corporation as the delivery collaborator for Vision for Economic Growth — a roadmap to prosperity initiative — which aims to develop a long-term plan to reinforce and renew the UK’s role as a global 昀椀nancial centre. The primary audience for this report includes public and private sector stakeholders. Oliver Wyman shall not have any liability to any third party in respect of this report or any actions taken or decisions made as a consequence of the results, advice or recommendations set forth herein. This report does not represent investment advice or provide an opinion regarding the fairness of any transaction to any and all parties. This report does not represent legal advice, which can only be provided by legal counsel and for which you should seek advice of counsel. The opinions expressed herein are valid only for the purpose stated herein and as of the date hereof. Information furnished by others, upon which all or portions of this report are based, is believed to be reliable but has not been veri昀椀ed. No warranty is given as to the accuracy of such information. Public information and industry and statistical data are from sources Oliver Wyman deems to be reliable; however, Oliver Wyman makes no representation as to the accuracy or completeness of such information and has accepted the information without further veri昀椀cation. No responsibility is taken for changes in market conditions or laws or regulations and no obligation is assumed to revise this report to re昀氀ect changes, events or conditions, which occur subsequent to the date hereof.

About the Global About The City of City campaign: London Corporation: The Global City campaign is The City of London The City of London Corporation is the governing body Corporation’s overarching initiative to promote the of the Square Mile dedicated to a vibrant and thriving UK as a world-leading international 昀椀nancial centre. City, supporting a diverse and sustainable London It showcases the UK as a great place for 昀椀nancial and within a globally successful UK. professional services 昀椀rms to invest, locate and grow. We aim to: theglobalcity.uk • Contribute to a 昀氀ourishing society • Support a thriving economy • Shape outstanding environments. By strengthening the connections, capacity and character of the City, London and the UK for the bene昀椀t of people who live, work and visit here. www.cityo昀氀ondon.gov.uk In partnership with: www.oliverwyman.com