The Treasury Department, Bank of England and FCA announced on Friday that they will try to encourage an increase in investment in “production finance.”
The organization said productive finance is augmenting production capacity, sustainable growth and economic contributions. The FCA said areas that require investment include “plants and equipment (which can help companies achieve scale), research and development (improve knowledge economy), technology (e.g., green technology), infrastructure and private stocks related to these sectors.”
As part of advancing productive finance, the Treasury, Bank of England and FCA say that a long-term investment commitment may be required, but this is what is needed to provide reliable sources and capital and support the economic recovery.
The Working Group aims to investigate barriers to investment in UK production financial assets, such as the Treasury’s Patient Capital Review in 2016 and the 2019 proposal for the Long-Term Asset Management Taskforce’s UK Fund Plan, Workhem Group, a UK Fund System, in 2019.
The group’s mission added “to agree to the necessary foundations that businesses and investment platforms can implement to encourage investment in long-term assets by a wide range of investors.”
As part of that work, the Ministry of Finance, Bank of England and FCA will propose solutions and roadmap to overcome investment barriers, including potential fund structures such as LTAF.
The working group, co-hosted by the Ministry of Treasury, Bank of England Chief Andrew Bailey and FCA CEO Nikhil Rathi, said it will be drawn from banks, asset management funds, insurance companies, businesses, infrastructure companies, infrastructure companies, wealth managers, wealth managers, investment platforms and trade associations representing representative sectors and markets.
In view of the need for assistance for sustainable growth, directed towards the non-financial sector, Franboit, director of Positive Money, called on the government to respect its commitment to “level up” within the new task force initiative.
“For a long time, the UK economy has been curtailed by the majority of bank lending heading towards property and financial markets rather than productive investments in the real economy that are desperately needed to level up the region and increase income.”
“More than ever, measures are needed to guide productive investment lending to support sustainable recovery and a fair green transition. Policymakers should aim to introduce a modern form of so-called “credit guidance,” which has been effective in steering loans towards more productive purposes for most of the 20th century. ”
