Sovereign Wealth Funds: What’s the big idea ... and what could it mean for Britain?
David G. Green, Eugene O’Callaghan, John Penrose MP, The Rt Hon Liam Byrne MP, Adam Dixon, John Crompton, Dag Detter, Richard Hyde, Hari Menon, Rachel Neal (Edited by Jim McConalogue), March 2024
Sovereign wealth funds (SWFs) are often discussed as government-owned investment funds with their benefits returning to the government and citizens
– and which invests its assets according to the interests of the national sovereign sponsor. They play an important role in both global financial markets and in
representing important domestic owners of capital.
This collection of essays sets out a definition and understanding of sovereign wealth funds. In particular, it looks across at various British ideas of wealth funds in which public money is spent on major commercial projects – and citizens are deemed to own a share of the wealth generated, thereby benefiting from returns on those investments. There are two comparative chapters which study Ireland’s sovereign wealth fund experience since 2001 and also ask what we can learn from Singapore’s two wealth funds.
Critically, it is also suggested a UK fund may not always be the most ideal policy choice: potentially, it may be more effective in terms of desired outcomes to look at existing capabilities. One further chapter describes the investment funds of the UK’s existing state-owned development bank – the British Business Bank – and what this could mean for a single coherent fund.
Some authors argue that a globally diversified sovereign wealth fund would allow us to invest to meet liabilities, while public wealth funds would enable assets to be better managed and value extracted for the taxpayer. Another chapter then argues that the creation of a UK sovereign wealth fund could create an ‘anchor investor’ for British entrepreneurs and start-up businesses – a ‘financially sensible’ idea allowing us to grow faster in the future, and enable us to become a fairer society.
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