The UK Government has an opportunity to mobilise far greater amounts of private investment for public policy priorities than is the case now. Blended finance, deployed well, offers a tried and tested pathway for public and private investors, with different outcome, risk and return expectations, to work effectively together. This paper provides examples from the UK which can be replicated to crowd in multiples of private investment for every pound contributed by the taxpayer. The UK is losing out globally against its peers in the US and the European Union, which are using blended finance to catalyse private investment, particularly into climate finance.
This paper demonstrates the scale of the opportunity now available to UK policy-makers to follow suit, and the practical path to implementation, through a series of policy and regulatory enablers. By implementing the approaches outlined here, the next five to 10 years could potentially see a far greater percentage of pension and insurance assets, as well as other pools of capital, directed at productive investment for resilient and sustainable economic growth in the UK.
Sarah Gordon and Anna Valero
26 October 2023
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This work is published under POID and is part of the CEP's Growth programme.
This publication comes under the following CEP theme: UK productivity and policy, Clean growth