Access to capital and finance: strategic context, challenges and policy recommendations

The UK’s capital, finance and investment markets are currently ill-equipped to narrow the UK’s regional productivity inequalities and they urgently need help in doing this. Research at The Productivity Institute shows that at present the investment risk premia gaps between London and most cities and regions away from the South East are of the order of 250-300 basis points, equivalent to today’s sovereign spreads between the UK and Romania or Chile, and as wide as the sovereign risk-premia spreads across the whole of Europe or the USA. Closing these investment attractiveness gaps is of paramount importance in driving productivity growth across all of the UK and requires public-private coordination to make progress. Neither the private sector nor the public sectors can achieve this on their own, and coordinated public-private actions are essential. What is needed is to create commercially sound and sustainable reasons for people from successful centres to spend time and moneys in other UK centres.