The\nUK private financial system has not performed well to support the real economy.\nIt has been pro-cyclical, over-lending in boom times but rationing credit\nduring and after crises. It has not sufficiently funded long-term investment in\nkey areas like green energy, needed to avert climate catastrophe, and create\ngreen jobs. Private and public investment has been historically low in the UK\neconomy, and fell sharply since the 2007\/8 crisis, to an important extent due\nto Tory austerity. The UK remains in last place amongst both G7 and OECD\ncountries, with the lowest share of investment in GDP. <\/p>\n\n\n\n
Because\nthey benefit from government ownership, which allows them to borrow long-term\nat fairly low cost, NIBs are ideally placed to fund projects that are\nenvironmentally or socially valuable but are too risky to be attractive to\npurely private finance, such as funding a Green New Deal. <\/p>\n\n\n\n
Irrespective\nof governmental policy orientation, rather large NIBs, have been an important\nfeature of the financial sectors of most developed and emerging economies,\nespecially the most successful and dynamic ones, like Germany, France, China,\nIndia, South Korea, India and Japan. The UK has been an exception in not having\nsuch a public investment bank, despite its evident need. <\/p>\n\n\n\n
How do party positions measure up on\nNIBs? <\/strong><\/p>\n\n\n\n Although\nthe Conservative party established the British Business Bank in 2014, it has\nremained far too small to have any meaningful impact. In their 2019 manifesto,\nthe Conservatives indicate that the BBB will grow but it is not clear by how\nmuch, nor is the indicated expansion costed. More worryingly, the UK Green\nInvestment Bank, established in 2012 was privatised and sold off to the\nAustralian Macquarie Group. <\/p>\n\n\n\n The\nLiberal Democrats have also pledged to scale up the BBB and have pledged to\ninject \u00a35 billion of capital for a new Green Investment Bank, but without\nspecifying target loan volume or balance sheet size. These initiatives are far\nfrom sufficient in the face of the magnitude of impending climate disaster.\nFurthermore, with the Lib Dem\u2019s recent commitment to permanent austerity, it is\nunclear how credible these pledges are. <\/p>\n\n\n\n In sharp contrast, the Labour party has pledged to create a UK National Investment Bank (NIB) with a strong focus on green infrastructure, and SME lending to boost much needed investment for a structural transformation to a low- carbon and inclusive economy. The total capital of the NIB would after several years reach \u00a325 billion, which thanks to the leverage achieved by the NIB co-financing with private banks, and raising funds on private capital markets, as well as re-investing all its own profits, could lead to a total stock of lending and investment by the NIB of \u00a3250bn after 10 years. Labour would also provide the Scottish National Investment Bank an additional \u00a320bn of lending power. This amount would be complemented by public resources provided by a \u00a3250bn \u201cgreen transformation fund\u201d projected to spend \u00a325 billion a year, as well as a \u00a3150bn \u201csocial transformation fund\u201d, that would spend on average of \u00a330 billion a year. <\/p>\n\n\n\n Such\nsignificant resources, as pledged by Labour, would help increase investment for\na far greener, dynamic and more inclusive UK economy. <\/p>\n","protected":false},"excerpt":{"rendered":" Professor Stephany Griffith-Jones and Dr Natalya Naqvi, write for the blog on the parties’ election pledges on National Investment Banks, making the case that such institutions ought to be pivotal in greening the economy.<\/p>\n","protected":false},"author":11,"featured_media":7086,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center 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