The British Private Equity and Venture Capital Association (BVCA) has called on political parties to adopt policies that encourage investors to back UK businesses with the capital they need.
This comes as the BVCA’s latest investment activity report shows investment by private equity and venture capital in UK businesses fell to £20.1bn in 2023, down from £29.7bn in 2022.
The BVCA has outlined how the next government could bolster economic growth and attract inward investment through private capital in the UK.
Key recommendations include producing an action plan for pension investment to unlock additional funding and generate higher returns for savers, publishing an industrial strategy to provide long-term certainty for investors, and prioritising a stable and competitive tax framework.
It said that London remains the leading destination for private capital, but almost six in 10 (58%) of businesses receiving venture capital or private equity investment were located in the nations and regions outside the capital.
Locations receiving most investment were London (42%), the South East (10%), North West (7%) and the East of England (7%). The BVCA has stated that investment in nations and regions could be even higher with improvements to infrastructure and planning decisions.
BVCA added that the UK continues to be a hub for technology, built on world-class research and development, a strong talent pool and connectivity. It said that in 2023, tech-focused businesses accounted for two fifths (39%) of total private capital investment.
To further support the growth of these businesses, the BVCA called on the next government to provide a long-term research and development (R&D) strategy and expand incentives that support ground breaking ventures.
Michael Moore, BVCA chief executive offiver, said: “Private capital is a key partner for driving growth in every nation and region of the UK, but investment by the industry could be even greater with the right policy environment in place.”
He added: “2023 saw a fall from the highs of 2021 for our industry, but it still backed UK businesses to the tune of £20.1bn. Parties aspiring to form the next government should be guided by the principles of a stable economy, world class standards that are proportionally applied, building on competitive advantages to maintain scale and breadth of talent, and predictable policy frameworks for growth sectors.”
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