The Investment Association has unveiled a plan to boost the UK economy by encouraging long-term investment.
The Productivity Action Plan was backed by Chancellor George Osborne in this year’s Budget, which was focused on a measures to boost business in the UK.
The action plan has five main objectives of enhancing company reporting for efficient capital allocation, enhancing investor stewardship and engagement, developing efficient and diverse capital markets, and overcoming tax and regulatory impediments to the provision of long-term finance.
Each objective has a series of recommendations, creating 12 recommendations in total. The Investment Association then proposes a series of actions and outlines future plans for works, including engaging directly with companies, associations, the FCA, the European Commission and consultants on all the objectives.
The success of the action plan will be measured every six months with the trade body sending updates to the chancellor on its progress.
Investment Association interim chief executive Guy Sears stressed in the report the importance of tackling the UK’s productivity problem, calling it a “chronic issue”.
According to the Investment Association, productivity growth in the UK is 16 per cent below its pre-2008 trend rate. Also, as a share of GDP, investment in the UK has ranked in the lowest 10 per cent for 16 of the past 21 years.
Investment Association director of corporate governance Andrew Ninian says: “Fixing the UK’s productivity puzzle is a difficult task and the solutions are far from simple. This is a challenge that affects every corner of society and calls for a multifaceted response from the UK’s leading business and economic stakeholders. We hope this Action Plan plays a part in improving UK productivity.”
Among other barriers and impediments to productivity for the Investment Association are unequal treatment of DB and DC schemes, especially for long-term investment, as well as executive remuneration, which creates incentives not linked to long-term results.
Commercial secretary to the Treasury Lord O’Neill also says: “Long-term investment is crucial to our plans to boost productivity. We need investors who are willing to back businesses that take this approach, whether it’s building a new factory or creating an exciting new product.
“That is why today’s report is a significant step in the right direction because it shows that investors are taking action to encourage the kind of long-term investment that we need.”