UK Private Markets Poised for £50bn Capital Unlock
- Editor
- Jul 2
- 2 min read
What's New
The UK is implementing sweeping reforms to channel private market investments into domestic growth, with the Mansion House Accord alone expected to mobilize over £50 billion into infrastructure, housing, and high-growth businesses over the next five years. According to the Investment Association's latest report, major pension providers have committed to allocating at least 10% of default assets to private markets by 2030, while regulatory changes are removing key barriers to illiquid asset investments.
Why It Matters
Private markets already contribute nearly £200 billion annually to the British economy—equivalent to 7% of UK GDP—yet represent only 13% of total capital compared to public markets. This capital mobilization could fundamentally reshape how the UK finances innovation, infrastructure, and regional development while addressing the £1.6 trillion infrastructure funding gap through 2040.
Big Picture Drivers
Regulatory alignment: FCA's March 2025 review of private market valuation practices strengthens investor confidence while identifying clear improvement areas
Pension reform: Government fee regulation changes exclude performance fees from charge caps, enabling more ambitious long-term investment strategies
Scale consolidation: Larger pension schemes gain better access to leading managers and internal investment expertise for private market participation
Post-Brexit flexibility: Solvency UK reforms could unlock approximately £100 billion from UK insurers for infrastructure and green energy investments
Political momentum: Cross-party support for private market expansion through National Wealth Fund and Modern Industrial Strategy initiatives
By The Numbers
£29.4 billion invested by private capital across 1,600 UK businesses in 2024 alone
2.5 million jobs supported by private capital, with 69% located outside London
25 LTAFs (Long-Term Asset Funds) launched as of June 2025 to democratize private market access
£25.6 billion planned capacity increase for British Business Bank to support strategic sectors
72% of retail investors comfortable locking away money for longer periods to pursue higher returns
Key Trends to Watch
Pension consolidation will accelerate as smaller DC schemes merge into "mega-funds" with sophisticated private market investment capabilities.
Retail democratization expands through Long-Term Asset Funds potentially becoming eligible for Stocks and Shares ISAs.
Regional investment increases via enhanced British Business Bank co-investment programs targeting strategic sectors outside London.
Infrastructure pipeline development focuses on eight high-growth sectors including clean energy, life sciences, and advanced manufacturing.
The Wrap
The UK is positioning private markets as a cornerstone of its economic growth strategy, but success depends on addressing supply-side constraints including planning system reform, streamlined procurement, and skills development. With public and private sectors aligned on long-term capital deployment, the next phase centers on execution and maintaining investor confidence through consistent policy frameworks.
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