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IA calls on Chancellor for ‘competitive’ budget to aid green transition

The Chancellor was urged by the investment trade body to ensure the UK remains a leading international finance hub in his budget – due to be presented on 27 October – while also allowing the investment management industry to “play its part in the fight against climate change”.

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The IA said Sunak needs to build on the delivery pathways outlined in the Treasury’s Net Zero Strategy to develop clear, long-term, sector-specific net zero transition plans.

According to the IA, further detail on the roadmap to net zero is needed if investors are to support the transition in different sectors of the economy and factor climate risks more accurately into investment decisions.

Chris Cummings, chief executive of the Investment Association, said: ”This is a vital budget.  As we emerge from the pandemic and accelerate towards a greener economy, action and clarity from the government is critical in order to ensure every corner of our country thrives.”

Published on Wednesday (20 October), the Net Zero Strategy has come under criticism, with sceptics pointing out the plan is thin on details on how the Conservative government intends to scale up energy efficiency improvements, decarbonise industry and boost the green economy.

Working with the investment management industry to identify specific sectors or projects “which align with the goal of net zero transition”, but where additional investment is needed, would be key, the IA stated.

“This could focus on sectors, nascent technologies or underdeveloped overseas markets, and should consider appropriate mechanisms to crowd in private finance,” the organisation said.

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Cummings added: “As we look ahead to COP26 next month, we hope to see further measures announced by government to aid the UK’s green transition.

“Underestimating the severity of climate change will undermine the basis on which our economy, businesses and jobs are founded.”

He stated that the investment management industry recognises the need to change course in order to protect savers, highlighting that UK savers invested nearly £1bn a month into responsible funds in 2020.

IA also called on Sunak to support long-term investment and broaden investor access to long-term, illiquid assets, both in the UK and globally, stating that the Long-Term Asset Fund – which has come under fire recently – needs to have a broader distribution within the retail market than currently proposed under the FCA’s draft rules.

It also highlighted the need to create a “supportive” regulatory culture “with competitiveness hardwired into it”.

“The UK is in a unique position to update its regulatory framework following the UK’s departure from the EU and ensure that it remains appropriate to meet the social, economic and geopolitical challenges that lie ahead,” the trade body stated.

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