Chancellor John Healey is to give £20.4bn of additional support to the state's business lender and infrastructure bank in next week's Budget, as he seeks to boost growth by exploiting flexibility in the UK government's fiscal rules.
The Treasury said the National Wealth Fund (NWF) and British Business Bank (BBB) would be granted the extra capital over roughly half a decade, creating and supporting 100,000 jobs in sectors including AI, defence and green energy by 2035. The NWF will receive an extra £15.4bn, which would allow it to continue lending at its current rate until 2030-31, including £2bn for a renewables-focused Energy Wealth Fund. The BBB will be topped up by an extra £5bn, raised through additional debt issuance.
Healey is seeking to support the economy despite heavily constrained public finances, as rising interest costs bear down on his fiscal buffers. Prime Minister Andy Burnham said before taking office that he would use any "flexibility" within the government's borrowing rules to bolster investment. Extra borrowing is expected to be "neutral" for public sector net financial liabilities, the Treasury said, because assets created by the institutions' investments are offset against liabilities.
The NWF, formerly the UK Infrastructure Bank, is the UK's main public investor in infrastructure, including green energy and supply chains, and is financing the construction of the Sizewell C nuclear power station. The BBB currently has £25.6bn of capacity, which will rise to £30.6bn under the top-up, as it seeks to provide scale-up finance to cutting-edge companies.
Source: Financial Times Companies · Summarized by HeadlinesBriefing