Only last week, we published a report in partnership with the think tank New Financial, which illustrated how the interconnectedness of EU and UK financial markets remains a “fact of life”.

A planned 2027 update to EU capital rules risks significantly reducing investment flows from the UK financial sector into the bloc, the governing body of London’s financial district and think tank New Financial say.

A new report from the New Financial think tank and City of London corporation warns the rules could hamper Europe’s economic growth.

Between 2019 and 2024, the total value of assets in sustainable investment funds doubled to more than €2.5 trillion globally, with four-fifths based in Europe, according to the New Financial think tank.

The proportion of UK pension fund assets invested in UK-listed equities, according to 2024 research by the think tank, New Financial.

A report by the New Financial think tank, in partnership with Goldman Sachs, suggests that European markets are stronger than they might seem.

No one needs to stay in the fund — but as New Financial points out, the average pension holder already believes they have a much higher allocation to UK equities than they actually do.

A “do nothing” approach risks seeing DC fund allocation to the UK slip further still to 3.5 per cent by the end of the decade, think tank New Financial warned, while full mandation would likely see UK equities rise to around 12.4 per cent of total funds.

“Vibrant public equity markets are crucial for the health of the UK economy, and a strong domestic base of pension funds really matters for UK equity markets,” said William Wright, founder of New Financial

If German individual investors had the same level of investment in the stock market as neighboring France, measured as a percentage of the economy, there would be an additional €1.1 trillion of capital to finance companies, according to New Financial, a think tank backed by the finance industry.

The interconnectedness of EU and UK financial markets remains a ‘fact of life’ according to a new report from the City of London Corporation and New Financial

A report published on Wednesday by the City of London Corporation and New Financial, a research firm, called for “closer co-operation in new areas such as sustainability or digital assets”.

The links between the regions’ financial markets remain strong even after relocations during the Brexit process, according to a report published Wednesday by the City of London Corporation and New Financial, a think tank backed by the finance industry.

The sheer complexity of EU financial regulation is another factor. New Financial estimated it had created 1,629 documents with about 95,500 pages and 38mn words — enough to fill 50 copies of the Bible.

The signatories of that letter to the chancellor argue that the requested 25 per cent allocation would not be mandatory (pension savers would be free to switch out of the default option), that it would align with international competitors, could deliver around £76bn of fresh capital into the economy and as much as £95bn – according to think-tank New Financial

The writer is the founder and managing director of New Financial, a capital markets think-tank

A recent paper from think-tank New Financial warns that this situation will worsen without new incentives for pension providers to invest in domestic companies.

A lack of pension investment is part of the problem. New Financial says defined contribution (DC) pension schemes allocate just 4.9% of total assets to UK equities, on average. The global average for domestic equities is 13%.

This slow-motion sell-off has been particularly marked in pensions: the think-tank New Financial recently reported that pension ownership of UK shares had fallen from over 53 per cent in 1997 to just 4.4 per cent in 2024.

This national gloom has affected both institutional and retail investors. In 1997, UK pension funds on average invested 53% of their assets in UK stocks. By 2022, that had dropped to 6%, according to a study by the think tank New Financial, opens new tab.