How Can Urban Wealth Funds and Regional Wealth Funds Help UK Regions to Rejuvenate?

This paper examines the case for, and context in which, an urban wealth fund (UWF) or a regional wealth fund (RWF), can realistically and meaningfully be established in UK cities and regions in a manner which helps to encourage investment capital back into economically weaker regions. Much of the current discussion regarding the links between industrial strategies, governance devolution nationally-orchestrated investments in renewables and national productivity growth, largely fails to consider in detail the particular effects on, or specific responses to, the capital markets, at the local, city, regional or national levels and the consequential local financial and fiscal implications of these effects and responses. The UK central-sub-central fiscal system is not well-designed to foster capital flows in economically weaker regions, and therefore finding ways to reform the interactions between the financial system and the fiscal system is essential in order to rejuvenate whole swathes of the UK economy is critical. The wealth fund model offers an important potential step in this direction. The fact that the wealth fund-types of arguments have received support from many of the UKs most prominent economists also underscores that these arguments have credibility and are worth serious consideration. These wealth fund types of arguments have strong links with various high-level fiscal and macroeconomic management debates currently taking place in the UK, but rather than national debt management issues, the arguments put forward here focus specifically on the economic nature, behaviour and role of cities and regions. It is argued here that, if properly constructed as genuine wealth funds, these institutions can provide a key piece of the jigsaw of how cities and regions may be 'turned around' in a manner which builds long-term investor confidence and investment flows back into weaker local economies.