Rachel Reeves says Canadian model for pension funds can ‘fire up’ UK economy

The chancellor has called on schemes to join together and invest billions in Britain as she tries to hit her growth targets.

Rachel Reeves wants to create a ‘Canadian style’ pensions model to “fire up” the UK economy.

The government is considering consolidating local government pension schemes - to become big enough to invest billions in Britain.

It comes as Labour faces pressure to deliver on its ambitious growth targets.

The National Institute of Economic and Social Research (NIESR) has questioned the Starmer government’s decision to cancel infrastructure projects which would have boosted growth.

Last week, in response to what she said was a newly discovered £22 billion black hole in the public finances, Ms Reeves scrapped rail projects and a new hospital building program.

Rachel Reeves says Canadian model for pension funds can ‘fire up’ UK economy (Dominic Lipinski/PA) (PA Archive)

She is due to hold a roundtable with the head of Canada’s ‘Maple 8’ pension funds in Toronto on Wednesday.

She called on pension funds to “learn lessons from the Canadian model and fire up the UK economy”.

She said: “The size of Canadian pension schemes means they can invest far more in productive assets like vital infrastructure than ours do.

“I want British schemes to learn lessons from the Canadian model and fire up the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment.

“We’re already beginning to see schemes announce plans to invest. That’s a vote of confidence in our work to fix the foundations of the economy, rebuild Britain and make every part of our country better off.”

Chancellor of the Exchequer Rachel Reeves is due to hold a roundtable with the head of Canada’s ‘Maple 8’ pension funds (Lucy North/PA) (PA Wire)

The NIESR stressed the importance of public investment in areas such as transport in order to help drive economic growth.

The think tank said: "The new government has inherited an economy with low investment and low productivity growth, and it is these issues that need to be tackled.

"In addition, public spending needs to rise if public services are to be brought up to scratch, the nations and regions of the United Kingdom outside London and the South East are to see the regeneration they need, and the government is to meet the mandated target of achieving net zero by 2050."

Its latest outlook report also predicted inflation will rise again over the second half of this year and the start of next year but will return to around the 2 per cent target rate over the medium term.