REUTERS, London

Britain needs an additional one trillion pounds ($1.3 trillion) in investment in the next decade to grow the economy, a report said on Friday.

New British Prime Minister Keir Starmer said he wanted the economy to achieve annual growth of 2.5 percent when campaigning in the run-up to July 4’s election - a rate that Britain has not regularly reached since before the 2008 financial crisis.

An annual growth rate of 3 percent would require extra investment of 100 billion pounds a year in the next 10 years, particularly in energy, housing and venture capital, according to the report from UK financial services lobby group Capital Markets Industry Taskforce.

The investment could come out of the six trillion pounds in long-term capital in Britain’s pensions and insurance sector, the report’s lead author Nigel Wilson, former boss of Legal & General, told Reuters.

“We’ve underinvested in the UK for such a long time, there’s a massive gap between the other G7 countries and ourselves,” he said.

“We have the long-term capital in the UK, it needs to be reallocated.”

The British economy needs an extra 50 billion pounds annually in energy investment, as it seeks to meet net zero targets, 30 billion pounds in housing and 20-30 billion in venture capital, the report said.

The government should look at incentives to investment, such as reductions in taxes on shares for retail investors, the report added.

UK pensions have a “significantly lower” allocation to domestic and unlisted equities than most developed market pension systems globally, according to a separate report published on Friday by think tank New Financial.

UK pensions could as much as double their allocations and still be in line with the pensions industry in other advanced markets, the report said.

The UK government has called for a review of Britain’s pension system, as it seeks to increase UK pensions investment in domestic startups.

“UK pension schemes could play a greater role in UK capital markets than they currently do,” UK pensions minister Emma Reynolds told a CMIT conference.