TLDR:
- Private equity and venture capital investment in the UK has plummeted by over 30% in 2023.
- In 2023, the UK raised £8.2bn in private capital, more than France, Germany, Sweden, and Switzerland combined.
Private equity and venture capital investment in the UK has seen a significant decline in 2023, with a decrease of over 30% to £20.1bn, following a similar drop in the previous two years. The 2021 record high investment of £36.8bn was attributed to the monetary stimulus injected during the pandemic, while higher rates and tighter monetary supply over the past two years have led to reduced investment in riskier ventures.
Despite the decrease, the UK remains a hub for private capital in Europe, raising £8.2bn in 2023, more than other major European countries combined, and over half of the amount raised in the US. The country’s strong university sector and connectivity continue to attract investments in technology and research and development (R&D), with tech-focused businesses accounting for 39% of total private capital investment in Britain.
The long-term asset funds (LTAFs) report from the British Private Equity and Venture Capital Association (BVCA) found a significant decline in buyout investments, growth capital investments, and venture capital investments in the UK. The BVCA called for a long-term R&D strategy and urged the next government to focus on stabilizing the economy, providing world-class standards, and predictable policy frameworks.
In addition to the R&D strategy, the BVCA recommended the next government to produce an action plan on pension investment, publish an industrial strategy for long-term investor certainty, and prioritize a stable and competitive tax framework to address the lack of capital across the sector.
