SWF Radar UK

Gordon Brown, the British prime minister, writes that, “The growth of Sovereign Wealth Funds (SWFs) is one of the most notable characteristics of the current wave of globalisation. The UK government welcomes the positive role that SWFs such as those in the UAE and Qatar have in the efficient allocation of capital and the benefit that they bring to the global economy by taking a long-term view of their investment decisions. To ensure a transparent environment that supports SWF investment, we have fully endorsed the lead taken by the IMF to develop a common set of principles. And, of course, the UK, with its history of open investment, will continue to be a natural place for SWFs to invest.”

The Associated Press quotes Peter Mandelson, the British secretary of state for business, enterprise and regulatory reform, as telling reports on Saturday that, “We haven’t had a problem with sovereign wealth funds in the past, so I don’t see why it should be a problem in the future. … I hope they are going to go on acting as they have.”

In fact, Britain did indeed have a problem with an SWF in the past.

UPDATE (November 2, 2008): Other news sources indicate that Mandelson was referring to Europe, not to the UK.

The BBC reports that, “Gordon Brown has said oil-rich Gulf states must play their part in stabilising world oil prices. Speaking ahead of a four-day tour of the region, the prime minister also said they should help countries hit by the global economic crisis. ”

Accountancy Age reports that, “Grant Thornton says that government intervention is making UK plcs a takeover target for sovereign wealth funds, which could put more FDs in the firing line.”

Thomson Reuters reports that, “Local government pension schemes are concerned that legislation in place to guide their investment strategies is proving damaging, according to poll data. A survey of schemes in England, Wales and Scotland holding 107 billion pounds in local authority pension assets has found 52 percent think current legislation is “detrimental” to efficient portfolio management. Some 57 percent said it limits their access to risk management strategies.”

The Telegraph reports that, “The Chinese central bank [the People’s Bank of China (PBOC)], one of the most secretive in the world, is amassing shares in many of Britain’s blue-chip companies.”

Here is more from the Telegraph.

Gerard Lyons, chief economist at Standard Chartered, writes in the Guardian that, “The balance of economic and financial power is shifting from developed economies in the West to emerging economies, led by China and India, and including commodity producers such as Brazil and Russia, and countries in Asia and the Middle East with large savings.”

UK shadow chancellor George Osborne said in a speech at the UK think tank Demos yesterday that, “A third of developed countries now have a national investment fund instead of national debt. Yet sadly the idea of a British Sovereign Fund investing for the generation who come after us is a distant dream.”

In January this year Osborne hinted at the need for a UK sovereign fund.

The Independent reports that, “The Scottish government is in talks with two Middle Eastern sovereign wealth funds to provide the cash for a £4.8bn offshore energy grid, to be built off the east coast of the UK.”

The Times writes that, “Britain has squandered its natural resources wealth in the North Sea and is paying for its failure to plan for the future, according to Sam Laidlaw, the chief executive of Centrica, the owner of British Gas.”