The UK could unlock up to £220bn in additional investment over the next decade if a package of reforms, including continued refinement to Solvency UK is fully implemented, according to modelling by Oxford Economics.

The analysis, published in L&G’s A Blueprint for Growth report, said the combined effect of the reforms could lift GDP by 0.7% by 2035.

The research argued that building on Solvency UK – the investment accelerator – already in train - will allow insurers to invest ahead of regulatory approval. A further opportunity to unlock investment could be delivered through continued refinement of Solvency UK, enabling insurers to invest more easily in long-term infrastructure. This adjustment relates to the regulatory treatment of whole projects to limit the need for insurers to securitise or pool assets into bonds or other debt instruments.

As well as Solvency UK, Oxford Economics assessed the combined impact of other policy measures: the Mansion House Accord, new Local Government Pension Scheme (LGPS) requirements, defined benefit (DB) surplus extraction reforms, updates to the national planning policy framework (NPPF) and a potential rise in auto-enrolment contributions to 12%

Under the modelling, the Mansion House Accord - under which 17 defined contribution (DC) providers have committed to invest 5% of default funds into UK private markets by 2030 - is expected to deliver £44bn in additional investment as workplace pension assets expand.

LGPS reforms could add a further £15bn, reflecting a shift in local investment strategies and expected growth in funds.

Meanwhile, surplus extraction changes, which could free up an estimated £12.7bn from DB schemes over a decade, are projected to contribute £1.2bn to business investment as employers reinvest part of their share.

Increased auto-enrolment contributions and widened eligibility could also channel a further £5bn into UK investment over ten years, despite initially weighing on take-home pay.

Overall, the report suggested the reforms could generate £8.8bn in extra government revenues and raise annual household disposable incomes by £330 in today’s prices.

L&G group chief executive, António Simões, described pension capital as “central” to driving long-term growth, stating that even a modest shift in investment allocations “can finance the homes, infrastructure and innovation the country needs”.

He added that the right policy environment “could unlock up to £220bn of additional investment over the next decade… strengthening public finances and increasing household incomes”.

Indeed, Oxford Economics also modelled a more conservative scenario in which only half of the anticipated investment materialises.

Even in this case, the package is projected to deliver £160bn in investment, raise GDP by 0.5% by 2035, increase household disposable incomes by £220, and generate £5.3bn in government revenues.

However, the report warned that outcomes depend heavily on the availability of UK investment opportunities and the extent to which capital flows are genuinely additional rather than displacing other funding.

Oxford Economics associate director, Alex Stewart, said the modelling “demonstrated the sizeable potential economic contribution” of reforms that support pension and insurance investment into the UK, though real-world outcomes would ultimately “depend on the supply of investment opportunities over the coming years”.

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