A recent report reveals that the UK requires an additional £1 trillion ($1.3 trillion) in investments over the next decade to stimulate economic growth and achieve a target annual growth rate of 3%.

This call for investment comes as the UK economy has lagged behind other countries for several years, necessitating significant financial input to catch up.

New Prime Minister Keir Starmer aims for a 2.5% annual growth rate, a level not consistently achieved since before the 2008 financial crisis.

Key investment allocations include £20 billion to £30 billion for housing, £50 billion for energy, and £8 billion for water projects.

The report recommends introducing government incentives, such as reducing taxes on shares for retail investors, to encourage more investment.

Potential tax incentives for retail investors aim to attract both private and institutional capital to meet these ambitious growth targets.

The report highlights that while the U.S. has emerged as a global tech superpower, the U.K. has experienced stagnation with no growth in real wages or GDP per capita for 13 years.

London's financial center status has been challenged as companies, including chip designer Arm Holdings, have opted for U.S. listings, prompting government efforts to revitalize the U.K.'s capital markets.

The CMIT has been advocating for regulatory changes to improve investment conditions in the UK, which is currently lagging behind the U.S. in capital market development.

The report, authored by Sir Nigel Wilson of the Capital Markets Industry Taskforce (CMIT), suggests reallocating some of the £6 trillion held in the UK's pensions and insurance sector to meet these investment needs.

Wilson emphasized the UK's longstanding underinvestment compared to other G7 countries, highlighting a significant investment gap that needs to be addressed.

To meet growth targets, the report specifies that the UK needs annual investments of £50 billion in energy, £30 billion in housing, and £20-30 billion in venture capital.