UK Chancellor of the Exchequer Rachel Reeves has launched the “London Coalition on Sustainable Sovereign Debt” to promote more sustainable debt financing for developing economies.
Co-chaired by Economic Secretary to the Treasury Emma Reynolds. The Coalition includes major UK financial firms like Aviva, HSBC and Schroders, alongside development institutions such as the European Bank for Reconstruction and Development (EBRD) and British International Investment.
Unveiled during a roundtable with EBRD President Odile Renaud-Basso, this initiative aims to create new solutions for sustainable sovereign debt financing in emerging economies. It aligns with Reeves’ frequent calls and underlying mission to “kick start the economy”.
“Business and government must work together to seize opportunities in emerging markets and kickstart economic growth as part of our Plan for Change,” Reeves said.
“Today’s roundtable shows how the UK’s world-leading financial centre can help countries unlock new opportunities for our brightest and best British companies to create wealth and drive growth.”
At the heart of the Coalition is the promotion of orderly and transparent debt restructuring and more resilient borrowing, which Reeves hopes will assist emerging economies with meeting climate and development targets.
In addition to supporting emerging markets, the Coalition seeks to create opportunities for British businesses, particularly in financial services, while strengthening trade ties with fast-growing economies.
While details surrounding which markets are yet to be confirmed, the MENA region boasts a lot of potential in the payments sector. Recently, countries in the Middle East have looked to increase the use of digital currencies – a market which holds a lot of potential itself.
These opportunities have been noted by British businesses, Revolut, for example, submitted licence applications to the Central Bank of the UAE last September and opened an office in the UAE at the Dubai International Financial Centre in 2022.
EBRD”s Renaud-Basso commented: “Mobilising private capital is key to meeting global development needs. I’m delighted to co-host UK business leaders with the Chancellor to discuss how multilateral banks like the EBRD can help channel further financing to emerging markets. By joining forces, we aim to deliver the much-needed impact for developing countries while creating new opportunities for businesses from developed economies.”
Additionally, the Chancellor and Renaud-Basso signed a Memorandum of Understanding to collaborate on the EBRD annual meeting and business forum, set to take place in London from 13-15 May.
This will be the bank’s first annual meeting in the capital since 2016, where governors will approve its next five-year strategy and showcase opportunities for UK businesses in key markets like Ukraine, Poland and Turkey.
A fresh investment strategy
Since becoming Chancellor, Reeves has faced significant scrutiny, inheriting a challenging economic landscape including a ‘£22bn black hole” of debt.
Before this meeting, Reeves travelled around globally to attract foreign investment. UK Prime Minister Keir Starmer has also played his part by taking a lenient stance on regulation in emerging sectors such as AI to help attract investment.
Despite these efforts, UK fintech investment fell 37% to £3bn in 2024 compared to 2023, according to figures published by Innovate Finance. However, this isn’t just a UK problem as investments dropped globally.
With this new strategy, the UK aims to shift from being primarily an investment destination to actively investing abroad. British International Investment and UK-backed programmes like MOBILIST and the Private Infrastructure Development Group have already mobilised billions in private investment for climate and development projects worldwide.
Reeves emphasised the UK’s growth priorities both domestically and internationally, highlighting financing tools such as the recently launched National Wealth Fund, which is expected to unlock over £70bn in private investment for high-growth industries of the future.
Baroness Shriti Vadera, Chair of Prudential PLC and Co-Chair of the World Bank Private Sector Investment Lab, concluded: “It is critical for governments, international financial institutions, and the private sector to work together to mobilise, at scale and pace, greater levels of finance for climate and development where it is most needed – in emerging and developing markets. I particularly welcome the focus today on practical steps to develop and deploy risk-sharing and blended financial instruments.”
