The UK is set to be the start-up powerhouse of the CPTPP

This article is co-authored with Julia Longbottom, the British Ambassador to Japan, and Nicholas Lyons, the Lord Mayor of London.

There is a place where unicorns thrive, where a focus on global growth has built a booming trillion dollar tech sector. Over 160 unicorns have been created in the UK – the third most after only the US and China – which we like to say makes us the ‘Unicorn Kingdom’.

London’s tech firms raised double the amount of investment of any European city in 2022.?This carries across the entire nation, with the UK being the number one country in Europe for tech investment. Thanks to new reforms, it is set to become an even more attractive destination for founders and investors alike.

Japanese innovators are taking note. Earlier this year, leading Japanese businesses committed almost ￡18 billion of investment into the UK. This includes Toshiba, which will expand operations at their Cambridge Laboratory to design quantum-safe cryptographic communication solutions.

Pioneering start-ups Datagusto and Qufooit also recently launched a UK presence, and joined a delegation of over 600 entrepreneurs and investors from across Asia Pacific who visited London Tech Week, Europe’s largest tech festival. Meanwhile TDK Ventures announced a new $150m investment fund with London as its first European office.?

This pattern is set to continue thanks to our deepening trade and investment partnerships across the region. The UK’s recent accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) (with strong support from the Japanese government) represents our commitment to the Indo-Pacific.

It also builds on a deepening bilateral partnership with Japan, which includes the 2020 UK–Japan Comprehensive Economic Partnership Agreement, our joint work in the G7 to support free trade and economic security, and the 2023 UK-Japan Hiroshima Accord with its new agreements on defence, trade and investment, collaboration on science and technology, and tackling global issues like climate change.

Earlier this year, the Japan Times wrote of “post-Brexit policy drift” in the UK, but these agreements demonstrate the opposite: our continued long-term strategic commitment to this region. For the UK, joining the CPTPP deepens our presence in a part of the world set to contain the majority of middle class consumers and power the majority of future economic growth. Other countries are now queuing to join us as the first new member of a trade pact worth over 15% of global GDP.

CPTPP also represents a boon for mutual investment. If considered together, the UK’s fellow 11 members of the CPTPP would rank as the fourth-highest recipient of Foreign Direct Investment (FDI) from the UK, valued at over ￡117.3bn in 2021. Meanwhile, investment from CPTPP nations into the UK was ￡182 billion in 2021. Both figures are surely set to grow in the years ahead.

We are not resting on our laurels, however, and continue to make reforms. The UK is the most attractive destination for FDI in Europe and was the third-most popular location for global inward FDI in 2022. But there is more to do to make the UK an ever more attractive home for tech companies and investors alike.

The newly signed Mansion House reforms are intended to turbocharge start-ups at the Series B level and beyond, with ￡75bn of additional investment available for UK-based firms over the next decade. This is thanks to nine Chief Executives from some of the UK’s largest defined contribution (DC) pension schemes committing to allocate at least five per cent of assets to unlisted equities by 2030 and changes to come to Local Government Pension Schemes (LGPS).

The signatories – Aviva, Scottish Widows, L&G, Aegon, Phoenix, Nest, Smart Pensions, M&G and Mercer – represent around two-thirds of the DC pension market. They will invest in tech, life sciences and biotech companies to support the development of high growth firms.

Similarly, Japan has a huge stock of very conservatively invested pension funds, which could be mobilised to support their own productive industries and deliver better returns for pension savers. The City of London and the Government of Tokyo discussed this during a recent visit this summer.

There is huge opportunity in Japan also for UK asset managers to set up offices in Japan to accelerate this process, removing barriers to entry and stimulating competition in Japanese asset management.

The UK has the largest stock market in Europe and one of the deepest in the world.? We will build on this strong position - listening to investor feedback - so that even more of the most exciting companies in the world grow and list in the UK. Post-Brexit, we are creating a more agile and user-friendly listing regime to attract and retain public companies. We are also working with the Financial Conduct Authority to help small and high growth companies get the right valuations and attract more investment – including by producing a dynamic and robust regulatory approach that meets the needs of companies seeking to list here.

This complements our fundamental strengths including the rule of law, world class universities, the English language, a fortuitous time zone, and the fact that London is one of the world’s most diverse and liveable cities.

We may be a kingdom where unicorns roam free, but there is no fantasy in our continued effort to ensure that the whole of the UK is the best place in the world to start, grow, and invest in tech businesses. Come and join us to see for yourself.