Britain requires an extra one trillion pounds ($1.3 trillion) in investment over the next decade to stimulate economic growth, according to a report released on Friday.

New British Prime Minister Keir Starmer set a goal of achieving an annual growth rate of 2.5% during his campaign ahead of the July 4 election. This growth target, however, has not been consistently met since before the 2008 financial crisis.

To reach a higher growth rate of 3% annually, an additional 100 billion pounds in investment per year over the next decade is needed, particularly in sectors such as energy, housing, and venture capital, according to the UK financial services lobby group Capital Markets Industry Taskforce's report.

Nigel Wilson, the report's lead author and former CEO of Legal & General, told Reuters that this investment could be drawn from the six trillion pounds of long-term capital held by Britain’s pension and insurance sector. "We've underinvested in the UK for such a long time, there's a massive gap between the other G7 countries and ourselves," Wilson stated. He emphasized the need to reallocate this capital towards key growth areas.

The report highlighted that the British economy needs 50 billion pounds annually in energy investments to meet net-zero targets, 30 billion pounds for housing, and 20-30 billion for venture capital. It also suggested that the government consider investment incentives, such as reducing taxes on shares for retail investors, to encourage more capital flow.

A separate report from think tank New Financial noted that UK pensions allocate significantly less to domestic and unlisted equities compared to other developed markets. The report suggested that UK pensions could double their allocations and still align with global pension systems.

The UK government is currently reviewing the country's pension system to increase domestic investments, particularly in UK startups.