Carney’s sovereign wealth fund idea already failed in Britain

As Bank of England governor, Carney was involved in the creation of the United Kingdom's sovereign wealth fund, which lost $450 million in its first two years.

Wikimedia Commons

Author: Quinn Patrick

Many Canadians are probably unaware, but this isn’t the first time Prime Minister Mark Carney has taken a crack at creating a sovereign wealth fund; he already tried it while serving as the Bank of England governor two years ago.

The UK government launched the National Wealth Fund in 2024, which was also presented as a sovereign wealth fund and based on a report compiled by the Green Finance Institute, of which Carney was a drafter.

The fund promised to raise three dollars of private investment for every dollar invested using taxpayers’ money. However, after two years in action, the fund’s performance is far from inspiring.

“Two years before selling this model to Canadians, Mark Carney recommended it to the British, who implemented it,” said Bryan Cheang, research fellow at the London School of Economics and senior fellow at the Montreal Economic Institute. “Given the losses it has incurred since then, Canadians are right to think twice before supporting such a model.”

Last month, the MEI conducted a poll to gauge support for Carney’s sovereign wealth fund, which found 58 per cent of Canadians opposed borrowing the $25 billion to finance it, compared to only 20 per cent who were in favour.

As a new MEI report points out, the British government presented its NWF AS a sovereign wealth fund was but it was really just a simple reorganization of the U.K. Infrastructure Bank.

That state-owned lending institution was launched in 2021 before later being rebranded. However, unlike Norway’s sovereign wealth fund, the NWF employs equity, debt and loan guarantees: all of which are traditional tools of a bank.

Last October, the U.K.’s House of Commons Finance Committee concluded that the NWF “is not a conventional sovereign wealth fund,” and that its very name risks “misleading the public.”

Additionally, the NWF recorded losses in three of its four years in operation.

In the 2023-2024 fiscal year (the first year of its rebranding), the institution reported a loss of $162 million, and in 2024-2025, its losses reached $288 million.

Those figures represent rates of return of –10.7 per cent and –14.2 per cent, respectively.

The MEI says that Carney’s new sovereign wealth fund for Canada “bears a strong resemblance to the National Wealth Fund.”

“It is based on borrowing money, it is designed to finance private projects in specific sectors favoured by the state, and it involves no commitment to adhere to the globally accepted governance principles established for sovereign wealth funds,” wrote the economic think tank in a study published on Thursday.

“Though Mr. Carney likes to present his project as a sovereign wealth fund, the details currently available make it look much more like an industrial policy fund,” said Cheang. “Canadians deserve to know about the underwhelming results of the British model before Ottawa commits $25 billion of borrowed funds to it.”

The institute also noted that there was little surprise about the U.K.’s sovereign wealth fund results considering the history of industrial policy, particularly the notion that the government should guide economic growth via subsidizing specific industries, companies or technologies.

The report cited examples of past failings, such as the Concorde and the National Enterprise Board in the U.K., as well as those of the electric vehicle sector in Ontario and Quebec.

“Industrial policy not only costs taxpayers a great deal, but it also harms small business owners by diverting significant resources to a handful of favoured sectors. From the Concorde to Northvolt, the logic behind the subsidies remains the same, and the results have been no more successful,” said Cheang.

“Doing the same thing on a larger scale with a fund like the one proposed by Prime Minister Carney is likely simply to lead to even greater losses.”