Adecade ago, the phrase “Sovereign Wealth Fund” made some European and American politicians shudder. No wonder. Back then — or before the 2008 financial crisis — these entities mostly hailed from Asia and the Middle East, and were lamentably opaque. So much so, that they were popularly perceived in the west as the financial equivalent of a James Bond villain: shadowy, powerful and potentially sinister.
How times change. When George Osborne, UK chancellor, unveiled his Autumn Statement on Wednesday he tossed the word “sovereign wealth fund” into his speech. This was not to criticise, but to copy: he plans to create Britain’s first sovereign wealth fund to channel money from the future development of shale gas in the north of England into infrastructure.
Right now, this looks more like a vote-grabbing gimmick than a concrete plan. Shale gas development has barely started in the UK. But the move is symbolic for three reasons.