OTTAWA — Prime Minister Mark Carney’s new sovereign wealth fund is likely to follow in the footsteps of a troubled British fund he had a hand in making, says a new report.
The report, released Thursday by think tank the Montreal Economic Institute (MEI), notes that Carney’s Canada Strong Fund echoes the United Kingdom’s National Wealth Fund , and argues that the resemblance should be a red flag for the Canadian prime minister and former Bank of England governor.
“Two years before selling this model to Canadians, Mark Carney recommended it to the British, who implemented it,” says Bryan Cheang, the study’s author.
Cheang, a research fellow at the London School of Economics, said that the model hasn’t worked in Britain so far and is unlikely to work in Canada.
Carney announced, in April, the creation of Canada’s first national sovereign wealth fund , with an initial endowment of $25 billion over three years . He said at the time that the fund would give private citizens an easy way to invest in major national projects.
While called a sovereign wealth fund, the Canada Strong Fund will use debt, rather than surplus revenues or resource wealth, to finance its activities.
Coincidentally, Carney was formerly part of a “Green Finance” taskforce that advised Britain’s Labour government on its National Wealth Fund, a public finance institution created in 2024.
The fund absorbed the former UK Infrastructure Bank, created in 2021, and was given £7.3 billion (C$13.7 billion) to invest in wealth generating projects. This includes investments in high-risk industries like green hydrogen, carbon capture and battery gigafactories.
Officials said at the time that the fund would attract three pounds of private money for every one pound from the public purse.
The study reports that the National Wealth Fund’s losses have nearly doubled since the 2024 rebranding, reaching £152.2 million (C$288 million) last year. It has delivered a cumulative return of minus 24.9 per cent in two years of operation. It has also fallen short of the three-to-one private-to-public funding ratio it promised Britons.
Notably, the fund led a massive bailout of rural broadband provider Gigaclear earlier this year, costing taxpayers nearly £100 million (C$188 million).
The fund, called the National Waste Fund in some corners of the British press, has been cited as a factor in the downfall of former chancellor of the exchequer Rachel Reeves. Reeves left the Labour government’s top economic post last month, following the installation of new U.K. Prime Minister Andy Burnham.
Cheang said the National Wealth Fund was set up to fail.
“This is a fund that’s used borrowed money to make investment decisions based on political priorities,” said Cheang. “This is different from how private investors spend money, which is guided by clear signals of profit and loss.”
Cheang noted that, like the British fund, the new Canada Strong Fund lacks the strict guardrails of successful sovereign wealth funds like Norway’s multi-trillion-dollar oil fund . He said that, absent these restrictions, Canada’s abundant resource revenue will be largely irrelevant to the fund’s performance.
“Resource revenues could mean there’s more money in the pot to support investments, but that could also increase the temptation to make bad investments if there aren’t the right safeguards in place,” said Cheang.
Carney said in April that the new fund would not be a “resource wealth grab” but indicated that some resource revenues would end up in its coffers.
“Where the federal government is catalyzing the (resource) project … it is fair, right, just for Canadians to have a share directly of those profits,” said Carney.
A poll released last month by MEI and opinion research firm Ipsos found that nearly six in 10 Canadians don’t think the federal government should borrow $25 billion to fund the new sovereign wealth fund.
National Post
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