̽��ֱ�� of Cambridge - investment

Too Hot to Think Straight, Too Cold to Panic

plc32 — Mon, 10 Mar 2025 15:19:22 +0000

Too Hot to Think Straight, Too Cold to Panic, a new report from Cambridge Judge Business School, BCG and the ̽��ֱ�� of Cambridge’s climaTraces Lab argues that failing to invest comes with significant economic consequences.

Allowing global warming to reach 3°C by 2100 could reduce cumulative economic output by 15% to 34%. Alternatively, investing 1% to 2% in mitigation and adaptation would limit warming to 2°C, reducing economic damages to 2% to 4%. This net cost of inaction is equivalent to 11% to 27% of cumulative GDP—equivalent to three times global health care spending, or eight times the amount needed to lift the world above the global poverty line by 2100.

“Research on climate change impacts across all regions and sectors is expanding rapidly,” said Kamiar Mohaddes, an Associate Professor in Economics and Policy at Cambridge Judge Business School and Director of the climaTRACES Lab.

Read: ̽��ֱ��compelling economic case

Researchers from the ̽��ֱ�� of Cambridge and Boston Consulting Group (BCG) offer a strong case for investing in climate mitigation and adaptation to avoid damage to the global economy.

Research on climate change impacts across all regions and sectors is expanding rapidly

Kamiar Mohaddes

Front page of report

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Changing how we talk — and think — about manufacturing

sc604 — Tue, 17 Jan 2023 15:50:09 +0000

Professor Tim Minshall, Head of Cambridge's Institute for Manufacturing, says it's time for a change in how we talk about manufacturing in the UK - and that means we must change how we think about it as well.

Cambridge joins launch of Responsible Investment Network - Universities

plc32 — Thu, 12 Dec 2019 11:12:21 +0000

̽��ֱ��three higher education institutions have formed the Responsible Investment Network – Universities (RINU), which launches with an article in Times Higher Education.

“Joining the Responsible Investment Network - Universities is the next step forward in the ̽��ֱ�� of Cambridge’s commitment to the global energy transition, and we look forward to working with RINU members on supporting the decarbonisation of the modern economy,” ̽��ֱ�� of Cambridge Vice-Chancellor Professor Stephen J Toope said.

UK investor activist charity ShareAction will run the network with support from the UK’s largest social impact investor, Big Society Capital, and SOS-UK, the National Union of Students’ sustainability charity. ̽��ֱ��universities are united in their ambitions to create positive change through their investment practices. They will share ideas on topics such as stewardship of their investments, engaging with their asset managers, educating students and staff, and social impact investment.

̽��ֱ��founding members of the network have seized an opportunity to use their endowments to further their missions and take action on global threats such as climate change and ecosystem breakdown as well as local issues including inequality and homelessness. This is often encouraged by students and other stakeholders who want universities to take a proactive approach to the management of their investments.

̽��ֱ��network offers access to research and advocacy opportunities relevant to universities’ core portfolios – but also support in exploring the social investment market.

“We’re excited to be supporting the launch of this network. ̽��ֱ�� endowments have the potential to create positive impact on society and the environment by making impact investments. These can also help universities to better align their financial assets with their values. We believe impact investments that don’t require profit maximisation or sacrifice financial returns present the greatest opportunities for universities. We’ve already invested alongside a number of UK universities and look forward to working with others, whether they’re expanding or just beginning to navigate the social impact investing market,” Katie Fulford-Smith, Engagement Manager at Big Society Capital said.

̽��ֱ��network will also work with universities to improve how they educate and consult with their students on how and where their endowment is invested. To achieve this, the project is working with SOS-UK.

“Responsible investment is the sustainability issue that students know least about at their universities. We are really hopeful that this new network will start to change that, supporting universities to put their investments to use for the public good, and shedding light on how universities manage their money,” Zamzam Ibrahim, President, Students’ Organising for Sustainability (SOS-UK), said.

ShareAction is building on the success of the Charities Responsible Investment Network, a group of 19 charities working together to align their investments with their charitable goals.

“I am delighted by the range of universities in the founding group, and their enthusiasm to share ideas and act boldly. ̽��ֱ��national conversation about responsible investment within higher education has focused mainly on whether to divest from fossil fuels or not. It’s an important debate, and over half of UK universities have divested, but it’s not the only strategy at their disposal. RINU is all about working with both investment staff and university stakeholders, who understand the urgency of social and environmental threats, and who are looking together for a range of solutions,” Lily Tomson, ShareAction’s Head of Networks said.

Cambridge joins forces with the ̽��ֱ�� of Edinburgh and St Anne’s College, Oxford to found a network with the vision of building a better world by aligning their investments with their missions, and using their endowments to benefit society and the environment.

We look forward to working with RINU members on supporting the decarbonisation of the modern economy

Vice-Chancellor Stephen J Toope

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Opinion: Forget Super Thursday, the Bank of England can only offer Mildly Useful Thursday

Anonymous — Wed, 03 Aug 2016 11:18:06 +0000

̽��ֱ��Bank of England is expected to announce on Thursday measures to stimulate the UK economy following signs that there will be a significant economic downturn following the vote for Brexit. ̽��ֱ��Bank may cut interest rates, inject another dose of quantitative easing or conjure up something new to give the economy a monetary boost.

Although some have dubbed this “Super Thursday”, it cannot hope to be anything of the sort. ̽��ֱ��Bank only has tools to help ameliorate the immediate damaging impact of the Brexit vote. It can do little to address the underlying structural problems of the UK economy; structural problems that are likely to deepen unless the government makes a U-turn and uses fiscal policy as a means to stimulate long-term economic growth.

̽��ֱ��impact of the Brexit vote will be revealed over many years. ̽��ֱ��immediate evidence is patchy but the initial signs are that the economy is slowing down. ̽��ֱ��Purchasing Managers’ Index, which is a lead indicator of GDP, shows that the UK economy suffered a significant deterioration following the Brexit vote.

Sterling totters. J D Mack/Flickr, CC BY-ND

Sterling has weakened and this was expected to stimulate manufacturing exports. But the immediate evidence suggests that even manufacturing activity is slowing down. ̽��ֱ��Bank is also expected to revise downwards its growth forecast for the UK economy – not simply because of its macroeconomic model but also, as the Financial Times has reported, because some of its economists have been talking to businesses and finding out the story from the horse’s mouth.

Stimulating

̽��ֱ��Bank, assuming the mantle of the “muscular” interventionist, is expected to introduce further monetary stimulus to help business confidence and encourage spending. This should help to reduce the depth of the emerging downturn and it will assuage markets that at least there has been some response to deal with the impact of the Brexit vote.

But there is little evidence that monetary stimulus alone will address the long-term weaknesses of the UK economy. There are two major limitations of excessive reliance on monetary policy to manage the economy.

First, it does little to expand the capacity of the economy by stimulating new investment. Second, it increases the inequality of wealth: the big gainers are those who own assets which are propped up by the monetary stimulus such as housing, bonds and shares. Very low interest rates have increased demand, but this demand has served to increase the prices of existing assets – such as the cost of housing. It has had little impact on the creation of new assets, such as house building and corporate investment and expansion.

̽��ֱ��Big Problem

One of the major long-term problems facing the UK economy is stagnant productivity, the prime determinant of future prosperity and income growth. There are a number of drivers of productivity including investment in capacity, investment in education and the creation of new ideas. Monetary stimulus can do little to stimulate these.

Low interest rates may stimulate private sector investment in normal times, but such investment is discouraged by economic and financial uncertainty. An active fiscal policy is required to address the productivity problem, including state investment in infrastructure, housing and education.

And the productivity problem is likely to get worse in the long-term as the UK wrestles with its post-Brexit legacy. First, the UK will find it more difficult to trade with both Europe and the rest of the world. This will lead to a widening of the UK’s trade deficit or a permanently lower exchange rate – or possibly a combination of both. Second, the level of foreign direct investment into the UK economy is likely to fall as foreign firms remain in, or move into countries within the EU single market.

Third, there will be serious disruptions to the UK’s innovation system. Universities are one of the strong aspects of the UK system, but their ability to attract funding and world-class researchers will be hindered when (or if) the UK leaves the single market. Furthermore, much business research and development in the UK is carried out by overseas firms, which may fall if such firms move or expand abroad.

A New Industrial Policy?

̽��ֱ��Brexit vote has led to a new government and a new opportunity to recast economic policy. ̽��ֱ��new Prime Minister has indicated her support for industrial policy and she has established a new Department for Business, Energy and Industrial Strategy. But we have been here before and the rhetoric and rebranding has often not been followed by action.

̽��ֱ��decisions of the Bank of England that will be announced on Thursday may be mildly useful, but they can’t hope to be much more than that. They can do little to alter the long-term direction of the economy. ̽��ֱ��key issue is whether the new government acknowledges the important role for the state in driving long-term growth and re-orientates fiscal policy towards increasing public investment in infrastructure, education and innovation.

Michael Kitson, ̽��ֱ�� Senior Lecturer in International Macroeconomics at Cambridge Judge Business School, ̽��ֱ�� of Cambridge

This article was originally published on ̽��ֱ��Conversation. Read the original article.

̽��ֱ��opinions expressed in this article are those of the individual author(s) and do not represent the views of the ̽��ֱ�� of Cambridge.

Michael Kitson (Cambridge Judge Business School) discusses how the Bank of England may try to give the economy a boost.

Captain Roger Fenton

̽��ֱ��Bank of England & ̽��ֱ��Duke of Wellington.

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Opinion: As ARM enjoys a Japanese embrace, the lessons it can teach UK tech firms

Anonymous — Tue, 19 Jul 2016 15:24:16 +0000

When the 12 founding engineers of chip designer ARM Holdings met in a 14th century barn near Cambridge in 1991 to welcome their new CEO, (now Sir) Robin Saxby, he asked them a brutal question: “Should we strike out for something, or just be in the hand-to-mouth chip design consulting business?”

With Saxby’s enthusiasm and the founding engineers’ belief in their technology, the team decided they would aim to become a global standard. They set a target to embed ARM designs into 100m chips by the year 2000. It was an ambitious goal for a tiny company with only £1.32m of investment from its then-struggling backers Acorn, Apple, and VSLI. At the time, many said it was no more than a pipe dream.

But this week, ARM agreed a US$32 billion sale to Japan’s Softbank. ARM’s chip designs are embedded in more than 95% of the world’s mobile phones, as well as tablets, servers, and many other types of smart devices. Last year, ARM’s designs went into some 15 billion semi-conductor chips. An incredible feat from an inauspicious start. So what lessons does ARM’s success have for other budding British technology companies?

̽��ֱ��first is: don’t try to do everything yourself. Instead, specialise in the activities where you have a distinctive advantage. In ARM’s case, that was designing capable, reliable chips that used little power and could be manufactured efficiently in volume at low cost.

Workhorses

Then, catalyse the development of a network of partners around you who will fill in the gaps and make you successful as they strive to grow their own businesses. ARM broke the mould at the time, abandoning the conventional wisdom that to succeed in semiconductors you had to be a vertically integrated company which made huge investments in wafer fabrication such as Intel, or remain as a small band of design consultants.

Instead, it decided to become a “chip-less, fab-less chip company”. It would specialise in designs for Reduced Instruction Set Computing (RISC) chips – the workhorses that control all the background activities users aren’t even aware of. But instead of being a small, specialist provider of designs for RISC processors, ARM was able to turn itself into the pivot of a huge ecosystem, becoming the “glue” that bound a network of hundreds of partners together as well as a magnet for knowledge fragmented between different players.

These include phone and tablet makers, chip fabricators, tool developers, software providers, and makers of complementary chips. Lesson one, therefore, is focus on your core and harness the power of ecosystem partners to do the rest.

Focus. niXerKG/Flickr, CC BY-NC

Growing the market

That leads on to the second lesson: concentrate what you can do to make the overall ecosystem “pie” bigger, rather than worrying about maximising your share of that pie. Given the difficulties of scaling up a technology company from a UK base, ARM shows the benefits of letting your ecosystem partners drive global scale for you, propelling your product into billions of devices and accumulating a small royalty from each to create a massive flow of cash.

̽��ֱ��third lesson is to think global from day one. ARM grew with hardly a single customer in the UK. It realised that the volume, and the lead customers driving the direction of its industry, were scattered around the world. So, from the outset, it’s early customers and partners were in the US, Japan and Korea including Texas Instruments, Sony and Samsung. Later, a few were added in Europe, such as ST Microelectronics and Nokia. ARM had to be global almost from birth. Now clients include leading Chinese players such as Huawei and ZTE.

̽��ֱ��SoftBank takeover is certainly not evidence that life will be rosy if and when the UK leaves the European Union. In fact, the deal probably has more to do with the decline in sterling relative to the yen and the dollar, which has made ARM shares cheaper for foreign buyers. Add the fact that ARM has hardly any customers in the UK and few in Europe; most of its sales are in Asia and the US. As a result, it’s pretty well insulated from a downturn in the UK economy.

̽��ֱ��genuine threat from Brexit would come from any future restrictions on migration; ARM has a very multi-national army of engineers and faces an extreme shortage of suitably trained developers in Britain. Any problems here, and SoftBank’s soothing words about maintaining and growing ARM’s presence in the UK might fade into history.

But ARM is also attractive to the Japanese firm because it has the potential to become a major player in the “Internet of Things” – the emerging world where smart machines, sensors, and devices talk to each other. It is another lesson for UK tech firms to keep moving into new spaces.

ARM is particularly well placed to benefit from this emerging network, not only because of the strength of its technology and development capacity, but also because its ecosystem approach is a perfect fit for a market that requires a multitude of specialist companies, institutions and governments to work together. Even at a 40% premium over ARM’s share price before the deal was announced, Softbank’s acquisition looks like a smart move.

Peter Williamson, Honorary Professor of International Management at Cambridge Judge Business School, ̽��ֱ�� of Cambridge

This article was originally published on ̽��ֱ��Conversation. Read the original article.

̽��ֱ��opinions expressed in this article are those of the individual author(s) and do not represent the views of the ̽��ֱ�� of Cambridge.

Peter Williamson (Cambridge Judge Business School) discusses the sale of Cambridge-based technology firm ARM Holdings to Japan's Softbank for £24 billion.

Shinichiro Hamazaki

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Debt level analysis could help investors make sharper choices about real estate

tdk25 — Wed, 15 Jun 2016 04:00:48 +0000

Investors who buy stocks of Real Estate Investment Trusts in search of a “defensive security” should be careful to check those firms’ levels of debt before they commit, a new study suggests.

Real Estate Investment Trusts, or REITs, are publically listed companies that generate income by owning and operating large property portfolios. By purchasing stocks in these companies, investors can share in that income and any capital appreciation, without having to buy the capital-intensive properties themselves.

These stocks are often considered to be low-risk, because they typically generate high dividends for investors and used to be only moderately affected during periods of economic turmoil. As a result, they are often also attractive to the managers of pension and endowment funds looking for high, reliable long-term returns, and are often referred to as “defensive” stocks.

In the new study, however, two researchers from the Universities of Cambridge and Sydney point out that the performance of individual REIT stocks is not always as consistent as this suggests. Instead, they argue that investors should look carefully at certain characteristics within the specific firms.

In particular, they warn that investors should examine these firms’ overall leverage, or the amount of debt that they use to finance their assets. ̽��ֱ��more indebted the firm is, they suggest, the less robust these so-called defensive stocks are likely to prove, in particular during periods of economic downturn.

̽��ֱ��study was co-authored by Dr Eva Steiner, a Fellow and Director of Studies in Land Economy at St John’s College at the ̽��ֱ�� of Cambridge, UK, and Dr Jamie Alcock, from the ̽��ֱ�� of Sydney Business School.

“Investors sometimes think that because stock is generally classified as defensive, not much is going to happen to it in a downturn, but that may not be the case,” Dr Steiner said. “ ̽��ֱ��sensitivity of any stock to variation in the broader market environment will fluctuate over time and investors need to know more about the drivers of this sensitivity so that they can make sensible choices. We found that this depends, among other factors, on the overall financial position of the firm.”

̽��ֱ��idea that firm characteristics can be used to predict the overall sensitivity of its stock to market downturns has not been extensively investigated empirically until now. Most research has looked at the impact of broader, macro-economic trends, such as real and monetary conditions, on returns from real estate stocks, and this data suggests that they are, on average, quite resilient.

̽��ֱ��new study, however, shows that the state of a specific REIT can offer investors a more nuanced and accurate picture. Steiner and Alcock looked at a large sample of historical data about the returns and overall characteristics of numerous REIT firms in the United States, covering a 20-year period from 1993 to 2013. On average, they examined data for 55 firms during each quarter over the course of the two decades.

Unlike any previous study, they found that leverage was one of the sharpest means of predicting the likely stability of stocks in these companies – especially during downturns. ̽��ֱ��more debt a firm had, the more its stock proved sensitive to periods of recession – without any additional gains on the upside. ̽��ֱ��impact of this relationship seemed to be particularly pronounced during periods of extreme difficulty, such as the 2007/8 sub-prime mortgage crisis.

Other company characteristics also proved important predictors of stock sensitivity. For example, more defensive, lower-risk stocks were consistently associated with small, high-growth firms that were less intensively traded.

Similarly, the researchers found that companies which demonstrated strong growth opportunities were less sensitive to such change. This pattern, they suggest, may recur because such opportunities were often circumstantial, one-off prospects specific to those companies alone, meaning that they would not be affected by broader market fluctuations – making an investment in them more secure.

Although the findings could help investors to construct more robust portfolios capable of weathering an economic storm, the researchers point out that they could also offer guidelines for managers within REITs themselves.

“There are implications for investors at two levels – the ones who buy the stock, who need to know that they are making sensible choices, but also the REIT managers, for whom this has implications regarding the risk management of their firms,” Steiner said. “These results could help guide decisions about the investment risk of their firm, for example by choosing the appropriate level of leverage.”

̽��ֱ��research was funded by the Real Estate Research Institute. ̽��ֱ��paper, Fundamental Drivers of Dependence in REIT Returns, is published in ̽��ֱ��Journal of Real Estate Finance and Economics.

Retail and institutional investors alike often buy stocks in Real Estate Investment Trusts, because they are known as defensive stocks, able to withstand periods of economic downturn, but a new study explains why some of these companies could prove a much safer bet than others.

Investors sometimes think that because stock is generally classified as defensive, not much is going to happen to it in a downturn, but that may not be the case

Eva Steiner

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Houses on British money

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Climate change sentiment could hit global investment portfolios in the short term

sc604 — Thu, 12 Nov 2015 14:50:34 +0000

̽��ֱ��report, “Unhedgeable Risk: How climate change sentiment impacts investment,” concluded that about half of this potential loss could be avoided through portfolio reallocation, while the other half is “unhedgeable”, meaning that investors cannot necessarily protect themselves from losses unless action on climate change is taken at a system level.

“This new research indicates that no investor is immune from the risks posed by climate change, even in the short run,” said Jake Reynolds, Director, Sustainable Economy at the Cambridge Institute for Sustainability Leadership. “However, it is surprisingly difficult to distinguish between risks that can be addressed by an individual investor through smart hedging strategies, and ones that are systemic and require much deeper transformations in the economy to deal with. That’s what this report attempts to do.”

While existing studies have analysed the direct, physical effects of climate change on long-term economic performance, this new report, commissioned by CISL and the Investment Leaders Group, looks at the short-term risks stemming from how investors react to climate-related information, from policy decisions and technology uptake, to market confidence and weather events.

Reynolds continued, “What’s new about this study is its focus on the potential short-term impacts which could surface at any time. Major events, such as the outcome of the upcoming United Nations climate talks in Paris in December, can send signals which drive market sentiment – sometimes slowly, sometimes rapidly – and this study allows us to model the implications.”

̽��ֱ��study modelled the impact of three sentiment scenarios on four typical investment portfolios.

̽��ֱ��scenarios tested were:

1. Two Degrees, limiting average temperature increase to two degrees Celsius (as recommended by the Intergovernmental Panel on Climate Change [IPCC]) and collectively making relatively good progress towards sustainability, and future socio-economic development goals.

2. Baseline, where past trends continue (i.e. the business-as-usual BAU scenario) and where there is no significant change in the willingness of governments to step up actions on climate change.

3. No Mitigation, oriented towards economic growth without any special consideration of environmental challenges, rather the hope that pursuing self-interest will allow adaptive responses to any climate change impacts as they arise.

̽��ֱ��portfolio structures modelled were:

1. High Fixed Income, comprising 84 per cent fixed income, 12 per cent equity, four per cent cash; mimicking the strategies of insurance companies.

2. Conservative, comprising 60 per cent sovereign and corporate bonds, 40 per cent equity; mimicking certain pension funds.

3. Balanced, comprising 50 per cent equity, 47 per cent fixed income, three per cent commodities; mimicking certain pension funds.

4. Aggressive, comprising 60 per cent equity, 35 per cent fixed income, five per cent commodities; mimicking certain pension funds.

Each scenario was linked to a series of economic and market confidence factors used to explore macroeconomic effects within a global economic model. In turn these were cascaded down to portfolio level through an industry sector analysis. ̽��ֱ��factors included alternative levels of carbon taxation, fossil energy investment, green investment, energy and food prices, energy demand, market confidence, and housing prices.

̽��ֱ��study found that shifts in climate change sentiment could cause global economic growth to reduce over a 5-10 year period in both the Two Degree and No Mitigation scenarios as a consequence of economic adjustment. In the longer-term, however, the study found that economic growth picks up most quickly along a Two Degrees (low carbon) pathway, with annual growth rates of 3.5 per cent not only exceeding the baseline (2.9 per cent), but significantly exceeding the No Mitigation scenario (2.0 per cent).

This is consistent with recent comments by the Governor of the Bank of England about the risk of “potentially huge” losses to financial markets due to climate change in the short term, and the “merit” of stress testing elements of the financial system to understand and deal with climate risks.

Urban Angehrn, Chief Investment Officer of Zurich Insurance Group and member of the Investment Leaders Group, echoed this view: “As an insurer we understand that the potential human impact and economic cost of extreme weather and climate events are vast. Multiplied by population growth, coastal migration and urbanisation, the threat seems even larger. We see it as our responsibility to help our customers and communities to build resilience against such events. As investors, the tools to help us translate that threat into investment decisions are - at present - limited. This report provides us with a meaningful basis to discuss investment strategies that tackle climate risk. It will help us go beyond the significant commitments that Zurich has already made.”

Under the Two Degrees scenario, the Aggressive portfolio suffers the largest loss in the short term, but it recovers relatively quickly and generates returns above and beyond the baseline projection levels by the end of the modelling period. In contrast, under a No Mitigation scenario, a

Conservative portfolio with a 40 per cent weighting to equities (typical of a pension fund) could suffer permanent losses of more than 25 per cent within five years after the shock is experienced.

“Far from being a lost cause, investors can ‘climate proof’ their investments to a significant extent by understanding how climate change sentiment could filter through to returns,” said Scott Kelly, research associate at the Centre for Risk Studies, ̽��ֱ�� of Cambridge Judge Business School, and one of the authors of the report. “However, almost half the risk is “unhedgeable” in the sense that it cannot be addressed by individual investors. System-wide action is necessary to deal with this in the long-term interests of savers.”

̽��ֱ��report offers a series of insights for investors, regulators and policy makers including:

Seeing climate change as a short-term financial risk as well as a long-term economic threat.
Recognising the value of “stress testing” investment portfolios for a wide range of sustainability risks (not only climate risks) to understand their financial impacts, and how to manage them.
Pinpointing areas of “unhedgeable” risk where system-wide action is required to address risks that cannot be escaped by individual investors.
̽��ֱ��importance of using capital flows to improve the resilience and carbon profile of the asset base, especially in emerging markets.
Identifying significant gaps in knowledge where new research is required, including of an interdisciplinary nature.

Originally published on the CISL website.

A new report by the ̽��ֱ�� of Cambridge Institute for Sustainability Leadership (CISL) reveals that global investment portfolios could lose up to 45 per cent as a consequence of short-term shifts in climate change sentiment.

No investor is immune from the risks posed by climate change, even in the short run

Jake Reynolds

Olatz eta Leire

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Opinion: Six deals to look out for as Indian PM Modi visits Britain

Anonymous — Wed, 11 Nov 2015 15:50:37 +0000

Narendra Modi, the prime minister of India, is in the UK from November 12 for a three-day visit. There is pressure on both India and the UK to sign a package of business deals to mark the occasion. ̽��ֱ��pair have a long, shared history, but trade between the two countries ranks low. There are many areas, however, where India’s needs complement the UK’s strengths and we can expect deals to be struck. Here are six areas to watch out for:

1. Defence

There are reports that a large contract will be signed for the sale by BAE Systems to India of up to 20 Hawk trainer aircraft. This deal is likely to involve the actual manufacturing of the aircraft in India, which would fit in nicely with the Modi government’s flagship Make in India programme, designed to provide a much-needed boost to India’s manufacturing sector.

2. Energy

̽��ֱ��UK and India signed an agreement on nuclear energy cooperation in July 2010 but it has been held up by an array of impediments in both countries. Expect announcements amid a concerted effort to reduce bureaucratic hurdles on both sides.

3. Finance and investment

India has a huge need for new ways to bring investment into the country, especially to feed its capital-hungry infrastructure sector. Here, the City of London is expected to be of aid by helping market offshore Indian-rupee bonds, which would in turn help finance railway expansion and housing in India.

Vodafone, one of the UK’s largest companies, has a significant presence in India. While Vodafone may announce further investments during Modi’s visit, it is likely that it will join hands with other UK companies in raising concerns with the Indian PM about various tax disputes they have been embroiled in with successive Indian governments.

4. Skills

Skills is huge area of need in India. Every month for the next decade the country will add one million young people to its workforce. If these young people can be suitably trained and employed they will fuel dramatic growth that could see India become the world’s third largest economy by 2030. ̽��ֱ��UK has significant capabilities in the areas of training plumbers, electricians, carpenters, retail store personnel, and those who work in hospitality and tourism. Importantly, the UK also has many world-leading providers of English language training and assessment.

5. High technology

An important area where India and the UK share significant complimentary strengths is technology – in particular in life sciences, software and, increasingly, hardware. India has vibrant pharmaceutical companies, many of which are making a concerted effort to move into drug discovery and development. ̽��ֱ��UK on the other hand is home to giants such as GSK and AstraZeneca that have an interest in India as a market, a location to conduct clinical trials, and a place to outsource the processing of clinical trials data. Both countries also have a lively biotech sector where further collaboration can be explored.

6. Frugal innovation

India has developed a global reputation for frugal innovation – the ability to develop highly affordable solutions in a whole range of areas from healthcare to energy, automotive to education, computing and software. ̽��ֱ��UK, for its part, especially in the triangle of London, Cambridge and Oxford, is increasingly a global hub for lean start-ups in fintech (finance-related technology), edutech (education-related technology) and medical diagnostics. Modi’s visit might well highlight the potential for collaboration between these clusters of frugal entrepreneurship in the UK and India’s own expertise in these areas. Indeed, some of India’s frugal innovation, in healthcare for instance, could even help bail out an NHS that is increasingly financially constrained.

̽��ֱ��visit of the leader of India, with its huge and rapidly-growing economy, to the UK is bound to bring exciting announcements. Anything of the scale of the billion pound nuclear agreement the UK did with China recently, though, is unlikely. Instead, a number of smaller deals seems a stronger possibility. Indeed, Philip Hammond, the UK’s foreign secretary, has said: “As the Indian economy has a very large and important private sector, many of the deals will be commercial and private sector deals rather than government to government.”

Jaideep Prabhu, Director, Centre for India & Global Business, ̽��ֱ�� of Cambridge

This article was originally published on ̽��ֱ��Conversation. Read the original article.

̽��ֱ��opinions expressed in this article are those of the individual author(s) and do not represent the views of the ̽��ֱ�� of Cambridge.

Jaideep Prabhu (Cambridge Judge Business School) discusses the business deals we can expect to be struck as a result of Narendra Modi's visit to the UK.

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