Rachel Reeves is coming for Britain’s pension pots because riskier investments are now a key part of the plan to save Britain’s economy – and the Chancellor’s future.
After a bruising few weeks, Reeves used her speech at the City’s annual Mansion House jamboree to rip up red tape in a bid to attract international investors to the UK.
Her argument is that one reason this country has economically flatlined since the financial crisis more than 15 years ago is a stifling aversion to risk.
The way one Government source puts it, summarising the Chancellor’s view, is: “We need a bit more risk in the system, because without risk there is no reward.”
Reeves deployed vivid language – regulation is “a boot on the neck of businesses”, she claimed – even if many of the details of how she hopes to change Britain’s financial plumbing are rather more prosaic.
If the Chancellor’s gamble pays off, and economic growth starts perking up significantly, then everyone in the UK will benefit.
Richard Hughes, the head of the Office for Budget Responsibility (OBR), warned a few hours before the Mansion House speech that “higher and higher levels of taxes are not good for growth”.
A healthier economy would boost living standards, but also go some way to ending the grim cycle which sees new tax rises introduced at each Budget to plug holes in the public finances.
The big problem is that Reeves’s proposals to solve this doom loop risk making people’s pensions less secure.
She told Mansion House that “we have a duty to maximise the potential of people’s pension savings” – which clearly implies investing in assets which provide a higher return over time, but on the flip side tend to be more dangerous.
square NATIONAL INSURANCE Reeves's Treasury hits back at Bank of England chief in national insurance row
Read More
It is highly likely that a more cavalier approach will, over time, produce better results for most savers. But there may well be winners and losers, especially for those who need to withdraw their cash in a period when the market happens to be on a downswing.
Another idea, on hold for now but still on the statute book, would see pension funds forced by law to put more money into specific UK markets – risking the worst of both worlds, as savers see their pots invested into assets which are still relatively risky but less lucrative than their equivalents abroad (since if they were equally profitable there would be no need to make the investments mandatory).
Still, it is increasingly impossible to deny that there are deep structural problems in the UK economy, which is why the Chancellor needs to act. She is deploying a three-pronged approach: stability first, then major investment in productive infrastructure, coupled with a pro-growth regulatory regime that re-establishes Britain as a leading place to do business.
In an interview with the Yorkshire Post, she summed one aspect of the national malaise well: “A couple of generations ago, my mum and dad were primary school teachers. They owned their own home in their 20s. How many primary school teachers today can get on the housing ladder?”
Relaxing mortgage rules is clearly not enough – Reeves and Angela Rayner must push on with their efforts to get more houses built, lowering purchase prices over the long run.
Again, there are risks here. Offering mortgages to less well-off borrowers risks a wave of defaults in a market downturn; building more homes can upset those who find their local green fields concreted over.
But the Chancellor is to be applauded for acknowledging that every economic decision involves a difficult trade-off, and biting the bullet on some of those hard choices.
In truth, perhaps she has no choice – better growth is the only way to avoid never-ending questions about which taxes she will raise next, and even how long she will be in her job.
The gung-ho attitude expressed in the Mansion House speech is one of the last cards Reeves has left to play.
Hence then, the article about reeves really wants your pension but it might cost you was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( Reeves really wants your pension – but it might cost you )
Also on site :
- Nick Cannon Calls the Democratic Party the ‘Party of the KKK’ and Says ‘I F— With Trump’
- Investigation underway after 16-year-old shot and killed in north suburbs
- Jamie Dornan Reveals Passion for Collecting Rocks That Look Like Potatoes in ‘SNL U.K.’ Monologue: ‘This Isn’t a Joke. God Knows, I Wish It Was’