Latest news with #UKassets
Daily Mail
09-07-2025
- Business
- Daily Mail
Bailey warns Reeves over pensions shake-up as Chancellor pushes funds to back British assets
Rachel Reeves should not force pension funds to back UK assets, the Governor of the Bank of England has said. Andrew Bailey yesterday warned it is not 'appropriate' for ministers to dictate where the industry invests savings. The Chancellor has confirmed she will create a 'backstop' power to force large pension funds to back British assets if they refuse to do so voluntarily. Reeves wants a larger proportion of savings invested in UK businesses and infrastructure to boost economic growth. But funds say they have a duty to invest in the best interests of savers and Bailey has now joined a chorus of industry leaders who have warned against such a move. Charlie Nunn, the chief executive of Lloyds Banking Group, this week compared it to 'capital control' policies in communist China. And Aviva chief executive Amanda Blanc has said it is like using 'a sledgehammer to crack a nut'. Bailey said: 'We've had a low level of pension fund investment in the economy and I think structural changes to the industry are helpful. 'However, I do not support mandating, I don't think that's appropriate.' He said reform was needed but stressed the changes should be 'natural'. It comes after 17 providers, including Aviva and Legal and General, agreed to invest 10 per cent of their funds in private assets – with 5 per cent in the UK – by 2030. The Government said the move would 'unlock billions for major infrastructure, clean energy and exciting start-ups'. Tax hikes crush confidence Business confidence has been crushed by 'sky-high tax' levels and trade war concerns, according to a report. The ICAEW accountancy body said its business confidence monitor has fallen to its lowest level since late 2022, after the Chancellor's £25billion national insurance hike and amid fears of further tax rises in the autumn. ICAEW chief executive Alan Vallance said: 'This is another stark reminder of the perilous situation facing businesses. Unless the Chancellor spares business from additional tax hikes in the Budget, economic prosperity will remain a pipe dream.'
Zawya
04-07-2025
- Business
- Zawya
Sterling heads for weekly loss as fiscal concerns loom
Sterling was poised for a weekly loss on Friday, marking a lacklustre end to a week that saw fiscal and political uncertainties rattle investor appetite for UK assets. The pound was flat and last fetched $1.36, while against the euro it inched 0.1% lower and was last at 86.26 pence. Gilt yields were broadly steady in late morning trading. However, on a weekly basis, cable was down 0.4% against the greenback, while it had fallen about 1% against the euro, marking its biggest one-week drop against the currency since U.S. tariffs on world economies took effect in early April. UK stocks, bonds and cable witnessed a selloff earlier in the week, after the government's welfare reforms were not well received by ruling Labour Party members and stirred speculation about the future of finance minister Rachel Reeves. Some analysts even drew parallels between this week's market reaction and the rout during former Prime Minister Liz Truss' premiership in 2022. With the Keir Starmer-led government completing one year in power, uncertainties prevail over the options it has to balance public accounts. "There is speculation that given the difficulties the government has faced in finding savings from welfare budgets, tax rises are likely in the Autumn Budget," said Susannah Streeter, head of money and markets at Hargreaves Lansdown. "Bets are rising that the Bank of England will cut interest rates more quickly with a reduction in August increasingly on the cards. So, that's kept a bit more downwards pressure on sterling." Traders expect the Bank of England to lower borrowing costs by 25 basis points next in September and are anticipating another interest rate cut by the same amount before the year ends, data compiled by LSEG showed. Further, top ratings agency S&P said the inability of Britain's government to make modest cuts to welfare spending this week underscores that it has very limited budgetary room to manoeuvre. Despite the week's developments, the pound is at a near four-year high against the dollar and is up about 9% so far this year, having benefited from broader dollar weakness and as a U.S.-UK trade deal offered some relief on the tariff front. (Reporting by Johann M Cherian, Editing by William Maclean)
Bloomberg
25-05-2025
- Business
- Bloomberg
Canada's CDPQ to Invest More Than $10 Billion in UK, FT Says
Canadian pension fund Caisse de Depot et Placement du Quebec is looking at investing more than £8 billion ($10.8 billion) in the UK over the coming five years, the Financial Times reported. CDPQ, Canada's second-largest pension fund managing C$473 billion ($344 billion), could raise its allocation to UK assets by 50% in that period, the FT reported Sunday, citing an interview with the fund's Chief Executive Officer Charles Emond.
Times
15-05-2025
- Business
- Times
Do not force British pension funds to buy UK assets, Aviva warns
British pension funds being forced by the government to buy UK assets would not be the 'right thing' and would be akin to using 'a sledgehammer to crack a nut', the boss of Aviva has warned. Dame Amanda Blanc said on Thursday that she did not believe such an order was 'the right thing' or 'a necessary strategy because we do think that pension providers are already willing to invest in the UK and are already, as we have proven, doing so'. She said the government would need to consider the 'unintended consequences' and that there was a 'chain of people who need to change behaviour', not just pension funds. These included employee benefit consultants, employees and workers. • Pension funds could be forced to
Telegraph
13-05-2025
- Business
- Telegraph
Rachel Reeves's pension gamble is pointless. Even her own advisers say so
Rachel Reeves is determined to get more of our pension savings into UK private assets with the aim of boosting the UK's lacklustre investment. Part of her plan is to merge pension funds to increase their economies of scale and give them more firepower. This 'bulking-up' applies both to the £400bn defined benefit scheme for local government staff in England and Wales and to defined contribution (DC) workplace pensions for private sector employees. But the Chancellor also wants to extend the current voluntary code for DC pensions – The Mansion House Accord – and get the biggest pension companies to commit to put 10pc of pension savings in unlisted assets by 2030, with half in the UK, amounting to a possible £50bn. It's easy to see what the Chancellor gets out of this. Less government borrowing, and, of course, it's also more business for the small UK-focused City firms – which have lobbied hard. But what about pension savers? Can they expect higher returns from investing in the UK or is it just a patriotic glow, like buying War Bonds? Unfortunately for the Chancellor, the detailed analysis from the Government Actuary's Department published to support her Mansion House Speech last year is not a ringing endorsement. It concludes that the likely risk-adjusted returns for DC savers if they switch from holding international equities – especially US – to UK equities and private assets, are virtually the same. Any differences over 30 years of regular savings are just lost in the rounding. Since likely returns are identical, DC savers should make their investment decisions on second-order grounds of maximising international diversification and minimising cost. UK equities represent just 4pc of the MSCI World Index, with the US – dominated by big tech companies – making up a huge 70pc. But the UK equity allocation for DC pensions is 8pc, already double the 'neutral' weighting. There are good reasons for UK investors to 'overweight' the UK – lower management charges and costs, no need to hedge currencies back into sterling, and many UK companies operate overseas, providing plenty of international diversification. What about costs for UK private assets? Fees are much higher than on public, passive equity trackers. Adding insult to injury, performance fees, paid on top of annual fees, are excluded from the 0.75pc pension auto-enrolment fee cap. Private asset valuations are also opaque, and they are much harder to sell, when you need to, than public assets with a clear quoted price. The Chancellor could always tip the scales, and make UK equities more attractive by reinstating the dividend tax credit abolished for defined benefit pension schemes in 1997 by an earlier Labour chancellor, Gordon Brown. The reason Australian savers hold Australian equities – which the Chancellor praises as a model for the UK – is the dividend tax credit. Of course, a UK dividend tax credit would be expensive, and surely it is better to give tax breaks directly to companies investing in their businesses? It is also not clear from the public and private briefings of the past few months if the Government has dropped the idea of forcing pension savers to hold more in UK assets – which was originally floated in a big way by Emma Reynolds, the previous Labour pensions minister. How would compulsion work in practice? Just passing a law to make it so is never easy, and takes up a lot of parliamentary time and energy – as well as using Labour's political capital. And how could this new law fit with the wide-ranging fiduciary duties of pension trustees to act in the best interests of their members? If the Government really is confident that UK private assets will benefit pension savers by generating higher long-term returns than international public assets, then it should be prepared to offer savers a minimum return on any UK private assets they are compelled to hold. Let's be absolutely clear. Pensions assets belong to the individual savers, not to the Government. And compulsion is a bad idea, both philosophically and also because it could undermine confidence in pension saving – fragile at the best of times. Over the years various overseas governments have tried to dictate how pensions should invest, none have worked out well. Reeves should rule out this idea.
