TOMD Content Deployment

“Harnessing the power of this multi-billion-pound industry is a win-win, benefiting future pensioners, and our wider economy” 

Last Thursday, Chancellor Rachel Reeves used her first Mansion House speech to outline her new plan for pension funds, intended to shake up UK pension saving and unlock £80bn of investment. 

Ahead of the speech, the Chancellor revealed that the government is backing a ‘megafund’ model to revolutionise UK pension saving. Based partly on similar schemes in Canada and Australia, this will involve merging the UK’s existing 86 Local Government Pension Schemes and Defined Contribution Schemes. The result, according to Ms Reeves, could be about £80bn of investment in new businesses and critical infrastructure, with larger funds better placed to invest in assets that have higher growth potential.  

The UK already has one of the largest pension systems in the world but the present system spreads assets between many different funds. The new plan seeks to make the most of another finding: that funds holding more than £50bn in assets can reap the greatest rewards, for example the ability to invest directly in large scale projects at lower cost.  

Commenting before her Mansion House speech, Ms Reeves said, “Last month’s Budget fixed the foundations to restore economic stability and put our public services on a firmer footing. Now we’re going for growth. That starts with the biggest set of reforms to the pensions market in decades to unlock tens of billions of pounds of investment in business and infrastructure, boost people’s savings in retirement and drive economic growth so we can make every part of Britain better off.” 

Pensions Minister Emma Reynolds added, “Harnessing the power of this multi-billion-pound industry is a win-win, benefiting future pensioners, and our wider economy.” 

UK growth disappoints 

Data released on Friday by the Office for National Statistics (ONS) showed that the UK economy stalled between July and September, growing by just 0.1% in the three-month period. The figures were weaker than analysts had expected and represented a sharp slowdown from the 0.5% growth recorded between April and June.  

Analysts pointed to uncertainty about the Budget, as a major reason for the weak growth. The release covers the first three months of the new Labour government, which has made boosting economic growth its number one priority. 

Commenting on the figures, Rachel Reeves said, “Improving economic growth is at the heart of everything I am seeking to achieve, which is why I am not satisfied with these numbers.” 

Climate finance tops COP29 agenda 

The annual UN Climate Change Conference (COP29) got underway last week in Baku, Azerbaijan, as leaders from across the globe came together to discuss progress on climate change. 

Key focuses at this year’s event include setting a new goal for financing emissions reductions, as well as individual countries submitting updated Nationally Determined Contributions ahead of COP30. Over the first week, major differences were already apparent between countries, especially with regards to the New Collective Quantified Goal (NCQG), which will set a financial target to support climate action in developing countries. 

Last Tuesday, UK Prime Minister Keir Starmer used his first public address at COP29 to announce a new climate target for the UK. Mr Starmer pledged to reduce the UK’s emissions by 81% by 2035 against 1990 levels. He stressed that doing so was possible through investment in clean technology and transport. 

New research shows the extent of the gender pay gap 

Women approaching retirement will receive annual incomes a third less than their male counterparts, according to a report by pension firm Scottish Widows released last week. On average, a woman will retire with an income of £12,000 a year after paying Income Tax and housing costs, compared with £17,000 on average for men. Although the gender pensions gap has fallen in recent years for those aged between 50 and 64, much remains to be done. If the gap continues to close at its current rate, it will take another 20 years for women and men to retire on the same annual income. 

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (20 November 2024) 

“This is a magnificent victory for the American people”

Last week, after intense months of campaigning, Donald Trump made a triumphant comeback to be voted 47^th President of the United States. The Republicans secured a decisive victory, winning crucial swing states, also regaining control of the US Senate.

Trump’s victory was surprisingly conclusive after opinion polls in the run-up to election day had shown the race for the White House was neck-and-neck. He comfortably secured more than the 270 Electoral College votes needed to win the presidency, with his victory in the swing state of Wisconsin pushing him over the threshold on Wednesday morning. The final result, with all states declared showed Trump had won 312 electoral votes to Harris’ 226.

During his victory speech at the Palm Beach County Convention Center, in the early hours of Wednesday morning Trump said, “I want to thank the American people… I will fight for you, for your family, and your future… I will not rest until we have delivered the strong, safe, and prosperous America that our children deserve, and that you deserve… This is a magnificent victory for the American people that will allow us to make America great again.”

Democrat candidate and current Vice President Kamala Harris delivered a concession speech, telling her downbeat supporters that she would ensure a peaceful transfer of power, promising to aid Trump’s transition before his inauguration on 20 January 2025. Harris added, “I know many people feel like we are entering a dark time… I hope that is not the case.”

Trump now has a couple of months to appoint his key personnel. Elon Musk, a prominent Trump donor, is likely to form part of his administration, so too is former presidential candidate Robert F. Kennedy Jr, in addition to close family members.

Global leaders extended their congratulations to Donald Trump on his victory. Keir Starmer spoke with the President-elect to offer his “hearty congratulations.” During the call they agreed the relationship between the UK and the US is “incredibly strong” and will “continue to thrive,” according to a Downing Street spokesperson.

With trade and tariff concerns front and centre, in a congratulatory message to Trump, Chinese leader Xi Jinping called for the US and China to manage their differences and get along in a new era. European Commission President Ursula von der Leyen stressed that the EU and the US “are bound by a true partnership between our people, uniting 800 million citizens. Let us work together on a transatlantic partnership that continues to deliver for our citizens.”

Major global stock markets were robust following the news, with a record rise for US shares on Wall Street, the FTSE 100 also saw gains. As investors processed the impact of a second Trump term, commentators started to analyse the potential implications. Key focuses for his administration will include trade and climate change policies, the war in Ukraine, the Middle East conflict, tax and immigration, on which Trump has pledged to launch a mass deportation campaign targeting immigrants residing in the country illegally.

Concerns are likely to heighten that his potential tariff proposals could ignite a fiercer trade war with China and US allies, while his plans to reduce corporate taxes and implement a variety of other tax cuts could balloon US debt, according to economists. Last Thursday, the Federal Reserve cut interest rates by 25 basis points, following a 50-basis-point cut in September.

UK Bank Rate reduction

In their latest meeting, the Monetary Policy Committee (MPC) voted by an 8 to 1 majority to cut Bank Rate by 0.25 percentage points to 4.75%, in a widely expected move. The one dissenting voice wished to retain the 5% rate. Andrew Bailey, Bank of England Governor, said rates were likely to “continue to fall gradually,” adding they could not be cut “too quickly or by too much.” The MPC expect CPI inflation, currently 1.7%, to increase by year end to around 2.5% and 2.7% by the end of 2025 before falling below its 2% target in mid-2027.

The next MPC meeting is scheduled for 19 December.

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

All details are correct at time of writing (13 November 2024)

“The only way to drive economic growth is to invest, invest, invest” 

Rachel Reeves delivered the first Labour Budget in 14 years on 30 October, during which she announced £40bn of tax rises. She outlined a series of new tax and spending measures, some of which had been widely trailed prior to Budget day, saying, “This government was given a mandate to restore stability to our economy and to begin a decade of national renewal, to fix the foundations and deliver change… that is our task.”   

She continued, “The only way to drive economic growth is to invest, invest, invest. There are no shortcuts, and to deliver that investment we must restore economic stability.” 

During her speech, the Chancellor referenced the previous government’s “unfunded measures” that she claimed has left a £22bn black hole in this year’s spending plans, before revealing the Office for Budget Responsibility’s (OBR’s) latest economic projections. The UK economy is expected to grow slightly faster than previously expected both this year and next, before easing off from 2026 onwards. The new forecast predicts the economy will grow by 1.1% this year and 2.0% in 2025, before tempering to 1.6% by the end of the Parliament. Inflation is predicted to average 2.5% this year and 2.6% next year. 

The Chancellor stressed that every Budget she delivers “will be focused on our mission to grow the economy” and outlined seven pillars which will form the government’s growth policy priorities. Key among these is restoring economic stability and increasing investment, while other areas include boosting regional growth, improving skills across the workforce, creating an industrial strategy, driving innovation and transitioning to Net Zero. 

Key announcements 

Some of the main pledges from the Budget included: 

Cost-of-living 

Personal taxation 

Business measures 

US Election 

With polls suggesting the race for the White House is neck and neck, voters took to the polls on 5 November to cast their votes; 83 million people voted ahead of election day. Final days of campaigning saw the two candidates traverse key states. Election night centred around seven critical battleground states of Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin. At the time of going to press on Wednesday morning, Donald Trump declared a “magnificent victory” in a speech to his jubilant supporters. We will reflect on the full results in next week’s News in Review. 

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (6 November 2024)