A group of prominent British executives, including representatives from HSBC Holdings, the London Stock Exchange, and other leading companies, have come together to urge UK Chancellor Jeremy Hunt to implement pension reforms. In a letter addressed to the Chancellor, the consortium emphasized the need for changes that could enhance economic growth and returns within the country.
The signatories, which include HSBC’s Noel Quinn and LSE’s Julia Hoggett, highlighted the UK’s significant potential for economic improvement. Despite the presence of strong companies and ample opportunities, there has been a persistent underinvestment in domestic businesses. Over the past 25 years, pension investment in UK equity markets has decreased from 53% to just 6% of total assets. This represents a withdrawal of approximately £1.9 trillion ($2.4 trillion), with a significant portion of these funds now being invested internationally.
To address this issue, the executives proposed setting a competitiveness goal for the Financial Reporting Council (FRC), which would require governance regimes to consider the attractiveness of the UK’s equity markets to investors. This move would align with changes made to the Financial Conduct Authority and Prudential Regulation Authority. The business leaders are hopeful that these reforms will be included in Chancellor Hunt’s autumn statement, scheduled for November 22.
Furthermore, the executives called for further consolidation in defined contribution pension plans. The aim is to ensure that all plan members benefit from diverse investment portfolios that include UK equities. At present, the Treasury has not publicly responded to these proposals.
The executives’ call to action highlights a critical issue facing the UK economy – the need to redirect substantial investments back into domestic businesses to support growth and prosperity. With the Chancellor’s statement on the horizon, there is anticipation in the business community about potential shifts in policy that could shape the future of UK investments.
The proposal put forth by these high-ranking executives underscores the importance of pension reforms to drive economic growth in the UK. By addressing the decline in investment in domestic businesses, the country has the opportunity to unlock its full potential and attract more investors. The suggested changes to the Financial Reporting Council and the call for consolidation in pension plans demonstrate a proactive approach towards improving the investment landscape in the UK.
However, it remains to be seen how the Treasury will respond to these proposals. The upcoming autumn statement by Chancellor Jeremy Hunt will be closely watched by businesses and investors alike, as it could potentially set the course for future policies and reforms. The outcome of these pension reforms will have far-reaching implications for the UK economy, and stakeholders are eagerly awaiting the government’s response.
As the UK navigates the economic challenges posed by Brexit and the ongoing pandemic, ensuring a robust and vibrant investment environment is crucial for long-term growth and stability. The executives’ call for action serves as a reminder of the significant role that pensions can play in driving economic prosperity. By redirecting investments back into domestic businesses, the UK has the potential to revitalize its economy and position itself as an attractive destination for investors.
With the Chancellor’s statement approaching, all eyes will be on the government’s response to these pension reform proposals. The outcome of these discussions will not only impact the business community and investors but also have implications for the wider population. As the UK strives to build back better in the post-pandemic era, it is imperative that the government takes into account the concerns raised by these high-ranking executives and works towards creating a favorable investment climate that supports growth and stability.
More detail via Investing.com here… ( Image via Investing.com )