U.K. Pension funds mainly invest in the U.K., but in bonds

The Chancellor wants U.K. Pension funds to invest more in U.K. companies and infrastructure. Pension funds would need to be persuaded such investments would make them better returns at acceptable levels of risk.

She needs to study just how U.K. pension funds came to be dominated by bond investment, and to review the LDI pension fund bond collapse of autumn 2022. Regulators and the advisory industry directed Trustees of funds to more U.K. bonds based on the doctrine that U.K. government bonds were assets that matched their liabilities. They also regarded them as low risk, as no one thinks a future U.K. government will fail to pay the interest or fail to repay the capital on the maturity date.

You can argue that far from being a matched asset a conventional long government bond means a fund  does not match the inflation in liabilities all the time the member of the fund is still working. The pension liability for such a member  will be rising in line with their wages. On retirement the pensioner would like pension increases to keep in line with prices. Often  Trustees can only afford  lower or no increases. Conventional gilts can only  match a defined need for cash that does not increase with inflation.

You can go onto argue that an investment in a spread of properties or shares can match liabilities better. Over the longer term these assets will provide increasing rent or dividends that should keep pace with inflation. This will be reflected in  rising asset values. You could however experience sharp falls in bear markets and need to keep sufficient cash or safer assets to pay a couple of years bills without needing to sell depressed real assets.

In 2022 many pension funds owned more bond than they could afford to pay for to give them  greater future cash flows to match estimated liabilities. When The Bank changed policy from cutting interest rates and buying bonds to the opposite the bond market fell sharply. As prices of bonds fell so pension funds had to put up more cash to the geared bond funds they had bought into to protect the funds from the growing losses, as the bonds were bought on margin. The pension funds often had to sell bonds they owned outright to pay the extra  bills on the bond funds which needed money to pay their debts.A fund might buy  six times the amount  of Bond  it could afford, only paying say 10% of the full price. When the price fell it had to pay more.

The Regulators should ask themselves how this all happened. It should have reminded them that far from being safe you can lose very large sums if you own long dated bonds when interest rates go up and bond prices fall.

74 Comments

  1. Charles Breese
    November 19, 2024

    I have read that Next could not understand how LDIs could predictably deliver a satisfactory solution for its pension fund, and wrote to the Bank of England in 2017 expressing the view that LDIs were an accident waiting to happen – another example of BoE failing in its role!

    1. Ian Wraggg
      November 19, 2024

      The LDI fiasco was manufactured by Sunak and his pals at the BoE and OBR to unseat Truss.
      Thieves wants to gain access to the vast amount of money invested in pension funds.
      If I was a fund trustee I wouldn’t go anywhere near this financially incompetent shower and their hare brained schemes.
      Yesterday electricity demand peaked just shy of 42gw. Gas and nuclear were supplying 58% and we were Importing 17%.
      How can the government think prices will drop when the spot price was ÂŁ127 per mwh
      Incidentally it was circa ÂŁ27 in the USA.

    2. Lifelogic
      November 19, 2024

      Indeed. This we lost Trust and Sunak and was able to blame his gross incompetence as a tax borrow and waste Chancellor on her and replace her. Later to chuck the towel in six months early, wrongly assue us Covid Vaccines were safe and gift us the even more appalling Starmer with a huge majority. BoE gross incompetence too – as we have come to expect from Carney PPE and Bailey (history).

    3. Peter Wood
      November 19, 2024

      The LDI scandal was a classic over-leveraged condition. Anyone with a long enough memory would have warned this is how banks went bust in the past; lending long (buying long dated gilts) borrowing short (funding the ‘lending’ from short term borrowing) is inherently risky, UNLESS they bought hedges. Clearly they didn’t.
      However, the questions: Was the BoE monitoring this risk? Why did the BoE not manage the gilt market better, it’s their job? Did the BoE make the market conditions worse? Where was the communication between Treasury and BoE on the Truss budget?

      1. Mark
        November 20, 2024

        The BoE didn;t care: they had a Treasury indemnity for all their losses.

    4. jerry
      November 19, 2024

      @Charles Breese; Perhaps, but then it is also another example of a Tory govt unwilling to take difficult decisions when it comes to wider banking & City regulation, which includes regulation on how the BoE is allowed to operate. If the many critics of the BoE and its (notional) independence since 1997 are correct the 2010-on Tory lead govt should have rowed back on such Blair era regulations, surely very remiss of them not to have done so?

      Blame the puppet masters, not the puppets!…

    5. Ian B
      November 19, 2024

      @Charles Breese – LDIs were intended to be a limited option for a limited set of circumstances. The FCA warned a good few years back that their use should be curtailed. The Head of the FCA at the time was Andrew Bailey, he forgot or refused his own advice. Seemingly when it all was coming to a head he chose to blame Liz Truss for his own failings with pre-emptive moves without her being aware of them and before she made any announcements – the saga continues

    6. IanT
      November 19, 2024

      There were a number of FS Pension Trustees that refused to touch LDIs and it was also flagged 18 months prior to the ‘crash’ by an industry expert. Where was The Pensions Regulator?

      When I retired, conventional thinking was that a “safe” (retirement) portfolio was a balanced Bond/Equity one. I therefore initially had nearly half my funds in ETF bonds such as European Corporates. This worked well at first with good returns and steady valuations but then I noticed that both dividends and valuations were declining, so I started moving the balance towards equity. This was during the ultra low interest (free money) period. I was completely out of Bonds by Covid which turned out to be very fortunate. However, I suspect many pensioners will (unwittingly) now have smaller ‘pots’ because the Pensions Industry carried on recommending this “safer” 50/50 Bond-Equity approach all through this period..
      Things may have changed again now with higher interest rates but inflation is still a real danger. Bottom line, the Financial/Pensions Industry is not always as ‘expert’ as it likes to pretend and it makes very good sense to be wary of their advice ..

  2. David Peddy
    November 19, 2024

    With every day that passes we learn how clueless this Chancellor is and how useless this so called ‘government’ is proving

    1. Lifelogic
      November 19, 2024

      Indeed 180 degrees out and hugely anti growth on every issue. Tax levels, the bloated size of government, its China policy, private schools VAT, over regulation, net zero, energy policy, Chagos, farming


    2. jerry
      November 19, 2024

      @David Peddy; Indeed, overwhelmed, under qualified, by all accounts… 🙁

    3. Lifelogic
      November 19, 2024

      Indeed even more clueless than Hunt, Sunak, Javid, Hammond, Osborne.

      1. Lifelogic
        November 19, 2024

        Though she is quite bright and with decent A levels in decent subjects even further maths which rather few women take (rather better than than the dope Starmer and he was at a very good school). But she seems to lack any understanding of what is need for economic growth, but she is perhaps just doing as she has been told to.

        1. Lifelogic
          November 19, 2024

          Denis Healey got a double first (Greats) yet he was daft enough to join the Communist Party in 1937 during the Great Purge leaving in 1940 after the Fall of France and so lacking on common sense to think 98% income tax was a great plan! Why stop at 98%?

          1. jerry
            November 19, 2024

            @LL; Wow, some cheap shots there…
            One needs to understand the economics and politics of the time, unfortunately back in the 1930s the political extremes appeared to provide the answers to the causes of the Great Depression (just as the same political idealistic extremes in the 2010s also appeared to be an answer to the so-called Great Recession); how many otherwise intelligent men and women in the mid to late 1930 joined the opposite extreme to the CPGB, then dumping their loyalties as if hot potatoes fresh from the fire, those who didn’t became subject to Defence Regulation 18B by mid 1940!..

            Anyway, Denis Healey’s biggest political about-face was in late 1976, such was his U-Turn some talk about there being a Denis Healey Mark l and a Denis Healey Mark ll, as he transitioned the country from Keynesian to Monetarist policies (at the behest of the IMF).

    4. Nigl
      November 19, 2024

      You have missed off the bit that you would do that guarantees a better outcome.

    5. Iain Hunter
      November 19, 2024

      I don’t think she is clueless. She knows what she is doing. This is the woman who has hung a picture of a female founder of the British Communist Party on her office wall. Her actions are ideologically Marxist and the destruction of family farms (and heritable private pensions) is her aim. British family farmers are the new Kulaks.

      1. Lynn Atkinson
        November 19, 2024

        +1

    6. Ed M
      November 19, 2024

      Serious question: does she have any senior commercial banking experience or is her experience just admin?
      It’s one thing being left-wing but if you have no senior commercial banking experience then that makes it doubly worrying.

  3. Mark B
    November 19, 2024

    Good morning.

    The Pension Funds have vast amounts of wealth that this government would like to tap into. I would not trust this ‘Chancer’ when she wants something. She is not doing it out of pure alturism.

    1. Lifelogic
      November 19, 2024

      Tap into = to Rob – just like farmers, workers, small businesses, energy users, motorists, landlords


    2. Dave Andrews
      November 19, 2024

      From John’s article it would seem the government is already tapping into pension funds, by way of the bonds they buy. If government pushes the pension funds to invest directly into projects, who will buy the bonds instead? it’s not like the government is intending to reduce borrowing.
      Chancer of the Exchequer – sounds about right.

    3. Donna
      November 19, 2024

      Correct. I have been voluntarily paying a monthly amount to my private pension, which I am not yet claiming. I cancelled it following the Budget. I will be finding “better” uses for it.

    4. Mickey Taking
      November 19, 2024

      Mark you did make me laugh this morning. The level of sarcasm, and indeed truth, was rather pointed.
      Anyone who could assert altruism to members of this Government want their judgement assessed.

    5. Lifelogic
      November 19, 2024

      “Tap into” = steal and thieve!

    6. Berkshire Alan
      November 20, 2024

      Mark B
      Agreed she just wants Pension Fund Money so she can speculate it on her ideals, which may not be the ideals of many pension holders..
      I am satisfied that my Pension provider is trying to get the best returns for me, at the minimum risk, and if that means investing abroad to get it, then that is what they do.
      With so many Government restrictions on this long term investment it is important that it performs well, otherwise I invest in something else where you have more flexibility.

  4. agricola
    November 19, 2024

    I see bonds as essentially a scam, run by government to provide money to support their spending beyond their tax income. PFIs and printing money are but two further scams. When these scams fail the citizens pick up the tab with even higher taxation.

    The answer, which no politician likes is to stop spending on things the country cannot afford. Secondly to realise that tax income arises from successful private activity only. Such activity should be encouraged massively, rather than the reverse. Governments since and including Blair have encouraged the reverse, indulging in spending beyond the capacity of the private sector to sustain. They have even stacked the overheads of their profligacy by deliberately increasing the population by millions. The present rule makers, I shy from allowing them the accolade of government, only emphasise their incompetence on a daily basis whenever they open their mouths or take yet another flight to fantasy land.

    Salvation lies with Reform curently represented by four gentlemen who have succeeded in the real business world, and one salt of the earth who has experienced the politics of failure first hand. They will succeed as Labour fail. To those that hope Kemi has the answers, I would say she may have, but her parliamentary party do not. Any support in the country is quickly realising that the only path is Reform. How long we have to wait is dependant on the proximity of the IMF.

  5. Linda Brown
    November 19, 2024

    I would also say that pension funds taken into the control of governments should be watched very carefully. When George Osborne took a Post Office pension fund into his domain there were over ÂŁ20billion assets in buildings etc. This money should have been put into the pot for the people who had paid into the fund but they were not. It is reported he said the money was to be used towards the national debt. Well we all know where that has ended up don’t we? I looked at a payslip I had in 2009 recently and was shocked to say the least to see that I was picking up less now on that pension than then. Shows you politicians have to be watched very carefully when you think they are throwing you a lifeline.

  6. Wanderer
    November 19, 2024

    I’m no economic genius, nor do I ever claim to be one. So I wouldn’t presume to advise pension funds on what to do with their members’ money.

    It seems the Chancellor has no such qualms.

    How much pressure can she put on them to do something that isn’t apparently in their members’ interests?
    What can the members do about it?

  7. Clough
    November 19, 2024

    The problem is that the government and the globalist banking cabal are trying to encourage investment in ESG projects. With prospects darkening for US investment in renewables after Trump’s election, however, and increasing doubts about energy security if fossil fuels are abandoned, ESG investments aren’t such a good idea. The bottom line for pension funds is they must make a viable return on their capital, to honour their pension payment commitments to an ageing population. They don’t want to be risk-takers, all so as to ‘save the planet’. I hope for all of our sakes they continue to ignore Reeves and the eco-fanatics alongside her on the government front bench.

  8. Peter Gardner
    November 19, 2024

    I emigrated from UK to Australia mainly for personal reasons but secondary reasons included superior healthcare, better taxation and better pension provision. My accumulated UK pension funds were transferred tax free into Australian funds.
    A feature of Australian superannuation fund (=pension fund) management that addresses the risk question raised by Sir John is that the investor stipulates his risk profile and this determines the mix of investments the fund manages on the investor’s behalf. I used to manage a bunch of equities myself but the fund manager does it so much better and without my having to spend hours working on it so I transferred the lot into the super fund. It has been very successful.
    Can’t investors in UK pension funds decide for themselves the level of risk they are prepared to accept?

    1. Know-Dice
      November 19, 2024

      If you have a SIPP then you can. And you can invest yourself or choose a managed risk profile.

  9. David Andrews
    November 19, 2024

    Of one thing we can sure. The Chancellor and the Labour government will not have a clue about what you are saying. Yet she has the arrogance to contemplate directing pension funds to “invest” in Labour’s hare brained, sure fire loser net zero investments. Once upon a time the UK stock market offered a reasonable range of choices (including UK companies) for investment savings. Not any more. If you want choice, diversity and growth potential you look abroad, outside the UK. High energy costs, net zero nonsense, excessive regulation and now the increased Employer NIC charges is already causing business closures, flight abroad for those that can or battening down the hatches for those that can’t.

  10. MPC
    November 19, 2024

    Pre EU referendum I attended a seminar by National Grid run by two blatantly pro Remain NG managers who were working in the Brussels office. They suggested that the fact that the EU had just ‘allowed’ the UK to ‘invest’ £170m on carbon capture and storage showed how beneficial EU membership was. I suggested that this technology was highly unlikely to prove viable and would they invest their own pension funds into it. They changed the subject.

    These are the sort of ‘investments’ that the chancellor really wants to see for UK pension funds.

  11. Sir Joe Soap
    November 19, 2024

    Quite a straightforward question to answer today.
    The root cause is DB pensions which usually require assets to match liabilities increase with wages.
    Wages increasing at or above inflation require ownership of high risk or geared assets.
    Tax on corporations and dividends means that a pure equity portfolio is unlikely to match liabilities. Nor indeed is a pure fixed interest portfolio.
    So the fix is relatively easy.
    Relinquish contracts tying DB pensions to wages. Instead fix them at a date, only to gain or lose against a risk defined portfolio thereafter. By all means choose to put your pension in to geared assets, but only on the basis that you might lose it all.

  12. Roy Grainger
    November 19, 2024

    Reeves isn’t bothered about all that, she just sees a giant pot of money that she can use to fund infrastructure projects. Given that the UK has long led the world in failed and massively over budget/schedule infrastructure projects (Channel Tunnel, HS2, lower Thames crossing etc. etc.) it would be a brave investment manager indeed who put any significant amount of money into the sector. The model she is using is Canada where recently some big public sector pension funds created on the same model had to write down their “investment” in Thames Water to zero. Obviously when these pension funds fail the taxpayer will still be obliged to bail them out so that the public sector pensions are protected. For that reason consolidating 80 such funds into a handful of “mega funds” simply gears up the risk for the taxpayer. Etc ed

  13. Paul Freedman
    November 19, 2024

    Pension funds trying to minimise risk by matching future liabilities with future income is often an inefficient way to invest. First, as Sir John mentions, you are hostage to inflation for the bond allocation in particular and when the BoE consequently raises policy rate to help offset the inflation bond prices get killed and it would take several years of more bond investing just to get back to where you started. Several years of lost returns from the bond allocation.
    Second is opportunity cost. The Pension fund would have earned so much more if it had been allocated more towards equities all along. That additional equity income could be segregated (earning overnight interest rate) to help fund the liabilities.
    The Chancellor trying to encourage more equity allocation is maybe the only good thing I have heard from this government since it took office but I am concerned what she might consider a good equity investment.

  14. Narrow Shoulders
    November 19, 2024

    Pensions should not be shorting positions or taking geared positions. The first responsibility of the pension is surely to make payments as they fall due, funds are necessarily risk based in order to provide growth but they should not be positioned so as to need to find cash to shore up a position overnight.

    As you write Sir John they should keep cash to ride out market downturns, a market downturn doesn’t have a margin call on it.

  15. Ian B
    November 19, 2024

    Having a Chancellor that was an economist at the Bank of England, I’m sure she is aware that any investment is created to cause a return. Money as she knows is the ‘seed-corn’ of everyone’s future. That’s why as an ‘economist’ she will know the economy is in reality the amount of this ‘seed-corn’ that is circulating every corner of the Country to produce a tomorrow. She will also know as an ‘economist’ the Government , the State, isn’t able to deliver a tangible reinvestment return for investors, she can only create a framework for others to cause this to happen, that means they are causing the production of purchasable services and items at a profit to fund a tomorrow.

  16. Donna
    November 19, 2024

    “The Regulators should ask themselves how this all happened.”

    The same way the 2007/8 banking crash happened. Because they are just tick-box bureaucrats who don’t understand how the real world works …. and they were asleep at the wheel.

    1. Lifelogic
      November 19, 2024

      Or bent, corrupt and on the make perhaps?

  17. Nigl
    November 19, 2024

    Firstly I do not understand why/how infrastructure projects will provide a better return than the gilts that currently fund them and why would HMG pay more? Is this a return to the provenly bad PFI days?

    Secondly and it started with Hunt, ignorant of finance politicians and their civil servants seem to think that there are umpteen ‘unicorns’ around the corner, they are ‘easy’ to create.

    Certainly a FTSE 100 tracker over say a decade will/has outperformed bonds but as you rightly say the bear market/crash is the problem, irrespective of additional bond back up liquidity, how do you value a persons pension if they need it at the ‘wrong’ moment.

    Business angel investments do not throw off cash income at early stages, often years and only three out of ten work, the rest will limp or fail.

    So where are these investments going that will allow trustees to discharge their duty of care to their members in terms of risk?

    They will surely need clear boiler plated guarantees from HMG.

    The pension industry is rightly expressing its concerns/pushing back. Reeves and before her, Hunt is relying on spinning this to an ignorant of tte subject, gullible public.

    If Hunt firstly had done his job properly HMG wouldn’t be scrabbling about at the back of a sofa desperate for anything it can find.

  18. glen cullen
    November 19, 2024

    No one’s going to invest in ‘solar-energy’ today ….only producing 0.1% of UK demand output as at 08:00am

    1. glen cullen
      November 19, 2024

      Update – as at 16:00hrs solar producing 0.0%

    2. Mark B
      November 20, 2024

      glen

      They will invest if the government guarentees them a return via subsidies.

  19. majorfrustration
    November 19, 2024

    This is all quite obvious to a trained economist

  20. Keith from Leeds
    November 19, 2024

    It all reveals a shocking lack of intelligence and understanding in this and previous Chancellors, PMs and the Governor of the Bank of England.
    The UK succeeds despite its leaders, not because of them.

  21. Ukretired123
    November 19, 2024

    Why should Pension funds take any notice of what lightweight Reeves thinks after Labour’s disastrous consequences of Gordon Brown’s wrecking ball 20 years ago.
    Given that Reeves is clobbering British business SME s and workers unlike her favouring those in the Public Sector and unions, they have zero incentives and would be well advised to take the total opposite of anything she proposed.
    This sounds like she has belated realised what a disaster she is for the economy after talking herself up whilst talking Britain down!

  22. Bryan Harris
    November 19, 2024

    So, it appears that pensions are next in line to be attacked/devalued/made less of.

    Since labour came in the stock exchange has slumped, and with no end in sight to the economy crushing actions made by this immature government, pension funds will be hard pressed to see any growth at all, whether holding bonds or share.
    Pension funds at one time were all truly profitable and getting a good return for their customers, but not any more.

    Why does it seem that labour are intent on in devaluing the UK in every possible way?

    There may be more than a few civil servants that hold golden pensions, but the average person will see his final pension pot shrunk considerably by the time that Starmer and co are done with the decline of the UK.
    That will mean more in financial poverty. How is it not possible to see the UK and residents becoming prosperous again? That’s because we cannot trust Starmer to do anything else but rob us blind with taxes, reduce our potential, while stifling our future with ever more oppressive regulations.

  23. Bryan Harris
    November 19, 2024

    Starmer has wasted no time in moving us closer to the EU.

    A petition, no doubt staged, calls for the UK to “apply to join the EU as full members as soon as possible” – Starmer is expected to allow a parliamentary debate as this has reached 36,000 votes.
    This goes against the rules which require 100,000 votes before a petition goes before parliament.

    We cannot allow Starmer to destroy our Brexit freedom, but that is his intention, and he will pull any trick to get us back under the whip of the EU.

  24. Ukretired123
    November 19, 2024

    O/T Farmers @ Westminster today .
    Labour want farmer’s land to build houses, Solar and Wind farms and have strong lobbies supporting them financially to meet the Climate change zealots like Miliband (who would look totally out of place on a mucky farm like the rest of the Labour Party in their donated designer suits). They wouldn’t last 1 day working on a farm yet they preach on their high, squeaky clean moral horse looking down on farmers and small business workers, leaving a trail of mess instead, for someone to clear up.

  25. Denis Cooper
    November 19, 2024

    I googled “LDI crisis” to refresh my memory and the top reference was this:

    https://insightplus.bakermckenzie.com/bm/pensions_10/united-kingdom-the-pensions-ldi-crisis-what-happened-next

    It doesn’t mention that since January 2009 the secondary gilts market has been rigged by the Bank of England at the behest of the UK government, with the Bank’s Asset Purchase Facility:

    https://www.bankofengland.co.uk/asset-purchase-facility/2024/2024-q3

    currently owning gilts valued at ÂŁ659 billion, which may be about 28% of all the gilts in issue:

    https://www.statista.com/statistics/1118604/market-value-of-government-bonds-in-the-united-kingdom/

    I say “may be” because I’m not sure about the ways they have been valued, but that is not important.

    I notice under “History and Background” of the Asset Purchase Facility:

    “21 September 2022 MPC votes to begin sales of the stock of gilts held in the APF. Gilt sales subsequently began on 1 November 2022 with an unwind pace of ÂŁ80 billion by September 2023.”

    Immediately followed by:

    “28 September 2022 The Bank announced it would undertake purchases of UK government bonds under its financial stability mandate. Purchases concluded as planned on 14 October. Sales of this portfolio began on 29 November 2022 and were concluded on 12 January 2023.”

    I also notice that:

    “6 June 2023 the Bank announced that it had completed its sales of sterling non-financial investment-grade corporate bonds … April 2024 APF corporate bond portfolio reached full maturity. From this point onwards, the stock of corporate bonds held in the APF was zero.”

    recalling that the Bank buying up corporate bonds and other commercial assets with existing money lent by the Treasury was where the UK’s “quantitative easing” started, the stated objective at the time being to inject much needed liquidity into the financial system, but that soon morphed into the Bank creating new money and using it to buy up previously issued gilts while on parallel the Treasury Debt Management Office was issuing new gilts so that the government could continue to pay all its bills on time and in full.

    With so much dishonesty over 16 years from the UK government under three parties – Labour, Tory-LibDem coalition, Tory, now Labour again – and from the Bank I would not trust any government plan about pensions.

  26. a-tracy
    November 19, 2024

    Can the general public demand that any Council pensions this government uses to gamble away on their ‘investments’ can’t be made good by local ratepayers in the future? Do the Council workforce pensions have to absorb the losses like defined contribution pensions have to do? Who is protecting those who don’t work in the unionised public sector?

  27. Denis Cooper
    November 19, 2024

    Off topic, a couple of articles this morning.

    Firstly, more anti-Brexit propaganda, this time from David Gauke:

    https://www.newstatesman.com/comment/2024/11/labour-can-no-longer-hide-from-the-cost-of-brexit

    “Labour can no longer hide from the cost of Brexit”

    “Weak growth and a Trump trade war could force the party to change its Europe policy.”

    Secondly, more rubbish about a trade deal with India:

    https://www.standard.co.uk/news/politics/keir-starmer-narendra-modi-uk-india-trade-talks-visas-b1194829.html

    “Keir Starmer and Narendra Modi relaunch UK-India trade talks stalled over relaxing visa rules”

    Here is the official UK government assessment of the potential benefit of a deal to our economy:

    https://assets.publishing.service.gov.uk/media/61e1b75e8fa8f5058d5a76bf/uk-india-free-trade-agreement-the-uks-strategic-approach.pdf

    “An FTA with India could provide a substantial boost to UK GDP, trade and wages.

    DIT modelling suggests that an FTA could boost UK GDP by around ÂŁ3.3 billion in 2035, up to around ÂŁ6.2 billion in 2035 (in 2019 prices) depending on the depth of the negotiated outcome. This is equivalent to an increase in UK GDP of between 0.12% and 0.22% in the long run.”

    1. Mickey Taking
      November 19, 2024

      ‘“Keir Starmer and Narendra Modi relaunch UK-India trade talks stalled over relaxing visa rules”’

      Now, would that be visas to enter for work in India, or just possibly the other way round?

      1. Denis Cooper
        November 19, 2024

        🙂

  28. javelin
    November 19, 2024

    I saw an interesting analogy between the start of the English civil war and today.
    ï»ż
    ï»żBasically the south east had gone capitalist but the rest of the country was still mercantile. Meaning business was run by the kings cronies – basically run by large corporates or oligopolies.
    ï»ż
    ï»żOutside the south east people could not earn enough money to eat. People were working 60 hours a week. People could not afford to heat their homes. There was also a homeless crisis. Taxes were high. ï»żBasically the same situation we have today.

    1. Denis Cooper
      November 19, 2024

      Interesting, and purely by coincidence I’ve just been watching the 1970 film “Cromwell” and have got to Naseby:

      https://naseby.com/

      “The English Civil Wars were primarily about establishing who governed the country, the Crown or Parliament.”

      And I keep thinking that while that film was being made Heath was planning for the EC to govern the country.

      But perhaps he and others didn’t understand what they were doing? Well, we know that they did understand:

      https://www.theeuroprobe.org/the-foriegn-and-commonwealth-letter/

      “FCO 30/1048 A document kept secret from the British public until it that came to light under the 30 year rule.”

      “Sovereignty and the European Communities”

      And I’m sure that those now leading the charge to overturn Brexit also know what they are doing.

  29. Jazz
    November 19, 2024

    These Titans of Finance can’t resist massive leverage.

    Well done NEXT, not so much BoE.

    1. Jazz
      November 19, 2024

      I wonder if NEXT could supply the next Governor of the BoE.

      1. Lifelogic
        November 19, 2024

        JR could do it far better in one day a week for about 20% of the pay of the current dope Bailey.

  30. John
    November 19, 2024

    Didn’t know that

    Thanks John

  31. Ian B
    November 19, 2024

    The Farmers are out doing their it to save the UK from this tyrannical vindictive Government.
    The Governments retort from the Chancellor as an expert economist she has to punish the Farmers to save the NHS.
    The Environment Secretary it won’t affect many Farmers. Government’s inheritance tax raid on farmers will be “small”. Another minister insisted the tax raid on farmers will be “small”. There has only been one man involved in the exercise of assessing the size, the impact of this raid, and that is a pollical activist academic on tax, who so far has just produced theories but no evidence. So how do Ministers and Parliament know when it can only be seen as biased review from someone preening themselves?
    It is reported in the Media RedEd wants us to import all our food, on can only assume he want their land on the cheap for his windmills and solar farms. Imports of any type is in reality the export of UK Wealth for it never to return.
    So this Government with its expert Economist is fighting the very idea of investment in the UK

  32. formula57
    November 19, 2024

    Pension funds may well be right to hesitate investing in UK equities for Sunak and Hunt’s British ISA (now abandoned by this government) to encourage the public to select such equities was a clear indication that asset class is doomed. Reeves’s NI increase alone costs business an extra ÂŁ25 billion, a direct reduction in returns to equity. Does she know what she is doing?

    The LDI fiasco points to serious failure by regulators with the maladroit hand of the Bank of England behind all. Audit the Bank!

  33. IanT
    November 19, 2024

    Watching Starmer talking about angry Farmers. Apparently all his family live in the “Country”.
    So it seems his father was a ‘Rural Toolmaker’ – Who’d have thought it ? 🙂

    1. Donna
      November 19, 2024

      Reigate is hardly rural 🙂

      1. IanT
        November 19, 2024

        When my Grandmother (who was in sevice to a Lady who live just off Sloan Square) told her employer that she was leaving to get married and live in Streatham, the old Lady exclaimed “How nice! Way out in the Country!”

        These days, anywhere outside of the M25 is still “Rural” to some people Donna 🙂

      2. Mickey Taking
        November 19, 2024

        but this was 50 years go.

  34. Iain Hunter
    November 19, 2024

    Dear Sir John,

    I am a possessor of a Self Invested Private Pension in which the equities/bonds split is 70%-30%. That has been my choice during the years I was building it up and I have retained it into the drawdown period. With the professional advice I have and the investment management handled by Quilter Cheviot, I am very content.

    I have carefully managed the drawdowns with my advisor so that my wife and I do not run out of money before our natural expiry dates, whenever they will be. I have also done so with inheritance in mind and we were on track to leave a substantial pension fund to our daughter and/or grand-daughter. My financial planning for a long time has been based on the assumption that pension finds were outside one’s estate. It is too late for me to change my strategy now as I will be 74 in a few months time.

    My concern is that with all the rightful fury over Inheritance Tax (IHT) on family farms, the planned robbery of private pensions from April 2027 is being forgotten about. It should not be. Kemi Badenoch is on record as saying that an incoming Conservative government will reverse the IHT raid on family farms. The raid on private pensions must be reversed too.

  35. JohnK
    November 19, 2024

    The LDI crisis blew up very conveniently to destroy Liz Truss’s administration. Now Andrew “Useless” Bailey seems to want us to align closely to the EU. I am not saying this was all a Remainer plot, just that it looks very much like one.

    1. Mickey Taking
      November 19, 2024

      ‘If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck’.

  36. Mark
    November 19, 2024

    It was of course Gordon Brown who originally perfected the art of robbing pension funds through assorted taxes while requiring them to shift assets into gilts to fund his spending programme, this starving the real economy of funds. He was also responsible for creating leveraged asset price bubbles in housing and mortgage backed securities that came unstuck when interest rates rose.

    The dismantling of the regulatory regime that he also orchestrated was at the heart of the problem. The subsequent tinkering by Carney and Bailey, emphasising ESG over sound economics, and playing with the nation’s money via QE and QT have taken this to a new level. It has to be said that oversight by successive chancellors has also been lacking – even those with some background in banking and risk management.

  37. rose
    November 19, 2024

    Talking of Chancellors, didn’t Mr Zahawi have to resign just for being in dispute with the Revenue before he was appointed?

  38. Mark
    November 20, 2024

    Talking of chancellors it is hard to imagine farmer Jim Callaghan would ever have attacked farming in the way Reeves has.

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