Markets – and ergo humans – love stability. Theresa May, who replaced David Cameron as prime minister last week, takes charge at a time when financial markets are craving security, as is much of the UK electorate. Comparisons have been made with the period in late 1990 when John Major was considered a safe pair of hands after taking over the leadership from Margaret Thatcher. But nothing is ever certain and it is worth remembering that a financial storm was already brewing when Mr Major took charge.
Already the new Chancellor of the Exchequer, Philip Hammond, is being urged to act fast to stop the impact of the ‘Brexit’ vote on the UK economy.
There are plenty of tools at Mr Hammond’s fingertips.
Commentators have speculated that he could use debt issuance to help back private sector or government schemes for infrastructure projects; of course this would not help the budget deficit and the Conservative party has an aversion to spending its way out of recession.
Others have suggested the new chancellor could look to suspend stamp duty on homes valued at less than £500,000, or even cut corporation tax to 12.5 per cent or less, bringing it into line with Ireland’s rate. The reasoning is that it might tempt companies to stick with their British bases rather than move to our neighbouring EU member states. But one thing our industry is urging him not to tinker with is pensions.
After decades of reform and government intervention, such as the scrapping of dividend tax relief, pension freedoms and simplification, the message will surely be – please, please leave well alone – for now.
However, change is taking place in the world of pensions. Ros Altmann has stepped down as pensions minister and taken aim at the government over the decision to scrap her former role in favour of the new title ‘under secretary for pensions’. She fears the pensions brief has been downgraded. Let us hope these fears are unfounded.
