Gosh, I wasn’t expecting that: a market-moving Budget.
Although there wasn’t much else of note in it, the Big News was that pensions, as we know them – a stream of income from the day you retire until the day you die – are old news.
Instead, we’ve got a new kind of long-term savings account.
Pensions savers will have more flexibility to dip in and out of their savings, without the punitive 55 percent tax for withdrawing funds too quickly. They’ll pay just their usual marginal rate of income tax on the money they draw out. This reform trusts us, the individual, not the state, to make the right decisions. The risk is now on us. Some will no doubt squander what they’ve got. But how refreshing to have a reform that celebrates individual responsibility, encouraging us to become a nation of savers again.
The move wiped £3 billion off the market value of the UK’s top pensions firms in one afternoon, because a lucrative chunk of their business, which only existed as a result of state regulation, will now be defunct.
Why did Mr Osborne tear up the pensions rules? Well we all know that pensioners of hugely varying incomes have seen their savings painfully eroded because of the Government’s policy to keep interest rates so low. So the move is partly ideological, liberalising the market, empowering people to choose how they spend their pension pots. This makes economic sense too. The chancellor is betting on a pensioner spending boom with all this unlocked cash.
Mostly though, the move is shrewdly political. Especially while Ukip benefits from defections by Conservative supports aged over-60. Note this: in 2010, general election turnout among the over-65s was 76% – while it was a paltry 44% among the under-25s. Whoever can win over that crucial “old vote” group takes a large stride towards winning the 2015 general election. This Budget seems to do just that.
Britain loses taste for bangers and mash
Brits aren’t eating as many sausages as we used to. They’re still a larder staple, with three quarters of UK households putting them on their shopping lists, but soaring pork prices have led to a decline in sales of sausages, chorizo and pepperoni in the UK, with a 5 per cent drop in demand in the past two years.
We’re still buying top and bottom end brands. Shoppers seem to be opting for either to the lowest-cost, or swankier sausages, encased in traditional animal gut which make up close to half the UK sausage market.
It is the mid-market brands we’ve lost the taste for, according to Devro, the Scottish maker of the collagen skins that encase salamis, bratwurst and chipolatas.
That is why they are pinning hopes for growth on Asia. Devro – who makes enough casing to stretch several times around the world – saw shares fall 9 per cent earlier this month when the company said demand for sausages had been subdued Europe-wide. Although not in Germany, which is still Europe’s biggest sausages consumer. Now they are building a £50m plan in China to start production in a couple of years.
New York pips London to no.1 financial centre spot
New York has knocked London off the top spot to become the world’s top financial centre for the first time in seven years. The Global Financial Centres Index, compiled by London-based consultancy Z/Yen, found that London’s reputation has been tarnished by recent scandals such as Libor rate rigging.
The report’s author Mark Yeandle said “London is less of a swashbuckling place….there’s less opportunity to make money.”
Bad news then for Europe’s financial centre, the place so crucial to financing growth and creating jobs by attracting foreign investors. Or is it? I don’t expect business to desert the British Capital in droves. Especially when you take a closer look at the rankings.
3,000 financial professionals are asked twice a year to give their take on the world’s commerce centres, on a 1,000 point scale. London was awarded 784 points versus 786 awarded to New York. That is only a two point lead. Hong Kong comes in third with 761 and Singapore is fourth with 751. In other words, it is a close run thing.
More interesting is that the gap between the “big four” and the chasing pack, led by Zurich, Tokyo and Seoul is narrowing. Plus Middle East centres such as Qatar, Dubai and Riyadh are continuing to flourish.
London slipping from the top spot is no cause for panic, but Europe’s policymakers would be wise to note this snapshot of what the men in city suits are thinking. London’s talent pool needs nurturing, or the lure of exciting, newer, money making places will steal them away.