UK Plans Revived Pensions Commission to Tackle a Savings Crisis
The proposal announced by the Department for Work and Pensions on Monday comes almost 20 years after the original panel of experts — set up by then-Prime Minister Tony Blair to investigate the private savings regime in Britain — issued its final statement.
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3 minutes ago
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The UK's weak economic growth and Brexit: Is the worst over?
Nine years after the vote on Brexit, the latest UK economic indicators send a strong message about an ailing economy that is yet to emerge from the shadows of the 'leave' vote. According to experts, some of the negative impacts of Brexit will endure. GDP has been contracting for two consecutive months, coupled with rising inflation and unemployment, and accompanied by a highly uncertain geopolitical environment and trade wars. UK GDP grew by 0.7% quarter-on-quarter in the first three months of 2025, but monthly data shows that the output contracted 0.1% in May after a 0.3% decline in April. According to S&P Global Ratings, these figures put the economy on course for 0.1% GDP growth in the second quarter, if there is no growth in June. Inflation increased to 3.6% in June — up from 3.4% in May and slightly ahead of expectations. This ties the hands of the Bank of England, which is aiming for a 2% inflation target before it lowers the benchmark rate, currently sitting at 4.25%. These weak datasets indicate that the UK has 'little spare capacity to grow,' Marion Amiot, Chief UK Economist at S&P Global Ratings, told Euronews Business. Some hope that the UK will be able to boost its GDP through exports, supported by trade agreements, including the latest with the US. However, exports alone might not be enough to fix a fundamental problem: the UK is contending with cripplingly low productivity. According to Amiot, productivity woes partially stem from Brexit. 'It has contributed to reducing the UK's labour supply and pulled the brakes on investment on the back of uncertainty in the years following the referendum,' she said. She added that sluggishness in the key financial services sector has also been playing a role: 'Productivity growth in the UK has been particularly weak since the Great Financial Crisis, especially in the financial sector.' UK labour statistics are also signalling a difficult path ahead for the economy. The number of job vacancies has been falling since April 2022. Unemployment in the country has been on the rise since August 2024, and sat at 4.7% in May, the highest level in four years. Related What would a UK-EU thaw mean for financial services? Brexit impact keeps getting worse, economists warn As poor productivity limits wage growth, this is expected to slow inflation. 'Wage growth has slowed, and unemployment has risen again. For the Bank of England, this is a sign of growing slack in the labour market, which is likely to ease inflationary pressures, and means it can cut rates sooner rather than later,' said Sarah Coles, head of personal finance at Hargreaves Lansdown. Job vacancies have also been falling due to higher costs, partially attributed to the UK government's decision to increase national insurance contributions, a cost that employers pay for every person on the payroll. What Brexit really cost the UK Nine years after the referendum, the Office for Budget Responsibility (OBR) assessed the economic impact of Brexit. Researchers came to the conclusion that — since 2020 — withdrawal from the EU has led to reduced productivity, lowering GDP by 4%, and trade by about 15%, in both goods and services, compared to a 'remain scenario'. Brexit has also had a sizeable impact on shrinking investments. According to John Springford, an associate fellow at the London-based think-tank Centre for European Reform, Brexit has cost the state £40 billion (€46.1bn) since 2019. 'The 2019-2024 parliament raised taxes by around £100 billion, and if we take the OBR's 4% loss of productivity to be the true figure, £40 billion of those tax rises were needed because of EU withdrawal,' he wrote in a recent study. Is the worst over? 'Brexit is going to have a long-term impact on UK growth beyond the initial fallout seen in trade,' said Amiot, adding that 'with a smaller pool of workers and weaker competition leading to lower productivity, the capacity of the UK to grow will remain durably lower'. She clarified: 'That being said, most of the large impacts are likely behind us.' The years following Brexit came with an increased uncertainty for businesses, and left a sizeable impact on investment, which stagnated for five years, before it returned to growth. Investment is now rising again and has surpassed its pre-Brexit referendum levels. According to the Office for National Statistics (ONS), gross fixed capital formation (GFCF) and business investment both increased to record levels in the first quarter of 2025. Trade with the EU also struggled, but that could have been partially attributed to a range of other factors, including the impacts of the COVID-19 pandemic and the global slowdown of trade in goods. 'Although much of the initial economic disruption has likely faded as firms adjusted, Brexit still appears to be weighing on export levels and GDP,' Andrew Hunter, Associate Director at Moody's Analytics, told Euronews Business. He added that goods exports to the EU are still 16% lower in real terms, compared to the end of 2019 (before the pandemic and before the UK began leaving the EU). 'And goods exports to non-EU countries have actually performed even worse,' Hunter said. He added that the UK has significantly lagged behind other advanced economies in this respect, due to a 'broader hit to the export sector from Brexit-related trade barriers (with many firms choosing to stop exporting altogether due to the added costs and paperwork).' Many hope the recent trade deal with the US will improve the economy by attracting investment into the country. And the US-UK trade deal provides relief for certain industries in particular. While the EU is finalising its potential countermeasures, including a tariff on US aircraft imports, almost certain to attract a retaliation, the UK has secured free trade for its aerospace sector. Yet, experts are sceptical about the overall contribution of the trade deal to the UK economy. S&P Global Ratings estimates 'that US tariffs are going to represent a direct drag on UK GDP of around 0.1 percentage point this year and next,' partly due to weaker global demand. And other trade deals are also unlikely to boost exports too much. 'The UK government's recent 'reset' deal with the EU has eased some trade barriers, particularly for food and agriculture, but further progress is expected to be slow,' said Hunter, adding that he doesn't expect a strong export rebound in light of global trade uncertainty. According to Springford, Free Trade Agreements (FTAs) signed since Brexit have had a very limited impact. 'The macroeconomic benefit of the new FTAs the UK has signed is very small, only offsetting the 4% loss from Brexit by about 0.2%. Even if a full FTA were signed with the US, that would rise to about 0.35%.' Related UK decision to leave EU a 'disaster' costing thousands of jobs - Lord Mayor A clouded UK economic outlook In the short term, the currently ailing economic output has been fuelling expectations that the government will have to make up for the missing tax revenue by hiking tax rates in the second half of the year, further constricting GDP growth. In the long run, experts agree that the UK's growth will be slower than if it had stayed in the EU. This is due to the fact that the structural changes associated with losing access to the EU market have meant that the UK is missing out on workers, investment and trade opportunities. Looking ahead, the primary source of uncertainty and risk remains productivity, according to the Chief UK Economist at S&P Global Ratings. 'While most forecasts anticipate a rebound in productivity that could support stronger growth, the outlook is clouded by uncertainty around the implementation of government growth policies and the pace at which AI technologies will be adopted,' Amiot said. Error in retrieving data Sign in to access your portfolio Error in retrieving data
Yahoo
an hour ago
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Who can afford the electric revolution? The £700m question
The UK government recently unveiled a £700 million package aimed at jumpstarting the electric vehicle (EV) transition. At the heart of the plan is a £640 million subsidy scheme to help drivers cover the upfront cost of a new electric vehicle, and an additional £63 million to expand EV charging infrastructure. Switch Auto Insurance and Save Today! Affordable Auto Insurance, Customized for You Great Rates and Award-Winning Service The Insurance Savings You Expect The message from Transport Secretary Heidi Alexander is clear: electric vehicles must become more accessible to the average motorist. 'There are a lot of people out there who think that EVs are just for the very wealthiest,' she admitted to The Telegraph. And on the surface, she's not wrong. The average price of a new electric car in Britain is just shy of £50,000, more than double the cost of a typical petrol model. But the message beneath the headline is more ambiguous. Is this plan enough to truly democratise the EV market? Or is it just another patchwork attempt to meet the looming 2030 petrol and diesel car ban, without fully reckoning with the underlying economics of the transition? Too steep for the mass market Let's be blunt: for the vast majority of households in Britain, a £50,000 vehicle is simply not in the realm of possibility. Even with a government grant, rumoured to prioritise UK-made EVs like the upcoming Nissan Leaf from Sunderland, the affordability gap remains vast. The previous Conservative government scrapped EV subsidies in 2022, claiming the market had matured. Since then, demand from private buyers has plummeted, with new consumer EV enquiries dropping 65% year-on-year. It's not just the sticker price. EVs face high depreciation rates due to battery degradation, and many consumers remain wary of both their long-term reliability and resale value. Buying an EV is still perceived by many as a financial risk, not a forward-looking investment. This is the crux of the problem: net zero targets depend on mass adoption, but mass adoption depends on affordability. And the market has failed to close that gap on its own. A patch for a broken model? To be fair, the government's new package includes more than just subsidies. Councils will receive £25 million for cross-pavement gullies, allowing people in terraced houses to charge their EVs at home using cheaper electricity rates. A further £63 million will expand public charging infrastructure and improve signage, a necessary step to address so-called 'range anxiety.' Yet infrastructure is not the primary barrier, it's economics. According to the Society of Motor Manufacturers and Traders (SMMT), EVs accounted for about 20% of new car sales in the first half of 2025. But that growth is increasingly driven by fleet and leasing schemes, not individual consumers. Motability One potentially transformative idea comes from Julian Rose of Asset Finance Policy, who argues that the government could build on the existing Motability scheme to create a fairer and more effective solution to the EV affordability crisis. Rose proposes a revised scheme focused on used EVs and hybrids, with eligibility expanded to include not just those with medical conditions, but also households on low incomes. Key to the idea is removing VAT from lease payments, as with the current Motability model, and offering a modest upfront grant — perhaps £1,000 — to reduce monthly payments. Rose also suggests capped interest rates and using the proven administrative frameworks of Clean Air Zone vehicle replacement schemes to prevent abuse. This approach, he argues, would not only 'help struggling families obtain vital mobility at an affordable monthly cost,' but would also 'strengthen the used car EV market,' reducing depreciation risk and encouraging new EV purchases. With used EV prices currently low, Rose sees this as a 'one-off opportunity' to both support families and build resilience into the second-hand EV market—complementing, not competing with, the government's newly announced subsidy programme. Leasing Meanwhile, private leasing continues to offer a critical bridge. UK-based and continental initiatives like Belgium's LIZY have made second-hand EV leasing more accessible, offering fixed monthly costs that are often lower than car loans. These platforms are proving essential for younger, urban drivers and SMEs who need flexibility and lower upfront investment. Such business models show that affordability isn't just about the purchase price, it's about the total cost of use. Leasing could help normalise EVs in the public mind and serve as a bridge to wider ownership, but these solutions are only scalable if backed by supportive policies and a competitive second-hand EV market. Risk of a two-tier transition What the government is offering now is a partial step forward, welcome, but insufficient. A £640 million grant scheme may provide short-term stimulus, especially for British-made models, but it won't fix the structural problems of price, depreciation, and market segmentation. There's a very real risk we're heading toward a two-tier EV transition: one where company fleets and wealthy households lead the charge, while ordinary drivers are left behind. That undermines both climate goals and social equity. If this revolution is truly meant for everyone, then it can't be designed around those who can already afford to participate. The electric future must be one the average person can actually buy into — literally. So yes, £700 million is a big number. But unless it translates into genuine affordability for the mass market, it won't be nearly enough. "Who can afford the electric revolution? The £700m question" was originally created and published by Motor Finance Online, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
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2 hours ago
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UK fears new summer of unrest, year after Southport riots
Concern is mounting that recent violent anti-immigrant protests could herald a new summer of unrest, a year after the UK was rocked by its worst riots in decades. Police have arrested 16 people since protests flared last week outside a hotel housing asylum seekers in the town of Epping, northeast of London. In one demonstration, eight police officers were injured. The unrest was "not just a troubling one-off", said the chairwoman of the Police Federation, Tiff Lynch. "It was a signal flare. A reminder of how little it takes for tensions to erupt and how ill-prepared we remain to deal with it," she wrote in the Daily Telegraph. Protestors shouted "save our children" and "send them home", while banners called for the expulsion of "foreign criminals". Cabinet minister Jonathan Reynolds on Thursday urged people not to speculate or exaggerate the situation, saying "the government, all the key agencies, the police, they prepare for all situations. "I understand the frustrations people have," he told Sky News. The government was trying to fix the problem and that the number of hotels occupied by asylum seekers had dropped from 400 to 200, he added. The issue of thousands of irregular migrants arriving in small boats across the Channel, coupled with the UK's worsening economy, has triggered rising anger among some Britons. Such sentiments have been amplified by inflammatory messaging on social networks, fuelled by far-right activists. Almost exactly a year ago on July 29, 2024, three young girls were stabbed to death in a frenzied attack in northwestern Southport. The shocking killings stoked days of riots across the country after false reports that the killer -- a UK-born teenager whose family came to the country from Rwanda after the 1994 genocide -- was a migrant. Nearly 24,000 migrants have made the perilous journey across the Channel so far in 2025, the highest-ever tally at this point in a year. The issue has become politically perilous, putting pressure on Labour Prime Minister Keir Starmer's centre-left government, as the anti-immigrant, far-right Reform UK party rises in the polls. - 'More unrest likely' - The Epping protests were stirred after a 38-year-old asylum seeker, who only arrived in Britain in late June, was arrested and charged with three counts of sexual assault. Images from the protests have gone viral on social networks, mirroring what happened last July. But Epping residents have maintained that the protests are being fuelled by people from outside the community. "These violent scenes ... are not Epping, and they are not what we stand for," the Conservative MP for Epping, Neil Hudson, told parliament Monday. While calm was restored to Epping, a middle-class suburban town with a population of 12,000, tensions remain palpable. "This is the first time something like this has happened," one local who lives close to the Bell Hotel told AFP, asking not to be named. "The issue is not the hotel, but extremists applying a political ideology," he added. Late on Thursday, the hotel, cordoned off behind barriers, was again the centre of a protest involving dozens of people, with police making one arrest. With another protest expected on Sunday, the local council voted through a motion to demand the government no longer house asylum seekers at the hotel. The UK is "likely to see more racist riots take place this summer", said Aurelien Mondon, politics professor and expert on far-right and reactionary discourse at Bath University. Anti-immigrant protests have already erupted elsewhere, with demonstrations in the southeastern town of Diss in Norfolk outside a similar hotel on Monday. Last month, clashes flared for several days in the town of Ballymena in Northern Ireland after two teenagers with Romanian roots were arrested for the alleged attempted rape of a young girl. - 'Civil disobedience' - "It is well documented that many of the protests we are witnessing are not the result of grassroots, local movements," Mondon said. "Social media plays a role and facilitates coordination amongst extreme-right groups," but it is "also crucial not to exaggerate" its power, he added. High-profile far-right activist Tommy Robinson, who was blamed for stoking the Southport unrest, announced he would be in Epping on Sunday, before later seeming to scrap the plan. The firebrand anti-Islam campaigner has just been freed from jail after spreading fake news about a Syrian immigrant, but faces trial on a separate issue in 2026. "I don't think anybody in London even understands just how close we are to civil disobedience on a vast scale," said Reform leader Nigel Farage. "Most of the people outside that hotel in Epping weren't far right or far left," he said, they "were just genuinely concerned families". mct-ebl/jkb/jj/lb
