Latest news with #riskaversion
Irish Times
16-07-2025
- Business
- Irish Times
Reeves pledges to extend purge of City red tape to rest of UK economy
Rachel Reeves said Britain has a 'culture of risk aversion to the point of obsession with stamping risk out', as she vowed to extend a purge on City of London red tape to the rest of the economy. The UK chancellor of the exchequer said an excessive safety-first approach was not seen in any of Britain's global competitors, adding: 'It is bad for businesses, bad for growth and bad for working people.' Ms Reeves, who is under intense pressure to pull levers to boost growth as Britain's fiscal position deteriorates, unveiled what she claimed was the biggest cut in financial services regulation in a decade. She said Britain needed a cultural change, and that the 'pendulum has swung too far in the opposite direction' after the re-regulation of the City following the 2008 financial crisis. 'The same flawed judgment that has seen newts and bats block major infrastructure projects is the one that requires almost 140,000 finance professionals to certify they are fit for their roles on an annual basis,' she added. Her comments followed her annual speech at the Mansion House in the City on Tuesday evening, in which she called on watchdogs to 'boldly regulate in the service of prosperity across our country'. 'It is clear we must do more,' she told City grandees. 'In too many areas, regulation still acts as a boot on the neck of businesses, choking off the enterprise and innovation that is the lifeblood of growth.' Ms Reeves' overarching message was Britain needs to take more risks. In the City, that meant reforming ring-fencing rules that force UK banks to separate their retail and investment banking activities – a change introduced after 2008. She also announced cuts to capital and reporting requirements, the scaling back of the onerous senior managers regime in the City, and an overhaul of the much-criticised financial ombudsman service. Ms Reeves also launched a new taskforce to support businesses to list and grow in the UK as part of efforts to revive the London Stock Exchange. She said she had retained reserve powers to mandate pension funds to invest in a wider range of riskier assets – but did not expect to have to use them – and was still considering 'further changes to ISAs' to encourage more investment in stocks and shares and less in cash. In the meantime, the public will be encouraged by banks and through a national advertising campaign to take more risks with their savings, investing in stocks and shares to boost returns. Ms Reeves is grappling with a deteriorating fiscal situation and the prospect that she will have to raise taxes significantly in her autumn budget. She said that a riskier regulatory environment would be married to an ongoing commitment to economic stability, reassuring the City that she would not be blown off her fiscal course by increasingly rebellious Labour MPs opposed to spending cuts. 'Fiscal stability is a choice that reflects economic reality,' Ms Reeves said, noting that national debt was at its highest levels since the 1960s. 'That's why the prime minister, this government and I remain committed to our non-negotiable [fiscal] rules.' She made light of her recent tearful appearance in the House of Commons. 'Recently on a visit to a school, a girl asked me 'What job would you do if you could do any job in the world?' Given the events of the last few weeks, I suspect many of you would sympathise if I had said 'Anything but chancellor'. But I didn't.' Her comments on growth drew a sceptical reaction from observers who said Labour had failed to deliver reforms on the scale needed to transform the economy during its first year in office. Despite policies to boost public investment that would pay off in time, 'it doesn't feel like a radical change', Helen Miller, director of the Institute for Fiscal Studies think-tank, said earlier on Tuesday. 'Growth should be the number one mission,' she added. 'We should be throwing the kitchen sink at it but it doesn't feel like that.' Ms Miller said the government's new focus on raising defence spending had overtaken other priorities, limiting the scope to invest in areas such as local transport or non-military research and development. Meanwhile Richard Hughes, chairman of the office for budget responsibility, struck a gloomy note about the state of the public finances. Mr Hughes said there were 'reasons to worry' about the level of public debt in the UK given the country's exposure to economic shocks and the hefty impact of events such as the financial crisis and the Covid pandemic. 'We have also already raised taxes quite a bit in this country – the tax burden is getting close to an all-time high, so we have used some of that policy flexibility,' he told MPs. – Copyright The Financial Times Limited 2025
Daily Mail
18-06-2025
- Business
- Daily Mail
Embrace risk to boost growth, pleads boss of London's struggling AIM junior market
The boss of London's beleaguered junior market, AIM, has said the UK needs to 'embrace' risk to boost economic growth, as it marks its 30th anniversary today. Marcus Stuttard said that over the last decade British investors had become too 'risk-averse', which meant they were less likely to take bets on smaller companies and newer technologies. He told the Mail: 'We all recognise that we need higher [economic] growth rates. 'But in order to generate that we have got to celebrate and back the people who take risks – the entrepreneurs, the founders that start these companies and grow great businesses.' He added that investors needed to recognise that achieving 'much higher returns' from investing also meant the potential for losses. 'We need to accept that and embrace it,' he said. AIM – short for Alternative Investment Market – is a sub-division of the London Stock Exchange (LSE) that was founded in 1995. But it has struggled amid a sharp fall in the number of firms on the market. Some point to disappointing returns. At the same time the wider London market is facing an exodus of firms being taken over or moving their listings overseas. AIM has listing rules which are less strict than those of the LSE's main market. It means smaller companies with less cash can still list on the stock exchange. But after a peak of 1,694 firms on AIM in 2007, the number is now around 650 as the appetite for smaller and higher-risk companies among investors has declined in favour of fast-growing US tech stocks. It was also dealt a blow in October when Chancellor Rachel Reeves announced inheritance tax relief on stocks in firms on the market would be slashed from 100 per cent to 50 per cent from next April – discouraging people from holding shares in smaller companies to save on tax bills. 'You would think a Chancellor who talks often about 'growth mission' and wanting to see increased investment in UK domestic assets would be a full throttle champion of AIM, but this is not the case,' said Jason Hollands, managing director at wealth manager Evelyn Partners. He added that while AIM's anniversary 'might be considered a cause for celebration' – with the market raising £136billion for more than 4,000 companies since its inception – it is now seeing tougher times. Luke Barnett, head of tax advantaged investments at St James's Place, said: 'Recent years have been challenging as it has underperformed the FTSE main market and missed out on the broader market rebound. Despite attractive company valuations, investor appetite has waned.'
Wall Street Journal
16-05-2025
- Business
- Wall Street Journal
Dollar Faces Further Falls as Correlation to Risk Shifts
1336 GMT – The breakdown in the positive correlation between risk aversion and the dollar could lead to further weakness for the currency, Neuberger Berman analysts say. U.S. investors might no longer see the dollar as a safe haven currency or unhedged dollar exposures as a source of diversification, they say. Investors are therefore evaluating whether to partially or fully hedge their exposure to the dollar, they say. Any level of hedging puts downward pressure on the dollar as investors sell dollars and buy currencies of their domicile. 'Non-U.S. investors will have to factor the efficacy of hedging their USD exposure relative to costs and implementation.' The DXY dollar index falls 0.1% to 100.763. ( 0821 GMT – The euro could extend its current gains against the dollar slightly as speculators continue to bet against the U.S. currency, ING analyst Francesco Pesole says in a note. Markets and consensus forecasts seen to be aligning for two further interest-rate cuts by the European Central Bank this year, he says. However, the risks remain skewed towards a weaker dollar. 'We still see $1.120 as a good short-term anchor for the euro, although the bias seems to be for testing $1.130 rather than $1.110 in the short term on the back of lingering dollar strategic selling.' The euro rises 0.2% to $1.1208. (
